Chicago City Council Unanimously Passes Strong Anti-Wage Theft Ordinance

January 18, 2013

By Liz Ben-Ishai

Workers deserve to be assured they will be paid for the hours they work – this basic proposition seems obvious to most of us.  Yet, for millions of workers across the country who are victims of wage theft, something that appears to be a question of simple fairness is out of reach. But there is hope for workers in Chicago, where yesterday City Council passed one of the strongest municipal anti-wage theft laws in the country. In a unanimous vote, the Council passed the law, which will allow the City to revoke or deny licenses to employers that steal their workers’ wages.

The new law could bring relief to the many workers in Chicago that experience workplace violations related to wages. A study put out in 2010 by the Center for Urban Economic Development at the University of Illinois at Chicago (UIC) found that nearly half of low-wage front-line workers experienced at least one pay-related violation in the previous work week, losing an average of $2595 annually due to workplace violations, out of total earnings of $16,753.  The study estimated that just in Chicago front-line workers in low-wage industries lose upwards of $7.3 million per week as a result of employment and labor law violations.

The UIC study points to examples of workers being required to work overtime or off-the-clock without pay, being denied meal breaks and their own tips, or simply never receiving pay for hours that they have worked. As a result of wage theft, workers can’t afford to pay their bills and support their families.

Like other workplace violations or instances of workers affected by poor job quality, the effects of wage theft reach beyond individual workers to the communities and economies in which they live and participate.. Workers are consumers, and when they don’t get paid, local businesses suffer from lost income, too. Alderman Ameya Pawar, who sponsored the Chicago ordinance along with Mayor Rahm Emanuel, Alderman Emma Mitts, and Alderman Danny Solis, said the ordinance contributes to rather than hindering Mayor Emanuel’s goal of making the Chicago “the most business-friendly city in the country.” Said Pawar, “The $7 million lost a week in wage theft could be spent in shops and to pay wage taxes.”

As it protects workers, the ordinance also helps to ensure that ethical businesses are not forced to compete with those businesses that profit off the backs of workers whose wages they steal, notes labor group Arise Chicago. Arise also notes that the issue disproportionately affects African Americans, who are 27 times more likely to have their wages stolen than their white counterparts, and immigrants, who are 1.5 times more likely than native-born workers to have their wages stolen.

The aims of this new ordinance are strongly supported by consumers, a new poll released by the National Consumer League released suggests. The survey found that the vast majority of consumers are upset by wage theft from restaurant workers. When consumers were made aware that servers may not receive their full tips when consumers pay with credit cards (due to the practice of management “tip skimming”), 89 percent said they were more likely to leave tips in cash. Consumers also expressed their support for improved job quality for restaurant workers, including earned sick days and fair wages.

As workers, policymakers, consumers, and ethical businesses in Chicago are celebrating this important step forward in the fight against wage theft, let’s hope the rest of the country is paying attention.  Elsewhere in the U.S., the fight for improved job quality for low-wage workers continues.

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