By Jane M. Von Bergen, Inquirer Staff Writer
Shannon Schuler's pay at the beauty salon Tommi's changed…
For a month after she started at Tom and Nikki Wong's upscale beauty salon in Center City, Shannon Schuler received regular paychecks, but then the payments started coming in cash, then sporadically, and then hardly at all.
Schuler would have quit, but she didn't think she could find another job, especially in the recession.
Tom and Nikki Wong, the owners of Tommi's Lifestyle Boutique on Chestnut Street, also hired photographer Kateri Likoudis to beef up their wedding business.
Same pattern for her, a few short payments, then sporadic cash, and then hardly anything: "I told them I can't afford to work here anymore," Likoudis said.
"My student loans were in default. I had a medical bill that had tripled because I hadn't paid it. I was living off cans of beans. I couldn't make credit card payments, and I had to borrow money from my ex-boyfriend to pay my rent.
"They owed me enough money that I was afraid to leave," she said. "I kept thinking that if I stayed, I'd get paid."
Wage theft is a perennial problem, but tough economic times add complications.
In a good economy, unpaid workers will cut their losses more quickly, assuming they can find another job. But a recession makes people hang on longer in hopes of getting paid, partly because they see no better alternative, say lawyers who have been representing plaintiffs in these cases for years.
At the same time, companies may also be struggling, exacerbating the situation.
"Business was doing bad and is still doing bad," Nikki Wong said, explaining why Schuler, Likoudis, and some of their coworkers didn't get paid. She said she expects an investor to put money into the company so she can pay them soon.
Wage theft happens in many sectors, particularly those that pay low wages, have few workers at any given location, and are not easily organized by unions, according to a 2010 report written for the U.S. Department of Labor by Boston University economics professor David Weil.
Undocumented immigrant workers are particularly vulnerable because they are afraid to complain, advocates say. (In enforcing these cases, the U.S. Labor Department does not ask about immigration status.)
Cooks, dishwashers, waiters, landscapers, janitors, hotel maids, nannies, residential construction workers, and car-wash workers are among the employees most vulnerable, according to a 66-page study conducted jointly by the UCLA Institute for Research on Labor and Employment, the National Employment Law Project in New York, and the Center for Urban Development in Chicago.
In Pennsylvania, the U.S. Labor Department has set up a separate initiative just to look at wage theft in hotels and motels.
A particular wrinkle that often shows up in residential construction is misclassifying individual trades people as independent contractors - each worker becomes his own boss, ineligible for overtime.
Technically, wage theft takes many forms - failure to pay minimum wage, failure to pay overtime after 10- to 12-hour days, failure to provide paid breaks, off-the-clock work at the beginning or end of a shift, and often, a simple refusal to pay a last check when the worker leaves.
"If you complained about the pay, you were likely to get fired," said lawyer Nadia Hewka at Community Legal Services in Philadelphia, an organization that represents low-income people and is representing the employees of Tommi's Lifestyle Boutique.
A trend in employment toward outsourcing and subcontracting work makes it more difficult for employees and for government enforcement agencies such as the U.S. Labor Department to pin down who is actually responsible for making payroll.
Academics call this the "fissuring" of the workforce.
"Fissuring" is exactly what caused a wage problem for a 28-year-old South Philadelphia woman from Mexico and her coworkers at the Dave & Buster's nightspot on Columbus Boulevard near Penn's Landing.
Dave & Buster's hired Majestic Cleaning, of North Bellmore, N.Y., in Nassau County, for janitorial work. But workers received checks from a subcontractor, "Victor Valencia DBA The Faraon General Maintainace Servi," misspelled just that way.
Majestic had subcontracted with the Faraon company to clean the Dave & Buster's in Philadelphia.
Like her coworkers, the woman worked 60 to 65 hours a week for seven days a week, cleaning from midnight to between 9 and 11 a.m. each day. She was paid $750 every two weeks from February until November 2010, she said.
Even without overtime, that comes to between $5.77 and $6.25 an hour, well below Pennsylvania's $7.25 hourly minimum wage.
The U.S. Labor Department intervened and was able to get her about $4,000 in back wages, which did not represent all that the woman was owed and did not include any penalties, Hewka said.
Other workers also received payment through the U.S. Labor Department. Hewka suspects that the subcontractor simply pocketed the difference between what Majestic paid him and what he paid the workers.
Not our fault, was Majestic's response, although Majestic settled with the U.S. Labor Department for the workers.
Wage theft is far from unusual in the restaurant business, according to a study done in 2009 by the National Employment Law Project.
One man, an undocumented worker from Mexico, worked his way up to $10 an hour, paid in cash for six days of kitchen work a week at a popular Philadelphia restaurant, now in bankruptcy.
It was a good job, but as business declined, the gap between paydays widened, with the Mexican workers losing out more than other employees, said the cook, who estimates he is owed $10,000.
A lawyer for the restaurant did not comment, instead promising to pass a message to the owner. The owner did not call.
"They would pay me one week, and then in two weeks they wouldn't pay me," the worker said, speaking through a translator.
Then, on a Thursday, the business shut down. "I asked, 'What's going to happen with my money?' and he told me he was going to pay me on Saturday. So I arrived on Saturday and he told me he didn't have the money and to talk to his lawyer."