Worker advocates welcome St. Paul’s new wage theft law

Supporters of a measure to crack down on wage theft were pictured during a rally at the Minnesota Capitol in 2019.

St. Paul will have a new wage theft ordinance on the books Jan. 1.

The measure, pushed by Mayor Melvin Carter and co-authored by all seven members of the City Council, drew praise from labor leaders and worker advocates as a step toward more robust, efficient protections for people working in the capital city.

Construction and service-industry unions, in particular, pushed city officials to add wage theft to the scope of its labor enforcement work.

At a public hearing on the ordinance in October, Carpenters Local 322 member Saben De Smet called wage theft a “competing business model” for too many developers and non-union contractors in his industry.

“Here in Minnesota, a construction contractor using a wage-theft model can underbid other contractors – whether union or non-union – by up to 20%,” De Smet told council members. “This is because they avoid paying worker compensation, unemployment insurance and other costs associated with being above board.

“This is both a leveling of the playing field and a human-rights issue for us.”

Wage theft has come under increased public scrutiny in recent years, after a 2014 report by the Economic Policy Institute estimated that it costs U.S. workers more than $50 billion annually. In Ramsey and Hennepin counties alone, construction workers lose $3 million to wage theft each year, according to a 2022 report authorized by the county attorneys offices.

“If someone was to shoplift or steal a car, you’d expect them to get arrested or get in trouble,” Ironworkers Local 512 member Nick Petrucelle, a co-chair of Minnesota’s Labor Council for Latin American Advancement, told council members. “But employers, they can rip off their employees, they can steal their wages, and it’s really hard to do anything about it.”

St. Paul’s new ordinance largely aligns with state legislation passed in Minnesota five years ago. Hailed at the time as the nation’s toughest wage theft law, it gave state regulators and the Attorney General new powers to investigate wage theft and created stiffer penalties, both civil and criminal.

While St. Paul’s ordinance does not create new requirements for employers, it does complement the city’s unique minimum wage and earned-sick-and-safe-time laws, advocates on the city’s Labor Standards Advisory Committee (LSAC) said.

“City staff should be able to resolve all of these issues together in one package,” LSAC member Rick Varco, political director for SEIU Healthcare Minnesota and Iowa, told council members.

Varco noted that city investigators pursuing a minimum-wage complaint are well positioned to identify other forms of wage theft, too. But without an ordinance on the books, the city must turn the matter over to state regulators.

“This is better for workers who don’t have to navigate one more bureaucratic maze,” he said. “It is better for employers, especially those who fail through ignorance or capacity issues, to have one stop that can get them back on the right track.”

The city’s Department of Human Rights and Equal Economic Opportunity (HREEO) will begin handling wage theft complaints when the new ordinance takes effect Jan. 1.

Wage theft occurs any time employers fail to pay wages employees are legally entitled to, including paying below minimum wage, not paying overtime, requiring work without pay, denying legal breaks, misclassification, withholding tips, failing to pay fringe benefits and making illegal payroll deductions.

“Wage theft is one of the largest types of theft in our country and is a pervasive and systemic problem throughout Minnesota,” St. Paul Regional Labor Federation President Kera Peterson said. “It affects workers in all sectors of our economy. This ordinance helps to make workers in Saint Paul more secure and helps level the playing field for employers who are following our state laws and local ordinances.”

– Michael Moore, Union Advocate editor