Wage Theft’s Top Cop

At around 7 p.m. on April 4, along a drab commercial stretch outside San Diego, a team of four U.S. Marshals and a state labor department investigator named Craig Eastep intercepted and arrested local restaurateur David Dadon as he left his hotel room. Two days earlier, federal agents had arrested Dadon’s son Barry. The pair had formerly co-owned the State Street Grill, which was the subject of a lengthy wage theft investigation by California’s labor department.

A member of California’s new unit of gun-toting officers charged with investigating criminal violations of labor code, Eastep had been examining the Dadon family restaurant for the past year, his investigation revealing hundreds of thousands of dollars in alleged unpaid wages. The father and son were charged with a number of crimes, including grand theft of labor.

(When contacted by In These Times, Barry Dadon’s attorney said that his client maintains that ​“he never cheated or stole from any employees,” and that his father made the business decisions at the restaurant. David Dadon could not be reached for comment.)

Employment law investigators handcuffing and hauling exploitative bosses into jail is hardly a common occurrence. Yet California may be changing this, thanks largely to the efforts of Julie A. Su, the state’s new labor commissioner. Since Gov. Jerry Brown (D) appointed her in 2011, Su has quietly reworked the California Department of Industrial Relations’ Division of Labor Standards Enforcement (DLSE) into what could be the most aggressive and effective state labor law enforcement division in the country.

​“Employers who break the law have learned that the chances of getting caught are slim and the costs, if they are caught, are marginal — the cost of doing business,” Su tells In These Times. ​“It’s my job to change that calculus and we are finding every efficiency possible to maximize the effectiveness of our division.”

Under Su’s management, DLSE has streamlined its administration, cut waste and trained investigators. These efforts multiplied its enforcement capabilities, Su says, allowing it to launch a proactive campaign to tame the state’s widespread violations of employment law. The Department of Industrial Relations (DIR) now stands in sharp contrast to other state labor departments across the country, many of which have seen their bud gets shrink while the workforces they police have ballooned, leaving many departments with swelling caseloads and weakened morale.

A top priority for Su’s administration is to stamp out wage theft — the deliberate non-payment of money owed to employees. Last year, Su announced the formation of the Criminal Investigation Unit (CIU), a team of six armed investigators tasked with pursuing exploitative employers. Since then, the division has filed 10 felony wage-theft cases against employers in the state, including the State Street Grill.

In 2012, the DLSE’s Bureau of Field Enforcement (BOFE) assessed more than five times the amount of owed minimum wages and more than seven times the amount of owed overtime pay than in 2010 — the year before Su took office — despite the fact that field enforcement staffing levels increased by less than 5 percent from 2010 to 2012. Both of those totals made 2012 by far the highest volume year ever for DLSE’s investigators.

Su made headlines in January when her investigators fined Quetico, a warehouse operator, $1.3 million for systematically underpaying workers. (The company rejects the charges and has filed an appeal; a hearing is scheduled for September.) Each month since, Su has rolled out high-profile fines against major California companies.

In recent years, the U.S. Chamber of Commerce has opposed stronger employee protections. Yet Su has won broad support from the state’s major business associations, including the California Chamber — allies that Su identifies as essential to her success. ​“I believe very strongly that there’s a lot of common ground between what’s good for employers and what’s good for workers,” says Su. ​“Good employers know that their profitability, stability and long-term success are all tied to the continual well-being of their workers. ”

Su has emphasized to the business community that in the absence of strong enforcement, unscrupulous employers gain an unfair advantage by mistreating workers. This, she says, undercuts upright businesses and creates a structural tendency toward illegal and exploitative business practices.

​“We are very supportive of her efforts to create a more level playing field for all of our employers who are trying to comply with the law,” says Jennifer Barrera, a policy advocate at the California Chamber, which is the state’s largest business association. ​“She does a great job of communicating exactly what she is doing and has created a level of transparency that removes the suspicion that the labor commissioner is coming after anyone and everyone.”

Partially because of the business community’s input, the Bureau of Field Enforcement is taking extra care not to impose inspections on law-abiding businesses. To that end, the division has improved its targeting strategies and is spending extra energy in the initial phase of investigations to make sure a company is worth examining.

​“It’s an example of emphasizing quality over quantity,” says Su. That means more pre-inspection work, such as cooperating with labor, community and business groups to identify targets, surveilling businesses and conducting employee interviews off-site (where they can freely speak without fear of retaliation), and using information from wage-theft claims to target employers for broader investigation. The result, says Su, has been an increase in the percentage of employer inspections that lead to citations. In 2012, the department’s ratio of citations to inspections was 80 percent, compared to an average of 48 percent between 2002 and 2010.

Employers often punish employees who share information with authorities during a workplace investigation, which can discourage employees from cooperating and prolong, or even thwart, investigations. To address this, in addition to conducting off-site interviews, Su’s administration cut out several intermediary steps for workers seeking to file retaliation complaints.

In the past, employees who believed they had been retaliated against for cooperating with a BOFE investigation had to bring their complaint to a separate department, rather than the BOFE deputy conducting the investigation. Now, when a worker approaches a BOFE investigator to report retaliation, the investigator works with other DLSE deputies to ensure that the complaint is assigned to a retaliation investigator and dealt with immediately. Su also reworked the department’s complaint forms to include sections where witnesses to retaliation could confidentially describe their workplace experiences without any fear of the information making it back to management.

Su’s effort to rein in management retaliation is one of the numerous steps she’s taken to streamline the division. When asked to describe one example of a key reform that she’d implemented, Su listed nine categories — and various subcategories — of changes she’s made. The point seems clear: There’s nothing simple about reforming a government agency. ​“It’s been an arduous two years for us,” says Su.

Although Su isn’t an expert on the problems facing other labor departments around the country, she does think her administration’s general approach can be replicated. Her main guiding principle seems to be a relentless critical examination of how things are done. ​“It’s about never thinking you should continue doing something just because that’s the way it’s been done before,” says Su. ​“That is one thing I never want to hear.”