Enforcing San Mateo County’s new minimum wage

The Board of Supervisors took a massive step in supporting thousands of low-wage workers. Thousands of minimum wage workers, from the farm workers who produce our food to the baristas who make our coffee, will receive a $2,080 annual raise. In addition, raises in the minimum wage incentivize other companies paying slightly above the minimum wage to raise their wages to stay competitive. The board has delivered tangible assistance to low-wage workers who suffered the brunt of economic hardships caused by the pandemic.

Now comes the hard steps of implementation and enforcement. Given the distressing statistics on wage theft, strategic enforcement is required to ensure this ordinance is the win for workers it promises to be.

Wage theft describes labor infractions such as minimum wage, overtime and misclassification violations. Essentially, employers exploit workers by withholding rightful compensation. This phenomenon hurts both workers and taxpayers. The National Employment Law Project found that 16% of U.S.-born low-wage workers face minimum wage violations. The statistics for minority and marginalized communities are far worse. For documented immigrants, that number climbs to 24%, while for immigrants without authorization, it’s a staggering 37%. In addition to the impact on workers, wage theft causes significant ramifications to taxpayers through losses in tax revenue and increased use of public assistance. While the practice is illegal, it’s often committed with impunity due to the coercive nature of employer-employee relationships. Victims of wage theft have to wrestle with the possibility of losing their job or even immigration status if they report it.

In San Mateo County, labor enforcement is quite complex and inaccessible for workers. The state, specifically the California Division of Labor Standards Enforcement, enforces all state and federal labor laws. Their enforcement strategy is primarily reactive, investigating complaints, rather than proactively examining workers’ employer records. Municipalities that institute labor laws supplementary to the federal and state government are responsible for their own enforcement. The majority of cities in San Mateo County that have enacted a minimum wage ordinance currently outsource their enforcement to the City of San Jose’s labor enforcement agency. This outsourcing method is relatively ineffective compared to a centralized enforcement agency at the county level.

A distant agency in San Jose with a complex claims process is a barrier for workers seeking to report wage theft. Other local counties such as San Francisco and Santa Clara have each created an Office of Labor Standards and Enforcement to enforce their employment laws. If San Mateo County created its own centralized OLSE, the agency could partner with local worker centers, unions and community groups to cultivate trust with workers. This trust element, which is primarily established through strong community relationships, is key to effective enforcement strategy, especially for marginalized communities.

One obstacle municipalities face in creating an OLSE is funding. San Francisco allocates $525,000 a year to running and operating its labor enforcement division. So where could San Mateo County find the funding for its own OLSE? Two sources: 1). Revenue produced by the OLSE from penalties, and 2). Diversion of funds currently being spent outsourcing enforcement to the city of San Jose. In 2019, the San Francisco OLSE collected $868,387 in penalties, exceeding its budget of $525,000. Though the San Francisco OLSE is economically self-sufficient, this level of productivity is a product of nearly 20 years of enforcement. Municipalities like San Mateo County can expect a slight initial cost in creating an OLSE, but the loss is short term. Over time, OLSEs have the capacity to fund themselves. In addition, 70% of cities already pay for enforcement, so the primary source of funding is a question of redirecting those expenditures to a new centralized OLSE.

San Mateo County has an economically-feasible, academically-credible opportunity to proactively protect workers’ rights. In creating an Office of Labor Standards and Enforcement, San Mateo County can ensure the effectiveness of the recently-passed minimum wage ordinance and prevent wage theft in our community.

Casey Platkin is a first-year undergraduate student studying at the Industrial and Labor Relations School at Cornell University.