Maria Leon, a single mother of three and longtime Gage Park resident, says she worked for years in two Chicago restaurants for less than the city’s minimum wage.
Last year, she sued the restaurants, which have the same owner, alleging they were violating city, state and federal wage laws. The two sides reached a settlement, but Leon believes it’s important to speak up on the matter.
“You can’t be silent. There are a lot of businesses who are doing this and we just sit there and take it because we need to work. But there are laws in place to protect workers,” said Leon, 42.
Enforcement of Chicago’s minimum wage ordinance — which passed exactly three years ago on Dec. 2, 2014, and gradually raises the wage to $13 an hour by 2019 — remains a work in progress. Some legal rights activists and labor experts say the city needs to dedicate more staff and resources to recovering wages for underpaid workers and holding businesses accountable. City officials say they’ve shifted to a more aggressive approach this year and results will prove out over time.
But there’s also this massive loophole: The city considers nearly 100 professions, including private security firms, to be exempt from the city wage ordinance because they’re regulated by the state. That means those businesses only have to pay workers the state’s minimum wage, $8.25 an hour, instead of the city’s, which is currently $11 an hour. This came as news to the state.
“(The Illinois Department of Labor) is just learning of the city’s new interpretation of its own local minimum wage ordinance. Should the city decide to exclude certain workers, the state minimum wage still applies,” Ben Noble, spokesman for the state Department of Labor, said in an emailed statement Thursday.
City officials, meanwhile, say they’ve been interpreting the ordinance this way all along. As a result, dozens of wage complaints filed with the city against state-regulated businesses haven’t led to investigations.
In total, almost 550 complaints about minimum wage violations have been filed with Chicago’s Department of Business Affairs and Consumer Protection since the law went into effect in July 2015. Only about 140 — or roughly one-quarter of the complaints — have led to investigations. People who make initial complaints with the city often don’t follow up with the necessary paperwork to trigger an investigation, according to data provided by the city.
The fact that only 1 in 4 complaints are investigated is “troubling but not surprising given the squeeze down on public resources and budget problems,” said John Bouman, president of the Chicago-based Sargent Shriver National Center on Poverty Law, who co-chaired the task force appointed by Mayor Rahm Emanuel to look at raising the city’s minimum wage in 2014.
“It’s not magic,” Bouman said. “You gotta pay for this stuff.”
He said the business affairs department could be more “aggressive” about investigating possible violations.
“The employers know that they have a workforce that is intimidated for one reason or another — they need to work, so they’re unlikely to make waves,” Bouman said. “So they cheat them.”
As the head of her household, Leon said she knew she was being paid less than minimum wage at Jam ‘n Honey on the city’s North Side and Franconello in West Beverly on the Far South Side, but she didn’t want to stir up any trouble. After she confronted her boss about tips she was owed, Leon said she was fired, hence the lawsuit.
Thomas Carroll, attorney for the restaurants’ owner, Frank Ruffalo Sr., said his client denied the allegations and that the two sides had reached an amicable settlement with no admission of liability.
‘Time for the gloves to come off’
Every year, Chicago’s Department of Business Affairs and Consumer Protection receives thousands of complaints on matters ranging from rogue taxi drivers to home repair scams. But staffing levels have remained basically the same since the minimum wage ordinance went into effect in July 2015.
In 2015, the department had 191 full-time employees and a $19.3 million budget. The budget approved for 2018 allows for 193 full-time employees and about $20.3 million in total funding.
Only a sliver of that workforce is looking into minimum wage complaints. Within the department, there are four investigators assigned to investigate minimum wage complaints, up from two last year, out of 42 total investigators, said Commissioner Rosa Escareno, who took over the post in July.
Does the department need more money and staff to properly enforce the ordinance?
“Certainly, more investigators would help, but what’s most important is strategy. … If the complaints continue to grow, I’ll be the first to allocate more resources where needed and I won’t be shy about asking for more,” Escareno said.
For the first two years, the city was more focused on educating businesses; beginning this year, that approach has shifted to more aggressive enforcement, said Deputy Commissioner Barbara Gressel. To date, the city’s recovered more than $213,000 in lost wages for underpaid workers but has issued no fines for companies. That too could change going forward, she said.
“It’s time for the gloves to come off,” Gressel said.
Earlier this year, the department changed its process to allow investigators to issue subpoenas for business records for all employees — not just the person filing the complaint, Escareno said. That’s sped up the process of investigating the complaints, she said.
To encourage more people to follow through with the paperwork needed to start an investigation, the department also simplified the complaint form earlier this year. It’s available in English and Korean as of now, but not Spanish. The city’s in the process of making the form available in other languages.
Bob Bruno, a professor of labor and employment relations at University of Illinois at Chicago, said more improvements to the city’s enforcement strategy are needed, such as a unit that’s solely focused on minimum wage enforcement, with staffers that are less dependent on complaints coming to them and more proactive in seeking out noncompliant businesses.
Random sample audits of businesses and independent study of the city’s enforcement could also help, Bruno said.
Arise Chicago, a nonprofit workers’ rights organization, is drafting an ordinance to establish an office of labor standards that would be housed within the business affairs department to enforce all of the city’s employment laws, including minimum wage and paid sick leave. The nonprofit hopes to work with aldermen and propose the ordinance to the City Council early next year, said Adam Kader, worker center director for Arise Chicago.
“The problem is that City Council passed these laws and decided they should be handled by the BACP but did not then resource the BACP accordingly,” Kader said. “You can’t expect to task an agency to do more work without resourcing them.”
The exemption loophole
Michelle Gunn, a South Shore resident, was drawn to the glitz and glamour of working as a security guard on the set of “Empire,” a popular television series filmed in Chicago.
But at $9 an hour, Gunn was earning less from Stevens Security — the firm contracted to secure the “Empire” set — than Chicago’s minimum wage. Gunn, 51, said she was outspoken about not being paid minimum wage, despite working more than 40 hours a week within city limits, and eventually sued the security firm.
Scott Cruz, an attorney with the Clark Hill law firm who represents Stevens Security, disputed allegations that the company violated minimum wage laws, saying Gunn was an independent contractor, not an employee.
But according to the city, private security firms like Stevens are in one of almost 100 professions — including barbers, locksmiths and nail technicians — regulated by the state and therefore considered by the city to be exempt from Chicago’s home rule regulation.
Christopher Wilmes, Gunn’s attorney, called the city’s interpretation of its ordinance “incredibly narrow” and said that would also mean the city’s couldn’t require such professions to follow other city ordinances like building and zoning codes.
That argument ignores a long history of the state having considerable authority over labor law, Escareno said. Since Chicago’s minimum wage law was implemented, the city has interpreted state law to mean that for certain occupations the conditions of employment are regulated solely by the state, Escareno said, whereas other local laws, such as building and zoning codes, aren’t relevant to employment and are enforceable by the city.
Every day, Wilmes’ office — the law firm of Hughes Socol Piers Resnick & Dym — receives calls from workers who say they aren’t being paid minimum wage or overtime pay, he said. They turn most of those potential clients away, often because the employers are too small or can’t pay, effectively making it pointless for a private attorney to sue them, Wilmes said. Other times, employees have signed arbitration agreements that make it difficult to challenge their employers in court, he said.
These limitations of private law practice are why the city needs to step up and better protect workers, Wilmes said.
The city’s working on it, Escareno said, and willing to listen to ideas on how to improve.
“My own personal opinion is workers who are paid the least amount are our most vulnerable residents, most fearful and possibly the least educated,” Escareno said. “The more people we can help, the happier we are.”
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