Wage Theft in Koreatown: Living on Less in the City of Angels

December 15, 2016

LOS ANGELES – Landlocked in the middle of city, Koreatown is dense and diverse. In less than five-square-miles, it’s the most populated neighborhood in the city, housing an array of cultures made up of lifelong L.A. denizens to young people just arriving from other parts of the country. Though for many low-income, minority residents, like 46-year-old Umberto Gutierrez, an undocumented immigrant, working and living in K-town means coping with exploitation.

Los Angeles is “the wage theft capital of the country,” according to the U.C.L.A. Labor Center. Each week, employers steal an estimated $26.2 million from low-income workers by not adhering to minimum-wage laws or mandating prep and closing work be done off the clock or requiring personnel to incur the cost of uniforms and tools needed to perform their duties. Wage theft violations take many different forms.

For Gutierrez, who worked at a busy Korean restaurant as the establishment’s sole busboy and dishwasher, it meant almost three years – from 2013 to 2016 – of mandatory overtime without proper compensation. As a part-time employee in the beginning, Gutierrez said there were no problems. Soon, though, the owner hired him fulltime, requiring 11-hour shifts, six days a week and, on most days, not allowing for state mandated meal or rest breaks.

“When I asked my employer about overtime [pay],” says Gutierrez, who’d worked at the restaurant for a year at that point, “he said, ‘Oh, we don’t pay overtime.'”

Left unchecked, wage theft damages the economy by perpetuating the cycle of poverty, which brings with it serious social and financial costs. “When you pay less than is legally owed, that’s a tax on the whole system,” says Tia Koonse, a legal and policy research manager at the U.C. L. A. Labor Center.

The annual number of wage theft claims statewide average around 40,000, though these claims are vastly underreported because workers are either afraid to come forward or are unaware their employers are stealing from them, according to Koonse. In Los Angeles County, an average of 15,000 wage theft claims get filed annually. The lost revenue in income taxes, payroll taxes, unemployment insurance taxes and the rest of the costs that should be going to the state and federal government is an estimated $25 million a year.

Koonse also points out that low-income victims of wage theft have to spend the majority of their finances on groceries, rent and utilities, money that will never circulate outside their community and into greater markets.

“It is a direct loss of spending money in the economy… We all suffer from that. It is true that undocumented immigrants face wage theft the most and it’s a huge cost. Whether a documented citizen or not, free labor was abolished in 1863,” Koonse says, and adds that working as an undocumented person or working with a fake Social Security number is not a crime.

The U.C.L.A. Labor Center makes pamphlets with illustrations, like this one, in English, Spanish, Korean and 15 other languages. The goal is to help educate those most vulnerable to wage theft, workers of color and women, about their rights as employees.

These pamphlets line the reception desk at the cramped offices of the Koreatown Immigrant Workers Alliance, located on the first floor of a K-town affordable housing complex. Founded in 1992, the alliance is where many low-income immigrants in Koreatown, like Gutierrez, end up after dealing with exploitation and wage theft.

“A lot of workers we work with are undocumented and so a lot of times they’re afraid to file a wage theft claim,” says Brady Collins, a policy analyst at Koreatown Immigrants Workers Alliance. “They fear repercussions from their employer who will explicitly or implicitly sort of threaten to call I.C.E. (U.S. Immigration and Customs Enforcement) and have them deported.”

With a wife and two young children in Chiapas, Mexico, to provide for, Gutierrez says he can’t afford deportation. Despite his boss’s illegal stance on overtime pay, he worked at the restaurant for another two years before quitting and going to the Koreatown Immigrant Workers Alliance for help in filing a wage theft claim.

The Los Angeles City Office of Wage Standards, the agency tasked with handling wage theft violations in L.A., ruled in Gutierrez’s favor and awarded him $85,000 in lost wages, damages and interest over the three-year period he worked at the K-town restaurant.

Gutierrez declined to name the Korean restaurant while his settlement is pending; though it is unlikely he’ll ever receive the full amount, if anything at all.

“We win 99 percent of the cases we [file], but the problem is getting those wages actually paid for. There were a number of loopholes employers were using to not have to pay those wages, ” says Collins.

Employers were able to avoid paying on wage theft rulings against them by shuttering their corporation or closing their doors temporarily and opening up under a new entity or name, until the passage of California Senate Bill 588. Signed in October 2015 by Gov. Jerry Brown, the measure allows wage theft claims to identify individuals rather than just corporations.

