Wage Theft Victims Are Owed $5.4 Million That WA Hasn’t Collected

April 9, 2024


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Business woman stacking figurines representing workers on coin stacks of varying heights from smallest to largest

Isabella Christian knew something was wrong with her paychecks just months into working catering events at Royal India, a Kirkland restaurant and catering company. She wasn’t always paid on time. Sometimes she wasn’t paid at all, or her paychecks bounced. And she wasn’t the only employee experiencing this.

After researching her options, Christian gathered evidence and in November 2022 filed a complaint with the Washington State Department of Labor and Industries (L&I), writing that the restaurant was “a nightmare of an environment to work in.” The Seattle Times obtained her complaint through a public records request.
Three months later, the state got back to her with good news: It had determined the restaurant owed her $5,726.

But more than a year later, Christian still hasn’t gotten a dime. She doesn’t know if she ever will.

Workers Are Owed More Than $5 million

More than 1,800 Washington workers across all industries are also waiting for wages. Since 2018, L&I has failed to collect $5.4 million from employers that the agency itself says is owed to workers, a Seattle Times analysis of the agency’s collections data found.

In most cases where L&I finds workers are owed money, business owners settle and pay up before entering the collections process. But for cases the agency escalates to its collections unit, its success rate has plummeted so sharply that in December, it reported to the Legislature that last year it collected nothing — zero dollars — for workers.

L&I spokespeople disputed the number that was in the agency’s own report, telling The Times it was “an oversight” and that the agency had actually recovered more than $300,000 of the nearly $800,000 it determined was owed last year to workers. But the spokespeople couldn’t confirm whether that amount was recovered before the end of 2023.

The agency noted that each investigator handles an average of almost 250 wage complaints per year, and last year it resolved 81% of cases in less than the 60 days state law requires.

State representatives are paying attention. In March, lawmakers unanimously directed L&I to explore how the agency can more effectively recover wages for workers.

But that report isn’t due until December 2025. In the meantime, workers like Christian are left waiting.

“The most frustrating part was I did actually work for that money,” Christian said. “We were treated poorly. The only thing that kept us going was [knowing] we’re going to get paid a lot for this, and then to not even get it wasn’t great.”

Wage Theft In WA Restaurants

Wage theft — the failure of employers to pay employees what they’re legally owed — affects workers in industries from health care to construction to retail. But no industry generates more complaints in Washington than food service, said Bryan Templeton, L&I’s program manager overseeing employment standards.

Washington restaurant workers filed more than 3,000 wage complaints from 2018 to 2022, according to an L&I complaints database obtained by a public records request. The subjects of workers’ complaints range from luxe wine bars to fast-food chains, sandwich shops, pubs and breweries. (The agency did not provide 2023 data in time for publication.)

Anthony Anton of the Washington Hospitality Association believes “workplace complaints are not endemic to, or rampant throughout, the restaurant industry” because only a small portion of total restaurant employees file complaints. Additionally, he takes issue with the term “theft,” saying it implies intent when “rarely is it the case.”

But the restaurant industry is consistently among the worst offenders, say national experts and researchers who study labor standards. They attribute this in part to the small-business structure of many restaurants.

“The restaurant industry is always high violation,” said Jenn Round, a labor standards researcher at Rutgers University. “A lot of restaurants are small businesses. The owners may not have any kind of HR capacity, and they themselves may be relatively low wage. They’re operating a small business without really having the skill set to operate a small business.”

Workers who claim lost wages have a few options. They can file private lawsuits, such as the class action suits against Blaine Wetzel of the famed Willows Inn and Tom Douglas (Serious Pie, Palace Kitchen, Dahlia Bakery), which each settled for more than a million dollars in recent years over service charges, regular meal and rest breaks, and tipping.

They can also file complaints with the U.S. Department of Labor, which in March recovered $196,000 for 100 Subway restaurant workers in Washington it found were owed tips and overtime wages.

If they work in Seattle, they can file a claim with the city’s Office of Labor Standards, which prioritizes investigations in specific industries – like restaurants, construction and health care – that have high levels of labor standards violations.

But for workers outside Seattle, if they are unable to find a private attorney, their main option is L&I.

