San Francisco strict with businesses cheating on wages

In December 2007, several employees of the Mission district’s Mi Tierra Market filed a claim for unpaid wages with the San Francisco Office of Labor Standards and Enforcement. They alleged that the market was paying workers $250 to $400 a week to work 12-hour days, six days a week.

Such practices would violate California labor laws and San Francisco’s minimum-wage statute, which mandates workers in The City must be paid at least $9.92 an hour.

The agency immediately began an investigation of the produce and meat market and confirmed that the workers had been paid below the minimum wage between June 6, 2005, and Dec. 31, 2007. An audit identified additional employees who were not paid legal wages, bringing the total to five employees in all.

Former owner Adel Alghazali did not dispute the charges, and subsequently increased salaries and reduced the workers’ hours. He agreed to settle the case for the full amount of wages owed. The workers have been receiving quarterly payments that will continue through June 2012, according to the Office of Labor Standards and Enforcement’s settlement report.

Over the past seven years, agency records show that some of San Francisco’s best-known employers, including Safeway, McDonald’s, Big Lots, Subway, Martha & Bros. Coffee Shop and We Be Sushi, have short-changed workers by as much as $4.1 million.

That money has been reimbursed to more than 2,500 employees — many of them undocumented.

Workers included janitors, baristas, maids, delivery van drivers and home care providers. They wash uniforms, turn down beds, operate whirring meat dicers and tend bubbling vats of oil — often for just $5 an hour. Some worked overtime for months without receiving a single paycheck.

Half of the 308 offending businesses were restaurants, but violations spanned a bevy of industries. Alghazali is still paying his five former employees $61,574 in back wages, and another $8,425 to the labor standards office for the cost of the investigation. A number of the employees are still working at the market, which is under new ownership.

Agency officials said 99 percent of employers, Alghazali included, agree to settle with employees before their case goes to hearing so as to avoid costly additional fines. Alghazali subsequently sold the business in July of 2008 to current owner Adil El Makhzoumi, who is not accused of having violated any wage laws.

San Francisco is one of just three U.S. cities with its own wage enforcement unit, which celebrated its 10-year anniversary last month. Some in the agency describe themselves as protectors of The City’s workers.

“We tell employers not to mess around because all you need is one disgruntled employee and you’re gonna have a pack of dogs on your back,” said supervising compliance officer Richard Waller.

In 2007, agency hounds pounced on the now-closed Fung Lum Sewing Factory, which was paying employees $5.50 to $6.25 an hour to operate sewing machines six to seven days a week. Although the company had shut down by the time workers came forward, the labor office sniffed out a $124,360 settlement for four employees, plus $18,000 in interest and $12,000 in investigation costs.

In another case, 14 Big Lots employees were being underpaid by 29 cents an hour. But the company may not have known it was violating the law, and immediately paid employees their $1,739 in wages owed. “We didn’t have to do a thing,” said Donna Levitt, division manager for the Office of Labor Standards and Enforcement. “A big chain would not fight us.”

Wage violations are not uncommon. In fact, they are “more widespread” than anyone ever thought, Waller said. “If you were to pick any commercial area in The City and went door to door, you’re going to find problems.”

One of the few studies on the problem was released last September by the Chinese Progressive Association. It alleged that half of Chinatown’s workers were paid less than The City’s minimum wage. Thirteen percent made $5 an hour or less.

Legislation intended to better protect workers is being developed by Supervisors Eric Mar and David Campos.

“Right now, we’re in the information-gathering stage, working with Supervisor Mar and community-based organizations trying to learn more about the issue and to find out what The City can do,” said Campos, who said he plans to release a proposal this month.

What needs to happen, progressive organizations said, is for The City’s labor watchdog to expand beyond its team of eight minimum-wage supervisors and start aggressively hunting down wage violators.

“They should be proactively investigating and doing audits,” said Marci Seville, founder of the free Women’s Employment Rights Clinic. “You shouldn’t have to have progressive organizations like the Chinese Progressive Association doing that.”

The labor office currently has to wait for maltreated employees to come to it. Few workers do, however, fearing they’ll be sacked or reported to immigration by vengeful employers.

“We want to make sure that we have a mechanism in place that protects the workers as much as possible and that allows workers to come forward without fear,” Campos said.

A beefed-up team of wage enforcers might mimic New York State’s Department of Labor, conducting strategic sweeps of known problem areas and industries. They might also shave processing times.

On average, the Office of Labor Standards and Enforcement’s pending cases are 18 months old, meaning many workers languish for months in hostile, or inadequately paid, work situations before their case is resolved, said Shaw San Liu, an organizer for the Chinese Progressive Association.

If The City were to get serious about nailing wage violators, it might boost sales tax revenues. According to the association study, Chinatown’s workers would earn $8 million more per year if they were paid the minimum wage — money they might spend in town.

Workers’ fear of recrimination keeps them quiet

Although thousands of San Francisco workers earn less than minimum wage, many are too afraid to seek justice.

“You can feel it when these people walk in here, they’re at the end of their rope and they’re freaked out,” said Robert Waller, supervising compliance officer at the Office of Labor Standards and Enforcement, the city agency that settles minimum-wage complaints.

Workers’ main fears are of being fired, deported or blacklisted from future jobs if they speak out. “It’s not uncommon for us to hear that employers have threatened to call ICE,” or Immigration and Customs Enforcement, said Donna Levitt, OLSE’s division manager. “Whether they actually do it, they use it as a threat so that workers won’t exercise their legal rights.”

In the case of the allegations of wage violations at the Mission district’s Mi Tierra Market, fear of ICE definitely discouraged cooperation. “Workers were fearful to come forward and there was a rumor that we were immigration,” Levitt said.

Her agency has blocked deportation attempts and recovered jobs for fired workers by proving that an employer’s actions were “retaliatory,” and therefore illegal. But retaliation is hard to prove.

Employers can call ICE anonymously or claim they fired a worker for any number of reasons. For that reason, the Office of Labor Standards and Enforcement doggedly guards the identities of claimants. Although retaliation is relatively rare, rights groups say workers should carefully evaluate the risks before reporting an employer to the agency.

“For every person, it’s wise to get advice and assess their personal situation, assess the likelihood of an employer taking retaliatory action,” said Marci Seville, founder of the Women’s Employment Right’s Clinic.

If employees do decide to come forward, the safest way to do it is as a group.

“There’s strength in numbers, so if all the workers in the workplace come together, an employer is unlikely to fire his entire workforce or deport them all,” Seville said.

How to complain

If you work in San Francisco and make less than $9.92 an hour, you are the victim of a minimum-wage violation. California law entitles all workers to The City’s minimum wage, regardless of legal status. The Office of Labor Standards and Enforcement provides free advice and protection for workers with wage, overtime, paid sick leave or health insurance complaints. OLSE does not request information about a worker’s legal status. Operators at (415) 554-6292 speak English, Spanish, Mandarin and Cantonese.

Correction: This article was corrected on March 16, 2011. The original article stated that Adel Alghazali, who ran afoul of city wage laws in 2007, was the owner of Mi Tierra Market. Alghazali sold the business in 2008 and current owner Adil El Makhzoumi is not accused of having violated any wage laws. The article has been changed to note that Alghazali is the former owner of the market.

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