Under the proposed ordinance, businesses won’t even qualify for contracts if they’ve been penalized or debarred for violations within the last seven years, and current businesses caught cheating workers out of wages could have their contracts revoked and be banned from future contracts for up to five years.
Every contractor doing more than $10,000 in business in the county will also be required to complete ethics training on wage theft, the ordinance says.
The legislation is being co-sponsored by Councilmen Dale Miller, Martin J. Sweeney and Patrick Kelly, and it follows on the heels of similar legislation passed by Cleveland City Council in December. They hope it will serve as a deterrent.
“People work hard to make a living and should get paid for all the work that they do,” Miller told cleveland.com and The Plain Dealer Monday. “We don’t want to see people not get paid for their work and we don’t want to see companies debarred, we want to head this stuff off before that happens and we’re hoping that this legislation will help with that.”
Wage theft is defined as any violation of state or federal law regarding the prompt payment of wages, payment of minimum wage, or prevailing wage rates. Payroll fraud is defined as the concealment of a business’s true tax liability by not reporting or underreporting applicable wages or by paying employees under-the-table.
Examples could include employees working overtime but being paid their regular rate, lunch and break time not being calculated correctly, or employees being classified as contractors when they should be considered full-time employees, Miller said.
Guardians for Fair Work, an advocacy group that lobbied for wage-theft protections for Cleveland workers and helped the county draft its ordinance, shared some other more specific examples of ways they say Ohio workers have been cheated out of pay.
In one case, independent contractors were hired to hang and finish drywall for a residential development project, but after completion they were left with several incomplete or missing paychecks for hours worked that the employer blamed on a glitch with the app they were using to pay workers. The company also locked the workers out of the project after completion, preventing them from recovering personal tools they’d used on the job.
In another case, a waiter was being forced to complete an hour of “pre-shift prep” and cleaning before clocking in. The employer told workers if they didn’t like it, they could quit, Guardians for Fair Work reported.
Such cases are apparently common.
Research from the Economic Policy Institute found approximately 217,000 minimum wage earners in Ohio are victims of wage theft each year, each missing out on an average of $2,800 in underpaid salaries. Misclassifying workers has an even greater economic impact, research showed, costing the state about $180 million in income taxes.
The proposed protections, however, go a long way toward ending that cycle and making sure public dollars are spent with employers who are following fair labor laws, Guardians for Fair Work organizer Nora Kelley told cleveland.com.
“The goal is not to be punitive but to change behaviors,” Kelley said. “It’s incentivizing employers to do the right thing.”
Residents who feel they are victims of wage theft or payroll fraud can continue to report complaints to the applicable state or federal agency overseeing such violations. The Northeast Ohio Worker Center will also be holding monthly wage theft clinics where residents can go to discuss potential issues in their workplace or file complaints.
As in other debarment proceedings, contractors will have a chance to respond to allegations of wage theft or payroll fraud with the county Inspector General’s office before debarment. They may also appeal the decision to the Cuyahoga County Debarment Review Board.
Records show the Inspector General has debarred at least 27 businesses since 2020, most often for delinquent property taxes. Five businesses were debarred related to bribery.
The legislation is being introduced to council for first reading on Tuesday and will be referred to committee for discussion next week.
Representatives from Cleveland Mayor Justin Bibb’s office, Cleveland City Council, and other labor-ally organizations are expected to speak on behalf of the legislation. It also has the support of the Cleveland Building and Construction Trades Council, Miller said.
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