Wage theft rampant, Center for Worker Justice empowers restaurant workers to get paid

Center for Worker Justice board members Sergio A-wan and Rafael Morataya lead a discussion Saturday about workers' rights under OSHA
Center for Worker Justice board members Sergio A-wan and Rafael Morataya lead a discussion Saturday about workers’ rights under OSHA

In 2015, the Johnson County Supervisors took the lead in the battle for a living wage, acting to raise the local wage in three steps to $10.10 by January 1, 2017. Now Linn, Polk, Wapello and other Iowa counties have joined the fight. But fair labor laws are only as strong as their enforcement. When these laws are violated in Iowa City, the Center for Worker Justice steps in and empowers low-wage workers to claim their rights.

Weak laws, understaffed agencies create gaps in enforcement

Current worker protections like the Fair Labor Standards Act and Iowa Wage Payment Collection Act rely on employees to report incidents of wage theft. Here in Iowa, we have only one full-time wage claims investigator for the entire state, leading to a slow and usually ineffective process where the majority of cases are closed with no resolution. There are no legal repercussions for employers who are caught withholding wages, other than being forced to pay the employee the money they are owed. In this system, an unscrupulous employer may calculate that it’s worth the risk to underpay an employee — because even if the employer is caught, they will not be fined.

Mazahir Salih of the Center for Worker Justice has seen the impact of this toothless legislation first hand and believes we need change.

“We need to pass a law against wage theft. Restaurant owners need to be held accountable. If there is a law where the employer was punished for this, they’re not gonna do it again.”

Legislation has been put forth in recent years by the Iowa State Senate to address these problems, but it has been blocked by opponents in the Iowa House, who have claimed it puts an undue burden on business.

Restaurant industry a major culprit of wage theft

As Iowa recovers from the last decade’s recession, the largest portion of job growth has been in the lowest-paying corners of the economy, such as the service sector. This is also true nationwide, with 34,000 new positions created in bars and restaurants in the past month, which is the most substantial growth in any area. A 2012 report by the Iowa Policy Project showed that the hospitality industry contributed 8% of Iowa jobs, but accounts for almost one in four FLSA violations and nearly one in five cases of back wages paid due to wage theft. This is clearly out of balance.

Undocumented workers and people of color experience higher rates of wage theft than their white and U.S.-citizen coworkers. Complacent resignation toward this commonplace discrimination pervades the restaurant industry, both here in Iowa and nationwide. A survey of Chicago restaurant workers by Restaurant Opportunities Centers United determined that while only 9-22% of workers surveyed earned a livable wage, there was also a $3.71 hourly wage gap between white and non-white restaurant workers.

Fancy restaurants are no exception when it comes to wage theft. Among professional line cooks in high-end restaurants, sweating through backbreaking, mentally exhausting 14-hour shifts with no breaks, no overtime pay, no holidays with your family, no health insurance and minimal wages, all while potentially being berated by a bullying boss, is considered a badge of honor, “paying your dues.” “Street cred” is the reward for busting your ass for nothing, and when it’s all you’ve got, you hold onto it like hell. This masochistic culture normalizes exploitation, leads to ostracism of those who dissent and claim their rights under fair labor laws, and contributes to underreporting of wage theft violations.

CWJ takes action

The Center for Worker Justice is an Iowa City-based organization that brings low-wage workers of all backgrounds together to learn about and advocate for their rights. In the nearly four years of the Center’s existence, CWJ has helped recover about $50,000 in unpaid wages. The majority of the wage theft cases have been reported by workers in the hotel and restaurant industry.

When CWJ receives a request for help resolving a wage theft issue, the worker must explain what happened and provide documentation such as clock-out slips and pay stubs, to prove that the wage theft took place. This can be a challenge for those who are paid “under the table” or are misclassified as contract workers and have no record of hours, but so far CWJ has successfully gathered enough information to move forward in nearly every case. Next, CWJ contacts the employer to hear their side of the story. The case is then brought before the CWJ members and they decide how to proceed. The CWJ board reviews the case, and if necessary, consults legal advisors to determine whether there is a clear violation of the law. A letter is delivered to the employer, and a delegation of CWJ members and allies go to the restaurant during service and try to have a conversation with management to resolve the issue.

This is almost always enough to recover the lost wages; however in rare cases, it may be necessary to file a complaint with the Department of Labor. One employer, Outback Steakhouse in Coralville, was so uncooperative that CWJ resorted to organizing statewide protests at every Outback location until the wages were finally recovered over four months later, according to Salih. The IWPCA requires wages to be paid within 12 days of the end of the pay period, but there is no penalty for employers who refuse to do so.

