Houston’s Attempt To Curb Wage Theft (TX)

Whatever came from Houston’s Wage Theft Ordinance? We take a look.

JULY 18, 2017, 7:00 AM (LAST UPDATED: JULY 18, 2017, 10:22 AM)

It’s called, “wage theft.” And it’s a problem here in Houston, that the city tried to address. More on how that worked out in a minute.

But first, just what constitutes wage theft?

It takes many forms. Not paying workers overtime they are entitled to, working off-the-clock, minimum wage violations, incorrectly categorizing employees as independent contractors, illegal deductions in pay, and not paying workers at all are all common examples of wage theft.

Stealing workers’ wages is an issue that even compelled President Obama to implement an executive order back in 2014 which, in part, discouraged businesses from committing wage theft, by not allowing them to receive federal contracts. That was repealed by President Trump back in March.

Tom Padgett is a lawyer in Houston, who says he represents lots of wage theft cases.
“The problem is that employers hold all the cards. And employees are afraid. They are afraid of retaliation…. I mean, we’ve had employees who have asserted their rights, and then the employers fire them, and they lose their house. Or they can’t afford their health insurance anymore, and their baby gets sick. So there’s a lot of terrible stories out there,” Padgett said.

The Fair Labor Standards Act (commonly known as FLSA) is a federal statute, put in place to ensure proper payment for workers. But Padgett’s firm says federal and state agencies don’t really have the man power to truly enforce that.

“There’s no specific Texas wage and hour law that would protect people. We have to go to federal court or we have to get a municipality, or a local ordinance, like Houston,” Padgett said. “But I haven’t seen any impact from the Houston ordinance, or any change at all.”

Padgett is referring to the Houston Wage Theft Ordinance, which was passed in 2013. It was put in place to deter businesses from stealing worker’s wages, by banning violators from working with the city. The ordinance even effectively bans businesses from operating in Houston, by way of not being able to renew permits and licenses.

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Study: Construction workers in southern US lack employment benefits

Kim Slowey
May 11, 2017


Dive Brief:

  • A study has found that construction workers across the southern U.S. receive little to no employment benefits and have relatively low pay, according to the Houston Chronicle.
  • The Workers Defense Project report found that 40% of construction workers in Houston had no health insurance, retirement savings, paid vacations or sick leave. More than 30% were not offered breaks during the day and reported that their employer did not provide drinking water on the job.
  • Only 5% of the 1,435 workers interviewed in six Southern states said workers’ compensation covered the cost of their work injuries, and 57% said they earned less than $15 an hour.

Dive Insight:

The results of this study reinforce a complicated issue plaguing the industry. On one hand, contractors across the country are facing the consequences of skilled-labor shortages and say they’re pulling out all the stops – including raising pay – in an effort to recruit workers. However, this report reveals that, at least in the South, many companies aren’t making the necessary changes in compensation and workplace culture to be an attractive option for new workers.

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(Full PDF of Report)

State fines Texas-based construction company $767K for misclassifying workers

Sep 20, 2016, 7:29am HST
Duane Shimogawa

The state Department of Labor and Industrial Relations has fined Texas-based R&R Construction Services $767,095 for the misclassification of its workers as independent contractors that are part of the Maile Sky Court hotel-condominium redevelopment project in Waikiki.

The state said Monday that R&R has 20 days to appeal the citations.

“Law-abiding contractors who pay their fair share face unfair competition, and workers suffer when deprived of their rights and benefits,” Linda Chu Takayama, director of DLIR, said in a statement. “The visitor industry and a pleasant visitor experience is important to Hawaii, but Hawaii’s working people and law-abiding contractors need to benefit fairly.”

R&R allegedly misclassified 65 construction workers as independent contractors and, by doing so, it avoided requirements to provide unemployment, workers compensation, temporary disability and prepaid health care insurances, according to the state.

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City to deny permits to companies with wage theft convictions (TX)

POSTED: 05:22 PM MST Mar 08, 2016
UPDATED: 07:24 PM MST Mar 08, 2016

EL PASO, Texas –
The El Paso City hall is cracking down on wage theft, adding changes to an existing ordinance that will prohibit companies in some industries from conducting business within city limits if they’ve been convicted of stealing wages from employees.

The council on Tuesday voted 5 to 1 to approve the tougher changes, with Rep. Michiel Noe as the only no vote. Representatives Cortney Niland and Larry Romero were absent. Romero resigned last month but is still a holdover until his seat is filled.

Businesses with a wage theft adjudication would not qualify for certain city permits, licenses or registration. The industries affected are food handling establishments, laundries, dealers of second hand goods, vendors, contractors and flea market operators.

The current city ordinance bars companies with wage theft adjudications from winning city contracts.

More than two dozen people went to the city council meeting expressing support for the ordinance expansion. “El Paso does not need employers who are thieves,” UTEP Professor Kathy Staudt told the council.

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Committee votes to close living wage loophole

Thursday, December 17, 2015
by Vicky Garza



City Council’s Economic Opportunity Committee approved a resolution at its meeting on Monday that would effectively close a loophole that allows some city contractors to avoid paying workers a living wage.

Both Bob Batlan, of Austin Interfaith, and Emily Timm, deputy director of Workers Defense Project, spoke in favor of the resolution.

