Chicago passes new wage theft ordinance

Chicago businesses that commit wage theft may have their business licenses denied or revoked when the city’s new wage theft ordinance goes into effect. The new ordinance, passed by the City of Chicago on January 17, was the result of a campaign organized by ARISE Chicago, a faith and labor solidarity center that helps low-wage workers organize and fight for a better life.

The new ordinance, which becomes effective in June, allows the city’s Commissioner of Business Affairs and Consumer Protection to deny or revoke a business license when the business has been judged by a court or an administrative hearing to have violated state or federal wage laws.

In Chicago and across the US, wage theft, such as paying a worker less than the minimum wage, not paying overtime when required, and non-payment of wages,  has become a serious problem especially for low-wage workers.

““I worked for over 55 hours a week for five years at a grocery store. And I never received overtime pay,” said Liliana Baca, a member of Arise Chicago. “This is my wage theft story. But I’m not the only one who has a story. So many people have had their wages stolen, and this ordinance will help them recover their wages and prevent wage theft from happening to other people.”

A study by the Center for Urban Development at the University of Illinois at Chicago shows that Baca’s story is not unique.

Researchers surveyed 4,387 low wage workers, including 1,140 in Chicago and surrounding Cook County suburbs. Of those surveyed:

  • 26 percent were paid less than the minimum wage
  • Of those paid less than the minimum wage, 60 percent were underpaid by more than $1 an hour
  • 67 percent were not paid time and one-half after working more than 40 hours a week
  • 23 percent were required to come to work before or stay after their assigned shift, and of these, 67 percent were not paid for hours worked out of shift
  • 45 percent did not receive pay documentation, so they had no way of proving whether their pay was incorrect
  • 15 percent were tipped workers who were not paid the minimum tipped worker wage

According to the study, there are an estimated 310,000 low-wage, front-line workers in low-wage industries in Cook County, about 25 percent of the workforce in Chicago and 12 percent in Cook County, and an estimated 146,300 wage theft violation a week in the Chicago area.

The study also identifies jobs in which wage theft is most common. Child care workers are the most common victims of wage theft. Other jobs where wage theft is common include, janitorial and ground maintenance work, cashiers, retail sales persons, and home health care workers..

Violations of wage laws were most common in private households and in person and repair services. Other high violation industries include retail and drug stores, grocery stores, and social assistance and educational private agencies.

The study estimates that Chicago area workers lost an annual average of $2,595 in stolen wages. Immigrants and workers of color are the most likely victims of this wage theft.

While helping low-wage workers recover stolen wages, the new ordinance also protects businesses that follow the law and pay their workers accordingly.

“I think this marks an important step in leveling the playing field for the many ethical business owners in our city,” said Chicago Alderman Ameya Pawar, who drafted and sponsored the ordinance.

According to David Launius, owner of We’ll Clean Car Wash, those business that pay overtime, adhere to minimum wage laws, and pay workers for all the time that they are required to be on the job, are at a competitive disadvantage over those who don’t play by the rules.

Launius supported the new ordinance and worked with ARISE Chicago to get it passed.

“This ordinance rewards businesses that are in accordance with employment law, and incentivizes wage stealing-employers to correct their ways,” said  Adam Kader ARISE Chicago’s Worker Center director. “Good jobs are the basis of strong communities. When workers receive their full paycheck, they spend more in their local communities, the government collects more taxes, and law-abiding businesses do not suffer from unfair competition.”


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