CWJ follows the same process for all wage theft claims, and doesn’t push workers to discuss their citizenship status, according to Salih.

“This person works here and he deserves to get paid and that’s it … At CWJ, we don’t ask. We are justice for everybody regardless of status. They can come and tell their stories, and everything is confidential.”

When workers don’t get paid, it affects us all

Wage theft has a ripple effect beyond the worker that is stolen from. Law-abiding restaurants are negatively affected by other restaurants’ wage theft, as they are forced to compete on an uneven playing field. Tax revenues are affected because when wages are unreported, they cannot be taxed. And when workers make wages that do not enable them to fulfill their basic needs, they are more likely to rely on public assistance, which tax dollars pay for.

A minimum wage is supposed to be just that: the minimum necessary to simply exist. When the poorest among us get a raise, it is generally spent immediately to meet basic needs, and those purchases support our local economy. If the idea of paying a couple dollars more for a cheeseburger so that the person cooking it (let’s call him Frank) can afford to eat one of the cheeseburgers at the end of his shift seems unreasonable, consider that if Frank cannot afford the cheeseburger, the restaurant does not get the revenue from Frank’s purchase. Instead, taxpayers subsidize Frank’s low wages by paying for his food stamps. Other businesses in town don’t get the money Frank would have spent to buy groceries, fix his car, replace his worn out kitchen clogs or finally go to the dentist.

Paying workers fairly is an investment in the restaurant

How does a restaurant create a constant, quality product, and reliable, engaging service? By having well-trained employees who feel like they’re part of something bigger than themselves. That is what sets great restaurants apart, and builds the regular clientele necessary to withstand the seasonal ebbs and flows of doing business in a college town. As wages fall, behaviors like theft, absenteeism, and problems with retention increase. These factors sabotage both the cost of inventory, and the skill and knowledge level of the staff.

Picture this scene: You walk into a restaurant, and nobody greets you at the door. A stressed waiter notices you, but can’t get to you right away and waves you over to a table. You wait 20 minutes to have a menu presented. You ask a question about the menu. The waiter says he’s not sure, he’s only been working here for two weeks, but he’ll ask the chef. You wait again. The waiter looks through his notes to try to answer your question. He returns and points at the menu, saying, “Did you mean this sandwich, or that one?” He returns to the kitchen. He returns to your table with the answer to your question. 40 minutes from the time you entered the restaurant, you order your sandwich. That’s 40 minutes wasted where another guest could have used the table. That’s a wasted opportunity to engage with a guest who could have potentially become a regular customer. The chef’s time has been wasted, answering questions that a more experienced server would already know. All this waste adds up to a failing restaurant, and could have been avoided by investing in employees and treating them with respect.

Consumers vote with their wallets

The CWJ is gathering survey data from staff at local restaurants and compiling a restaurant guide. The guide will enable diners to select a restaurant not just by the food they serve, but by the way their workers are treated. The release date is not currently known, as the organization is still gathering information.

Service workers in the Iowa City area interested in participating can find the Johnson County Restaurant Worker Survey here.

Additional Links:

Forms for reporting wage theft, in both English and Spanish 

Frequently asked questions about Iowa labor laws

Common forms of wage theft

(via Iowa Policy Project)
• Nonpayment of wages: An employer fails to pay workers for some or all hours of work performed, or fails to pay workers in a timely fashion.
• Underpayment of wages: An employer pays workers less than they were promised or less than they are legally owed under state or federal minimum wage or overtime statutes.
• Tipped job violations: An employer pays tipped employees less than the legally mandated minimum wage for tipped jobs, forces tips to be “shared” with managers or steals workers’ tips.
• Deduction violations: An employer diminishes workers’ pay by making unauthorized or illegal deductions from paychecks
• Misclassification of employees: An employer falsely labels an employee as an “independent contractor” in order to avoid obligations to pay minimum wage and overtime (along with a host of other employment laws, and unemployment insurance, workers’ compensation, and income tax payments). The “independent contractor” exemption was meant to apply only to individuals such as physicians, lawyers, dentists, veterinarians and construction contractors who are paid for services, but who do not work under the direction and control of others who hire, fire, direct their work, and pay them. Misclassification also includes, for example, calling a cashier a “salaried manager” to avoid the overtime provisions of federal law.

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