San Jose Looks to Strengthen Wage Theft Ordinance

To prevent companies from stiffing workers out of their legally entitled pay, San Jose will consider bolstering its wage theft policy.

The City Council on Tuesday will vote to revise its existing ordinance, which already requires public contractors and subcontractors to comply with all wage and hours laws.

Wage theft happens any time an employer cheats workers out of required pay for every hour they work. That happens any number of ways—by companies paying a fixed rate that fails to compensate workers for all the work they put in, by deducting “fees” or stealing tips, by misclassifying people as independent contractors or managers or denying meals and breaks.

Under the proposed changes, anyone doing business with the city would have to disclose all wage theft judgments, even if the violations related to another job. Failure to notify the city would be considered a material breach of contract. If that turned out to be the case, the city would then have the authority to withhold contract payments until the company makes good with its own workers.

Also in the works is a plan to leverage business permits as an enforcement tool. Already, the city can deny an operational permit to companies that knowingly lie, commit crimes substantially related to their line of work or become a public nuisance.

Public Works director Barry Ng suggests adding another ground for denial: the violation of wage and hour laws and unpaid judgments.

The proposals coming before the council garnered support from both labor and business groups. The San Jose Silicon Valley Chamber of Commerce wrote a letter of support for the revisions, calling wage theft prevention a “moral imperative.” Companies running afoul of the law make it harder for their law-abiding counterparts to compete, the letter added.

Council members Ash Kalra, Raul Peralez, Magdalena Carrasco and Don Rocha wrote a memo endorsing the revised ordinance and urged the city to team up with Santa Clara County on the effort. Though California has some of the strongest wage theft laws in the nation, they said, there’s a lack of meaningful enforcement.

“In fact, 83 percent of employees who receive a favorable judgment from the state Division of Labor Standards Enforcement receive zero payment from their employers,” the council members wrote. “We can and must do better.”

Over the past decade, San Jose has identified 700 wage violations involving 3,500 workers under city contract. That oversight helped recover $3.4 million in back wages and $2.1 million in liquidated damages assessed to 290 contractors. Two contractors have been blacklisted from doing business with the city because of the egregious nature of their violations.

Under the city’s minimum wage enforcement program, which is complaint-driven, 52 complaints have been filed as of December. Forty-four have been settled, while eight remain under investigation. The city found 10 businesses—all in the retail and restaurant industries—in violation and 145 workers underpaid a total of $37,000.

Studies on wage theft show that immigrant and low-wage workers bear the brunt of wage theft. According to the National Employment Law Project, the crime is pervasive and chronic, found in virtually every industry.

More from the San Jose City Council agenda for May 24, 2016:

  • San Jose will team up with the Santa Clara Valley Habitat Agency to protect the region’s thriving burrowing owl population. This species of ground-dwelling birds had been on the decline for years until the city designated 180 acres as burrowing owl habitat in 2012. Thanks to the habitat plan, that downward trend has reversed.
  • Complying with a new state law, the city will streamline the permitting process to make it easier for property owners to install electric car charging stations.

WHAT: City Council meets
WHEN: 1:30pm Tuesday
WHERE: City Hall, 200 E. Santa Clara St., San Jose
INFO: City Clerk, 408.535.1260

Jennifer Wadsworth is the former news editor for San Jose Inside and Metro Silicon Valley. Follow her on Twitter at @jennwadsworth.


  1. Does this mean that Downtown Streets (operating under a City of San Jose contract) will need to pay homeless workers instead of donated gift cards or other cash equivalents?

    Anthony King and other homeless advocates have bitterly complained about this practice.

  2. I’m beginning to think I may have unknowingly suffered a concussion as I am seriously confused. Moral imperative? From a city that, with support from the chamber of commerce, pulled out all the stops — spending millions of dollars, in its attempt to dishonor its labor contracts with its employees and its fiduciary duties to its retirees? What a load of political crappola.

    • Frustrated, It’s called Do As I Say, Not As I Do.

      Don’t forget that the SJ public safety employee pension board hasn’t made financial disclosures in years (at least not on its web site) and their estimated returns are absurdly high. SJI wrote a critical article a few years ago, but nothing appears to have changed.

      Guess who gets stuck with the check when the music stops.

  3. I have a better Idea let’s just run all the employers out of San Jose and turn the city into a bedroom community for Milpitas and Morgan Hill!

    • Well perhaps running all the employee’s out of town then and replace them with robots.
      How’s the drone working for the SD?

  4. Crazy Buffet in Sunnyvale? Wasn’t that the place that was busted for human trafficking of its workers around 2006??

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