San Diego Restaurants Guilty of Wage Theft, Labor Law Violations and Discrimination

by on June 17, 2015 · 0 comments

in California, Civil Rights, Culture, Economy, History, Labor, San Diego

Stop wage theft protestSDSU and CPI Study Found 3/4’s of Employees Victims of Wage Theft

By Doug Porter / San Diego Free Press

A study by San Diego State University Department of Sociology and the Center on Policy Initiatives found persuasive evidence of widespread wage theft, labor law violations and widespread discrimination in restaurants throughout San Diego.

If you went in to a grocery store and took something without paying, you’d face arrest. If you robbed a bank you’d be eligible for jail time. Both are thefts. Both are crimes.

But if you’re an employer in the restaurant industry and fail to pay an employee’s wages –also a crime–, chances are good to excellent that you’ll get way with it. So this morning we’re learning there’s a crime wave going on in San Diego. And that’s just the tip of the iceberg.

What They Found


This survey of 337 employees of restaurants throughout San Diego County uncovered disturbing numbers of legal violations and other exploitative workplace practices among restaurants of all kinds – from fast food to fine dining.”

Here are the bullet points from the SDSU/CPI report:

WageTheftStory2LeadWage Theft: More than three-quarters (77%) of 337 restaurant employees surveyed have been victims of wage theft by their employers during the past year, and a third said it happens regularly. Restaurants’ varying systems of distributing tips are confusing and open to abuse.

Break Violations & Fraud: Nearly a quarter of the sample said employers made them falsely record taking unpaid meal breaks. More than 80% reported violations of their legal rights to breaks, either working more than 6 hours without having a meal break or being prevented or discouraged from taking rest breaks.

Time Theft & Unstable Schedules: Most workers surveyed get their work schedules less than a week in advance and 85% get less than two weeks’ notice. Other common practices, such as on-call and open-ended scheduling, rob employees of their personal time.

Sick Time & Health: More than three-quarters (78%) of workers in the sample have gone to work when they’re sick, injured, or in pain, and 65% have done so repeatedly. Only 11% reported having any paid sick time, and only 17% get any health insurance from their jobs.

Discrimination: The survey found wage theft most often targeted women, Latinos, and “back-of-the-house” staff. Observational data on 40 high-end local restaurants show white males disproportionately represented in “front-of-the-house” jobs.

How The Data Was Obtained

cpi_logoA graduate field practicum class of the SDSU Sociology Masters program conducted the survey in March and April of 2015. Restaurants where in person research took place were selected for price, popularity and geographic diversity, from online review and rating websites such as Zagat’s and Yelp. The 2009-2013 five-year Public Use Microdata Sample from the American Community Survey (from the US Census Bureau) for restaurant workers in San Diego County was analysed for patterns of discrimination and for comparison with survey data.

This is a pilot study that offers a glimpse into the work lives of San Diegans employed

in the restaurant industry, and highlights issues that warrant further exploration and the urgent development of policy solutions. Survey respondents included employees of at least 163 distinct workplaces scattered throughout San Diego County and probably substantially more.

We conducted in-depth interviews with 30 survey respondents to clarify and enrich the findings, analyzed census data and collected observational data at 40 top local restaurants. Many of the findings replicate what has been found in studies conducted elsewhere…

…In addition to the survey – which included workers at all types of restaurants, coffee shops, fast food places, and bars – we collected observational data at 40 fine dining and casual fine dining restaurants in San Diego on race and gender of front of the house positions. Pairs of graduate students sat for at least an hour in each of the 40 restaurants, ordering beverages, conferring, and noting their observations.

While this method involves potentially problematic racial identification by appearance only, it offers a fair measure of the discrimination, which is itself based largely on appearance (both how the employer perceives race and how the employer believes customers will perceive workers). It is a partial measure providing a glimpse at the problem, and obviously could not include observation of the kitchens.

The data in the local study confirm what researchers have observed in other locales .

Late Pay or No Pay in San Diego Restaurants

bounced payAlthough California law stipulates civil penalties for late or bouncing paychecks, the survey found that about 13% of respondents had experienced difficulties over the past year.

