By COLIN STAUB
Employers who intentionally withhold wages totaling more than $10,000 could be taken to criminal court under an agreement in development between state labor regulators and the Multnomah County District Attorney’s office.
Oregon’s Bureau of Labor & Industries (BOLI) signed a memorandum of understanding with District Attorney Mike Schmidt on March 7. It’s not binding and isn’t legally enforceable, but it indicates both parties intend to enhance enforcement of wage and hour laws.
No cases have been referred for prosecution yet. But BOLI Wage & Hour Administrator Laura van Enckevort said she hopes to have at least a few cases identified for referral to the DA’s office in September, and definitely before the end of the year.
Employers could face felony charges
Schmidt says he was interested in tackling wage theft even before voters elected him in May 2020. He draws a connection between wage theft and public safety.
“When workers aren’t paid and they can’t bring home a paycheck, then that hits food on the table, the electric bill, the school supplies, that hits everything, and that can destabilize entire communities,” Schmidt said. “When I think about public safety, the thing that I think makes us the most safe is when communities are healthy and thriving. If you look out across Multnomah County, the places with the greatest economic disparity are the places we see the most criminal challenges.”
Schmidt says he’s heard several first-hand accounts from victims of wage theft since entering office. In one case, a man came to Schmidt to advocate on behalf of a group of Portland laborers who weren’t being paid by a contractor.
“They got to the first round of checks, and they bounced,” Schmidt said. “The second round of checks, and they bounced. They got to the third round, and he promised a bag full of cash. And then he showed up with an empty bag. He kept stringing them along until they finally walked off the job.”
Even though wage theft is a crime, if a worker calls the police to report it, police are likely to tell them it’s a civil issue, and the worker will end up going through BOLI’s wage theft process. BOLI investigators review payroll records and other evidence, and if the wage theft is proven, BOLI orders the employer to pay back wages, and sometimes a fine as well. The timeline from initial claim to penalty can vary from several months up to multiple years. So for an unscrupulous employer, wage theft can be a gamble that, at worst, delays wage payments with a modest fine. And under BOLI’s current practice, civil penalties can only be issued to the employer business entity, not the business owner personally. If a claim is filed against an LLC that then closes, BOLI doesn’t have an avenue to pursue the claim.
The Multnomah County-BOLI agreement adds a new deterrent — criminal prosecution of unscrupulous business owners. The agencies are still developing the criteria for which cases will be referred for prosecution. Schmidt said they’ll begin with wage theft of at least $10,000 where intent can be proven. Under Oregon law, theft of more than $10,000 is a felony punishable by up to 10 years in prison and a fine of up to $250,000.
“I think there’s a very big difference between having a judgment from BOLI saying you owe so many thousands in civil penalties, versus facing potential jail time,” said van Enckevort, the BOLI wage and hour administrator.
BOLI agents learn to do police work
For a criminal case, prosecutors will need to prove beyond a reasonable doubt that an employer intentionally withheld workers’ wages. That means BOLI investigators must bring sufficient evidence to the DA’s office, and they’re being trained by Multnomah County prosecutors right now. Schmidt said the training will help investigators approach cases the way police investigate a crime.
“If you get stopped in a stolen car, the police officer is going to ask you some questions: Where did you get this car? How long have you had it? Who did you get it from? Why is there a screwdriver in the ignition? Those are all questions that help us get to whether or not you knew the car was stolen and whether you should be driving it,” Schmidt said. “Same thing when it comes to employers: We’re going to want to ask some questions.”
BOLI investigators will be asking why workers aren’t getting paid, whether they’re indeed entitled to those wages, and whether the employer knew about the wage theft, for example. Working with the DA’s office, they’ll also have the ability to subpoena bank records.
As of early August, BOLI had 227 open wage claims, van Enckevort said, with a number of additional claims in the initial screening phase before being investigated. She said the agency has seen a big uptick of claims recently, largely because BOLI made the filing process more accessible to workers. Under changes directed by Labor Commissioner Val Hoyle, the agency removed a department limitation on how quickly workers had to file claims after theft occurred. And it increased the maximum recoverable amount from $10,000 to $15,000.
As for whether the DA’s office has the resources to take on this additional work, Schmidt says that’s one reason they’re starting with limited criteria that will apply to a small number of cases. Once they prosecute a few cases, they’ll have a better idea of the resources needed to maintain and expand the effort.
The Multnomah County District Attorney is the first in Oregon to pursue criminal enforcement of wage theft, but van Enckevort said the Clackamas County District Attorney’s office has had initial conversations with BOLI about a similar arrangement.
The union-backed think tank Economic Policy Institute reported last year that district attorneys in at least 15 states had brought criminal charges against employers for wage theft or other workplace issues. The report noted a small but growing number of district attorneys are creating labor units specifically to prosecute employer crimes against workers.