NEWS

Senate Democrats offer plan to stop Iowa wage theft

William Petroski
bpetrosk@dmreg.com

Dishonest employers are cheating Iowa workers out of an estimated $600 million annually in wages, and legislation is needed to fix the problem, two Iowa lawmakers alleged Tuesday.

State Sen. Tony Bisignano, D-Des Moines, chairman of the Senate Labor and Business Committee, was joined by Sen. William Dotzler, D-Waterloo, in proposing a bill to strengthen enforcement of wage laws. They cited a 2012 study by the liberal-leaning Iowa Policy Project that calculated the $600 million estimate. That number includes nonpayment and underpayment of wages, violations of tipping laws, unauthorized or illegal paycheck deductions, and misclassification of employees to avoid paying the minimum wage and overtime.

"Iowa's wage theft laws don't protect Iowa workers from being ripped off and don't protect honest businesses who pay their employees," Bisignano said. He called the situation shameful.

State Sen. Rick Bertrand, R-Sioux City, said Tuesday that he questioned the $600 million annual estimate for wage theft in Iowa, but he agrees wage theft is a problem for some Iowa workers. He said Senate Republicans are willing to work with Democrats on the legislation. He also suggested honest Iowa employers shouldn't be burdened with increased government regulations simply because a few Iowa employers are dishonest.

Bertrand said Republicans are looking at a proposal to increase enforcement of wage laws by Iowa Workforce Development. They are also exploring ways to put tools in place to help employees to get legal advice and other assistance in such cases, he added.

"At the end of the day I think we can come together and find a policy that helps the workers," Bertrand said.

Several Iowa workers spoke at an Iowa Capitol news conference in support of the proposed legislation, saying their employers had not paid them money they honestly earned.

Katie Wilson and Justin Banks, who had been servers at an Applebee's restaurant in Coralville, told reporters they were paid $4.35 an hour, but had expected to boost their hourly wage with tips. They said they and other servers for years were forced to pay 5 percent to 20 percent of their tips into a tip pool. They claimed that management has admitted taking the tips, which they described as a violation of state and federal laws.

"Applebee's was taking my hard-earned money. It didn't just happen to me. It happened to all of my co-workers," said Wilson, who worked for Applebee's for six years before leaving in October.

Banks, who was employed by for Applebee's for three years, remarked, "Here in Iowa, there are virtually no consequences" for wage theft. "This is not a racial or gender issue. Wage theft is an Iowa issue."

A manager at the Applebee's in Coralville referred a Des Moines Register reporter's questions on Tuesday to a corporate office. Tom Linafelt, an Applebee's spokesman, said 99 percent of Applebee's restaurants are owned and operated by franchisees, and neither Applebee's nor its franchisee — who owns and operates the Coralville restaurant — comments on personnel matters.

"With that said, team members are the lifeblood of the restaurant, and their compensation is competitive. All of our franchisees are obligated to ensure that they meet all legal requirements related to wages," Linafelt said.

Valentine Ruiz of Conesville, an immigrant from Mexico who has lived in Iowa for 23 years, spoke in Spanish through an interpreter. He said he won a judgment against a West Liberty company for $1,200 he was owed for welding work done in 2012, but he has yet to receive any of that money.

Dotzler said common-sense reforms would be provided in Senate File 39, which has been introduced in the Iowa Senate. It would require employers to keep a written record of the terms of employment; would not allow an employer to claim he or she "unintentionally" failed to pay employees; and would provide whistle-blower protections.

"Iowa's wage theft laws are so weak they are impossible to enforce," Dotzler said.

The Iowa Association of Business and Industry, which represents nearly 1,500 members statewide, has opposed the Democrats' wage theft legislation. Chairman Mark Hanwalt of Waverly said in a recent column that his organization strongly believes wage theft is wrong. But he said existing laws and regulations protect employees. The focus, instead, should be on providing the resources necessary for strong enforcement, he said.