And for those employees who ultimately get stiffed, their chances of recovering the money are slim.

From the Los Angeles Times:

A 2013 UCLA Labor Center study found that workers in California collected only 42% of the back wages the state said they were owed from 2008 to 2011. Only 17% of workers who obtained a judgment against their employer saw any money at all during the three-year period, the report found.

The state’s own investigators had a similar collection rate of 20%, according to the most recent report from the California Labor Commissioner’s Bureau of Field Enforcement.

Here’s a particularly sad vignette from the report:

Workers interviewed said late pay sometimes makes them late on rent, bills, and credit card payments, at the risk of extra fees and bad credit. In the worst cases, the late wages were never paid at all.

One server, Kadie, reported that she briefly worked at a restaurant where her paycheck bounced regularly. She spoke to her coworkers and learned that no one was being paid.

Some of her coworkers continued to work at the restaurant while looking for other jobs, only taking home cash tips. “They would stay for 2 weeks, maybe 3 weeks, and realize they were not going to get paid and finally they would leave without recourse,” Kadie said. “The owner would then clean himself up and walk out to the street and recruit anyone walking by….The door kept revolving.”

Lawmakers in California are aware of the problem. Last year’s attempt at holding employers accountable was blocked by the California Chamber of Commerce, who called it a “job killer.”

It’s a real tribute to the basic decency of working people in California that there aren’t “employer killer” incidents from ripped off employees. You’d think the Chamber or Restaurant Association would show their basic decency by doing more than simply blocking legislation. But that’s not happening.

Here’s the latest on this year’s attempt to fix this problem, from the Union-Tribune:

California lawmakers have advanced a “wage theft” bill in an effort to crack down on employers that shortchange workers.

The state Senate on Monday approved the proposal on a 24-12 vote. SB588 by Senate President Pro Tem Kevin de Leon would make it easier for the state labor commissioner to collect unpaid wages on behalf of workers.

The proposal by the Los Angeles Democrat allows the labor commissioner to file a lien on an employer’s property.

Advocates say the problem disproportionately affects low-wage workers, immigrants and women because some employers pay less than the minimum wage or skirt overtime pay.

An analysis by the National Employment Law Center and UCLA Labor Center found eight in 10 workers with unpaid wage claims were never paid.

Rampant Racism & Sexism

racist restaaurantPersons of color and women, according to the survey, were more likely to be the victims of wage theft.. The survey found 35% of Latino respondents reported experiencing wage theft regularly vs 28% of Whites regularly experienced wage theft. Latinos were twice as likely to have experienced three or more types of wage theft compared to Whites.

The disparities also follow gender lines: 37% of female respondents and 28% of males regularly experienced wage theft during the past year.

From the SDSU/CPI Report:

We found more intense racial disparity among jobs at these high-end restaurants, where the potential tip income is highest. Whites, who make up 36% of all restaurant workers in San Diego, were greatly over-represented among the 548 front-of-the-house workers observed in the 40 establishments; 74% of bartenders, 76% of servers, and 85% of managers were White.

Latinos were over-represented in only one front-of-the-house job: as 55% of bussers, compared to their 47% of the industry.

Men also dominated the highest-income jobs. In the 40 high-priced restaurants we observed, 57% of the servers were male. By contrast, 35% of all servers in the local restaurant industry (and 25% in our survey) are men. Two-thirds of bartenders in the high-end restaurants were male, compared to 50% of all bartenders in San Diego County.

A Dirty Little Secret

This is the dirty little secret of the hospitality industry. Eating establishments ranging from fast food to fine dining all play the game – cutting corners on pay, meal breaks, stealing tips and somehow not seeing the racism in their hiring and promotion practices.

I know this first hand, based on 30 years of hospitality industry experience, working at jobs ranging from dishwasher to general manager to restaurant owner. I got myself fired from a major restaurant company for reporting racist hiring practices. (Silly me.)

I’ll also admit to having tolerated some of the practices highlighted in the SDSU/CPI report. You either played the game or you didn’t work.

Whether it’s tagging job applications with “not the look” (code for persons of color), including managers in tip pools, charging servers for credit card fees or simply refusing to pay overtime, this kind of conduct is more common than not.

