San Jose Council Considers Loosening Wage Theft Rules

By Jana Kadah, San Jose Spotlight

April 11, 2023

San Jose wants to loosen wage theft requirements to allow more contractors to work for the city, but the idea isn’t sitting well with some members of the City Council.

A number of councilmembers are concerned a new proposal would be too lax and that wage theft policies should not be scaled back. In fact, some want it strengthened. The full council will consider the proposal later today.

As it stands, contractors who bid for jobs in San Jose are automatically disqualified if they’ve had two or more wage theft violations in the past five years, or at least one unpaid wage theft judgement. The requirements are causing a shortage of contractors for a multitude of city services. The city wants to amend the requirements to three violations in the past three years. They also want to have no wage theft disqualifications for banking, janitorial and security service contractors.

Wage theft occurs when an employer fails to pay workers minimum wage or overtime, takes away their tips or does not allow workers to take meal and rest breaks. If the employer is found in violation they are required to pay the employee for lost wages.

Vice Mayor Rosemary Kamei, along with Councilmembers David Cohen and Domingo Candelas, want to make sure existing regulations remain in place, but allow contractors with a history of wage theft to be exempt if they create a process for workers to make complaints or allow for a collective bargaining agreement. They also want to strengthen the existing policy by expanding city searches for violations. Currently, San Jose only examines violations filed with the California Labor Commissioner’s office. The elected officials want it to also include the Civil Wage and Penalty Assessments and Bureau of Field Enforcement citations.

Councilmember Sergio Jimenez said the right policy is going to require compromises, and he expects them to be determined during Tuesday’s meeting.

“I have very little patience for corporations stealing people’s money and not paying them appropriately,” Jimenez told San José Spotlight. “But it is a very real concern that we’re going to end up sort of disqualifying everyone (if a policy is too broad).”

Matt Loesch, acting public works director, said he’s asking councilmembers to amend the requirements to help the city fill those hard-to-come-by contractor jobs. He said the city has already made compromises by working with banks even though they have wage theft violations. That’s why he wants banks to be exempt from the wage theft policy.

It’s the same for janitorial and security service workers who have high rates of unpaid violations, 67% and 69% respectively, according to data from the U.S. Department of Labor. In order to avoid automatic disqualification, the city suggests contractors with a history of wage theft work to demonstrate how they will comply with labor requirements including wages, hours and working conditions. That also includes providing employees with a wage theft grievance process.

Investigations into wage theft violations by San José Spotlight, as well as lawsuits from various labor groups, have found numerous allegations of wage theft and unsafe working conditions. Union leaders and legal experts said contractors routinely violate labor laws in San Jose because the city doesn’t have strong enough protections for workers or penalties for those breaking the laws.

Unions and wage theft lawyers argue if the policy is relaxed in any way, workers’ wages will continue to be compromised. Tomas E. Margain, an attorney who represented workers subjected to slave-like conditions during the construction of the Silvery Towers, said the city should expand disqualification to not only judgements, but also complaints filed.

“Most cases settle, so limiting this to judgments would potentially allow a contractor who is a repeat offender to be on a job without anyone knowing this history,” Margain said. “Having broader disclosure requirements allows municipalities and (compliance departments) to better monitor projects as they can see if a contractor or subcontractor has a pattern of wage claims.”

The San Jose City Council meets today at 1:30 p.m. Learn how to watch and participate.

This story will be updated.

Contact Jana Kadah at jana@sanjosespotlight.com or @Jana_Kadah on Twitter.

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