“This is simply closing a loophole that currently allows bad actors to subcontract out and not comply with that living wage standard,” said Timm. She added that the requirements will ultimately “protect responsible contractors who are doing their best to comply with the city’s living wage standards that are already in place in the purchasing department.”

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Houston contractor indicted for making false statements about paying prevailing wage on CMHA jobs

Tuesday, November 17, 2015


A 61-count indictment was filed charging Marcus Butler, of Houston, with making multiple false statements to the United States Department of Housing and Urban Development and the United States Department of Labor while defrauding the Cuyahoga Metropolitan Housing Authority and several of his former employees, said Steven M. Dettelbach, U.S. Attorney for the Northern District of Ohio, announced that.

The indictment alleges that Butler ran an electrical company called LB Electric of Northeast Ohio in the Cleveland area.  Butler and his company agreed to work as subcontractors on a number of CMHA construction projects, including projects at the Riverside Park, Union Square and Delaney Village properties.

Butler, as a subcontractor on the CMHA project, agreed to pay his employees a prevailing wage while they worked on these CMHA projects and further agreed to provide certified weekly payrolls to CMHA. Although Butler submitted numerous certified payrolls claiming that he paid a prevailing wage to his employees, he did not in fact make such payments to his employees and instead submitted false certified payrolls to conceal this conduct. As a result of his conduct, Butler overstated the amount of wages paid to his employees, and thus underpaid his employees, by approximately $126,514, according to the
the indictment.

First Reported Conviction Under Texas’ New Wage Theft Law

by Scott Braddock on Wed, 09/16/2015 – 8:30am


The first reported conviction of a contractor guilty of wage theft was handed down by a jury in El Paso this past week. The case against the employer was pursued under a law passed in 2011 by a local lawmaker who has made stamping out wage theft one of his personal causes.

The victim, Esteban Rangel, said he was owed $2,295 by the owner of Sun City Roofing, John Najera. Najera did not have any prior convictions, which is why the 180 day jail sentence announced in court was reduced to three months of probation. In addition, Najera must pay a fine of $5,000 and Rangel will receive $2,295 in restitution.

The lawmaker who pushed for passage of the state’s new wage theft law, Sen. Jose Rodríguez, said the conviction is an important step forward and will hopefully send a message to other unethical business owners. The bill he successfully championed in 2011 allows for criminal prosecution for wage theft if – with the intent to avoid payment – an employer fails to make full payment after receiving notice.

“This conviction is a landmark in the fight against wage theft,” Rodríguez said. “Unscrupulous employers who intentionally steal from employees now know there are real consequences for robbing workers of the pay that they’re owed,” said the El Paso Democrat.

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DFW Television Report Puts Spotlight on Worker Misclassification

by Scott Braddock on Wed, 04/29/2015 – 7:36am

In an explosive investigation that drew the attention of many average Texans over the weekend, WFAA Television in Dallas/Fort Worth put a bright spotlight on the problem of worker misclassification. It’s a problem the Construction Citizen team has exposed for years and we greatly appreciate any time other media outlets take up the cause as well.

This most recent outrage came to light after three men working as independent subcontractors underneath Thanksgiving Tower in Dallas died in a horrific accident. But, the companies involved have denied damages to their families. How can that be?

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Cheating by Unethical Employers Reaches Crisis Levels While Texas Lawmakers Sit on Their Hands

by Scott Braddock on Wed, 04/08/2015 – 5:46am


Over the years, the Construction Citizen team has put a bright spotlight on the myriad problems caused by worker misclassification. Those difficulties continue to mount while Texas lawmakers do very little about it, much to the frustration of ethical companies that cannot compete with cheaters, many single mothers who are denied child support payments, conservative activists upset about illegal immigration, and workers’ rights advocates who believe in a better standard of living for those who toil in the hot Texas sun.

Worker misclassification is one of the major underlying problems when it comes to fixing all those challenges.

If you’re unfamiliar, worker misclassification is a fancy term for cheating on payroll. That’s why labor activists call it “payroll fraud.” It happens when a boss pretends their worker is an “independent subcontractor” instead of an employee even when, by law, the person should be on the books as an employee. Many employers do this with the goal of avoiding payroll taxes, workers’ compensation coverage, and other benefits and protections in place when there is a true employer-employee relationship. Keep in mind that there are many legitimate uses of contract labor, but the IRS has legal definitions for who is an employee and who is a contractor.

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Texas Urged to Crack Down on Employers That Misclassify Workers

By Julian Aguilar

March 15, 2015


Workers’ rights groups in Texas are revamping their efforts to increase protections for low-income laborers by urging lawmakers to crack down on employers that intentionally misclassify their employees.

Misclassifying workers as independent contractors – rather than employees – allows employers to avoid paying payroll taxes, overtime and workers’ compensation. The practice also allows employers to skirt federal law that requires new hires to provide proof that they can work in the country legally.

About 35,000 Texas workers were misclassified between 2010 and 2012, according to the Texas Workforce Commission. That includes 4,300 in the construction industry and 4,100 in the health care and social assistance industries. Those workers’ employers should have paid about $2.4 million to the state’s unemployment insurance fund, according to a report by the Legislative Budget Board.

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