Who Paid for This Study?

No doubt the local press will make mention of the fact that CPI is often connected to organized labor. It’s true. And it makes the report’s finding no less valid. Here’s the “thank you” p[art of the report.

We thank Alor Calderon from the Employee Rights Center of San Diego for advising on state labor law and employment policy and Audrey Beck, PhD, and Enrico Marcelli, PhD, for their assistance with data analysis. We also thank Teófilo Reyes and Saru Jayaraman from the Restaurant Opportunities Centers United for sharing their survey and observational instruments and expertise on the industry research.

We gratefully acknowledge the Division of Undergraduate Studies Common Experience and Service Learning and Community Engagement Program at San Diego State University, the Marguerite Casey Foundation, the UU Veatch Program, and the Open Society Foundations for funding this research.

Most Restaurant Workers are Low Wage Workers

public_assistance_share_of_workers_by_industryFor every server you hear about making $200 a night, there are dozens–if not hundreds–of other hospitality employees living hand to mouth.

The latest corporate strategy to rip off restaurant workers is to make them sign arbitration agreements as a condition of employment.

Here’s one example from In These Times:

Workers in the restaurant industry are routinely the victims of wage theft. For workers without a union, suing the company is one of the few ways to recover those wages. But a legal fight led by the restaurant chain Applebee’s against the National Labor Relations Board is aiming to further limit workers’ ability to sue the company over disputes on the job.

The Rose Group, a Pennsylvania-based franchise operator of 56 Applebee’s restaurants in several states, is fighting a recent ruling by a labor board judge that the company violated the rights of its workers by forcing them to sign agreements not to sue, but instead to settle disputes in private arbitration. In an April 22 decision, Administrative Law Judge Susan A. Flynn found that Rose Group had engaged in an illegal unfair labor practice by forcing workers to sign a “Dispute Resolution Program and Agreement” that restricts their rights to join class action lawsuits against Applebee’s.

How Big is This Problem?

I’m so glad you asked. A report from the Economic Policy Institute estimates the total loss in wages nationally to be $50 billion annually… But that’s just an estimate.

Here are some harder numbers:

Wage_theft_versus_other_property_crimesIt is useful to compare the cost of these wage and hour violations with crimes that are better recognized and greatly more feared, though they are much smaller in their overall dollar impact. All of the robberies, burglaries, larcenies, and motor vehicle thefts in the nation cost their victims less than $14 billion in 2012, according to the FBI’s Uniform Crime Reports. That is well over one-third of the estimated cost of wage theft nationwide.

Looking in more detail, in the United States in 2012, there were 292,074 robberies of all kinds, including bank robberies, residential robberies, convenience store and gas station robberies, and street robberies. The total value of the property taken in those crimes was $340,850,358. Those are not the robberies that were solved; those are all the robberies that were reported to the police, anywhere in the nation.

No one knows precisely how many instances of wage theft occurred in the U.S. during 2012, nor do we know what the victims suffered in total dollars earned but not paid. But we do know that the total amount of money recovered for the victims of wage theft who retained private lawyers or complained to federal or state agencies was at least $933 million—almost three times greater than all the money stolen in robberies that year.

What is to Be Done?

The SDSU/CPI report concludes with a bunch of policy recommendations, ranging from better enforcement of existing laws, better education of employers and employees, along with some modest suggestions for new legislation.

Past surveys from this group have been valuable in providing an impetus for changing the way things get done in San Diego.

While the City Council and the Legislature can advance new laws, and enforcement agencies can be beefed up, ultimately it’s up to the industry itself to own the realities brought to light in this report. Laws are being broken and employees are being mistreated because these are accepted practices. Managers are more likely to be praised and promoted for bad behavior than they are for doing the right thing.

Not all restaurateurs do business this way. Those who follow ethical and legal practices need to step up to the plate and make it part of their brand identity. As public awareness grows, so will their business.

Finally,we consumers need to play a role. Doing things the right way isn’t always the cheapest way. It’s time we started putting values before pricing in a culture that currently worships at the temple of greed.


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