Workers face barriers to getting paid

L&I won’t accept a complaint without detailed information to substantiate it. Workers are required to provide extensive documentation, including timesheets, paystub and tip copies, and sometimes witnesses.

The agency rejected 35% of the food service wage complaints filed from 2018 to 2022, according to a Seattle Times analysis of L&I data.

One rejected complaint was filed in July 2022 by Vivian Lee, a former King County restaurant server. Lee claimed she was owed $20,000 in unpaid tips over a period of almost two years, according to a case file obtained via public records request and reviewed by The Seattle Times. After quitting her job, she filed another in October 2022.

She wrote in her first complaint that the restaurant’s tipping policy was unclear and salaried managers were involved in the tip pool.

An L&I investigator asked for more documentation including “your tips and gratuities earned each day or each week for period of complaint and show your math and calculations for the amount claimed and provide any evidence to substantiate that you earned and are entitled to these tips.”

But Lee was no longer employed at the restaurant and told The Seattle Times that she “didn’t have access to anything else due to the system” the restaurant used to determine sales and tips. So she didn’t send L&I more information.

“L&I was really frustrating,” Lee said. “When I called them, they just repeated themselves over and over again. I just can’t do this anymore.”

The agency wrote to her in November 2022 that it couldn’t accept her complaint because she didn’t provide enough information. It added that Lee could file another claim within three years if she could access the documentation to substantiate her claim.

“I don’t have the paper trail for the amount I’m seeking, so I decided to let it go for now,” Lee said. “If I can afford a lawyer in the next year, I would pursue it further.”
Lee left the restaurant industry and opened a hair salon.

The duty to provide documentation is only one barrier for workers trying to recover lost wages. They must figure out how to file a complaint and where, sometimes while navigating language barriers. Some don’t take action for fear of retaliation, a particular issue for undocumented workers.

It’s hard to quantify exactly how many people are affected by wage theft but don’t file a claim, and there hasn’t been a study done to answer that question in Washington.

“The number of people who don’t know L&I exists, don’t make a claim out of fear of retaliation, don’t make a claim because it seemed too hard — those numbers are just massive,” said Columbia Legal Services employment attorney Andrea Schmitt, who works with low-wage immigrant workers.

A 2009 study from the National Employment Law Project, a nonprofit workers’ rights advocacy group, surveyed more than 4,000 low-wage workers in major U.S. cities and found that 68% of them experienced at least one wage violation in the previous workweek. Only 20% of employees made a complaint to their employer or a government agency or attempted to form a union. Employees said they stayed quiet out of fear of retaliation or the belief that it wouldn’t make a difference.

Investigations Can Miss Root Causes

The state’s Wage Payment Act, passed in 2006, requires L&I to investigate every single complaint filed by workers and to complete the investigation within 60 days. The time requirement means most workers’ complaints are investigated one by one.

“We often can’t wait and see what trends are developing over extended periods of time because we’re required to act on the complaints we have,” L&I spokesperson Matt Ross said.

The intent of mandating investigations was good, Schmitt said, but it also created an administrative burden, forcing L&I to spend time on complaints that may involve only a few dollars.

L&I started a small unit in 2020 that takes a wider view, investigating violations across entire companies in collaboration with the state Attorney General’s Office. The unit closed five cases last year; Ross said these wider investigations often last a year or longer and include an extensive litigation process.

Some restaurants show up repeatedly in complaints to L&I. A Seattle Times analysis of agency data, excluding national chains, identified 28 restaurants across the state that had five or more complaints filed against them from 2018 to 2022. Ten Washington state restaurants had 10 or more complaints in that time period.

The non-chain restaurant with the most complaints was Royal India, a casual-dining Indian restaurant and catering company with two locations in Lynnwood and Kirkland that date back to 2004. Owner Mohammad Rashid Bhatti and manager Aeisha Bhatti have been the subjects of at least 37 wage complaints from workers since 2018.

Some workers reached out to the Seattle Solidarity Network, a worker advocacy network. The Network started a website highlighting workers’ claims about Royal India and has held periodic pickets outside its Kirkland location since April 2023.
That location closed March 7 under a stop-work order from Kirkland’s fire inspectors — the third in two years — due to a kitchen hood fire suppression system that violated regulations.