“We pierced the corporate veil,” says Koonse. “Now, as of January of this year, people who own corporations and their officers are individually liable. We should hold individuals personally accountable if they don’t pay people.”


Still, she says, victims of wage theft have a 17 percent chance of collecting anything at all. This is because many businesses don’t have any assets or savings from which to pay a claim. They might, in fact, have to close permanently because they can’t afford the judgment against them. The small number of workers that do reach a wage theft settlement with their employer will receive, on average, 10 percent or less of the original judgment, says Koonse.

If Gutierrez is fortunate enough to reach a settlement with his previous employer, this means he’ll be lucky to get $8,500 of the $85,000 owed him.

Having lived in California off and on since 1996, Gutierrez hasn’t gone home to Chiapas in 11 years. “It’s harder now,” he says. “Before, immigrant families would go and come back and make the trips, but with Border Patrol it’s gotten really hard and people don’t do that anymore.”

In the Koreatown Immigrant Workers Alliance community room, Gutierrez leans forward and rests his forearms on the table when asked about his kids. His 8-year-old son loves to play soccer, he says, and his daughter, 10, used to want to take ballet classes, but that she doesn’t talk about that anymore.

Both of his children were born in California and are legal residents of the U. S, but they cannot cross the border legally and expect a reunion with their father.

Children of immigrants can’t petition for their parents’ citizenship until they turn 18 years old, says Scarlett De Leon, a worker’s advocate at Koreatown Immigrant Workers Alliance. Before the age of 18, says De Leon, “The U.S. doesn’t care. [Families] just get separated,” if the parents are here illegally.

Los Angeles County, in 2013, had the largest share of the state’s estimated 2.67 million undocumented immigrant population, according to the Public Policy Institute of California. Nationwide, they projected 11 million undocumented immigrants, with 25 percent of that number residing in California.

Undocumented immigrants with families take an even harder hit in low-wage positions and are more likely to have financial struggles at every turn.

“Everything is intensified for [low-income] families,” Lonnie Goldman, an economics professor at Penn State University, says in a phone interview. If both parents have low-income jobs and have just enough combined income to pay for the necessities, like food, housing and transportation, that still leaves the cost of childcare, healthcare and any other number of other expenses. “Everything gets compounded by low-income,” says Goldman.

In California, low-income workers are defined [i] as those making $13.63 an hour or less, according to the U.C. Berkley Labor Center. The majority of these workers are people of color, with 40 percent [ii] born outside the United States. Over the next five years, the largest share of job growth in Los Angeles will be in low-income, low-education categories, writes the Los Angeles Economic Development Corporation in their June 2016 report.

This type of job growth mirrors the national trend. The Bureau of Labor Statistics released its Occupational Employment and Wages Summary, May 2015, in March of this year. The report noted that 64 percent of nationwide employment, in 2015, required “a high school diploma or equivalent or no formal educational credential for entry.”

Because women, people of color and undocumented immigrants are the demographic that traditionally fill low-income and low-education positions in the workforce, wage theft is not likely to decline any time soon.

“In Los Angeles, what we found is in any given week, 88 percent of low-wage workers experience a [wage theft] violation,” says Koonse, referring to the U.C.L.A. Labor Center’s 2010 survey [iii], titled “Wage Theft and Workplace Violations in Los Angeles.” Koonse added that because the 2010 survey was so exhaustive and expensive, there have been no subsequent studies, to date, that have documented wage theft with this much precision.

Gutierrez, who’s since found a dishwasher’s job at another restaurant in Koreatown, says he tries to talk to his wife and kids on the phone everyday, though he admits his work schedule sometimes make that impossible. “The most I’ll go [without talking to them] is every two days,” he says.

At a bare bones minimum, $1,300 a month is what Gutierrez says he has to make to cover his rent and bills and allow him to send a little money back to his wife and kids in Chiapas. It’s not the $1,000 a month he used to send when he worked six days a week, 11 hours a day, but it’s something, he says and shrugs. When asked if he’s hopeful about his wage theft claim, he says he doesn’t know.

“Life is hard here as an immigrant, but it’s still easier than being in your own country,” Gutierrez says. “What’s unfortunate is when you’re undocumented, you don’t have papers here. So, you’re not able to pay taxes. You’re not able to support the country as you would like to, like I would in my own country where I have documents.”

[i] Bullet #2 on linked page – California’s Low-Wage Problems

[ii] Bullet #3 on same link as above – Race, Ethnicity and Nativity

[iii] Page #30, first paragraph, second sentence in the downloaded PDF report – Wage Theft and Workplace Violations Los Angeles

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