That same day, a King County health inspection found other violations and cited the restaurant for a lack of adequate hand-washing facilities and food worker cards. A March 15 Snohomish County inspection at Royal India’s Lynnwood location found ingredients stored at unsafe temperatures and black mold in an ice machine.

Wes Bates, an attorney for Royal India, said on March 28 that the company has “closed and is no longer operating at the Lynnwood location. The Kirkland location is currently closed.” Through Bates, the Bhattis declined to respond to specific questions about wage theft allegations. As of the first week of April, Royal India’s website states that the restaurant is under new ownership.

L&I spokesperson Ross said the agency has collected $42,051 from the Bhattis since 2018 out of $121,662 owed in wages, interest and penalties.

Washington’s Wage Recovery Act, passed in 2021, gives current or former employees the option to put a lien on their employer’s property to collect unpaid wages. L&I has the authority to foreclose on property after wage liens are placed, but it hasn’t used that option, collections program manager Steve Beaty said.

“The cost to do a foreclosure would be pretty significant,” Beaty said. “In some cases, it might be that we do a lot of work and get no results out of it.”

Business owners can evade collection by transferring money to other accounts or moving out of state. Business owners and employees both have the right to appeal a judgment from L&I, which sends the case to the state’s Office of Administrative Hearings, adding months to the process.

And if a business files for bankruptcy, L&I no longer has jurisdiction to investigate any employee complaints; workers must pursue their claim separately in bankruptcy court.

“L&I can go to bank after bank and request people’s accounts, but if the business was already sort of fly-by-night, it’s easy for them to give their business assets to their brother and open a name with a new LLC,” Schmitt said. “The state won’t spend all its resources coming to find them if it’s a small amount of money, and sometimes that’s a strategy that works.”

Anton, of the restaurant association, believes most wage theft allegations are a result of administrative mistakes. “Most small businesspeople are literally chasing their dream,” he said. “They don’t have a team of 10 lawyers, they don’t have an HR director.”

Labor Agency’s Heavy Caseloads 

Inside the agency, the mandate to investigate every complaint means investigators juggle many cases at once. L&I employs 28 investigators focused on wage complaints, Templeton said, and last year the agency received 6,943 complaints — a workload that averaged almost 250 complaints per investigator.

Investigators — whose official titles are “industrial relations agents” — manage the investigation process for each case, gathering evidence from employees and employers and acting as a neutral third party.

Most investigators are actively working on 20 cases at a time, Templeton said — a caseload that “can be overwhelming at times.” He points to L&I’s resolution of 81% of cases in less than 60 days as an “exceptional” accomplishment.

“Like any government, I’m always asking for more resources to do that big body of work,” Templeton said. “We definitely could use that, but I also think that we do a really good job.”

There sometimes wasn’t enough staffing to handle the volume of complaints the agency received, said a former L&I investigator who asked to remain anonymous out of concern about future employment prospects.

“Sometimes we’d just get slaughtered with cases,” the former investigator said. “You feel a lot of times you don’t have the tools to help people out with what they need.”

Most cases are settled directly with business owners before the collections unit is involved. However, if a business doesn’t pay voluntarily, L&I transfers the case to its collections unit and sends what it calls a “citation and notice of assessment,” ordering the employer to pay.

If the employer doesn’t pay within 30 days, the agency files a tax warrant in the superior court in the county where the business operates. The warrant allows the agency to place a levy on business bank accounts. If the accounts have funds in them, the bank must send them to L&I to pay the wages owed.

The amount of the warrant also becomes a lien on real estate or personal property owned by the employer, meaning L&I is paid if the property is sold or refinanced. If the employer is working somewhere else, the agency can direct that their wages be withheld in order to pay the funds owed to L&I, a process called wage garnishment.

State’s Declining Success At Forcing Owners To Pay Up

The collections unit’s success rate in forcing businesses to pay has dropped consistently in recent years, according to yearly reports the agency files with the state Legislature.

Last year’s report showed L&I sent notices of assessment for $789,693 in wages but collected nothing.

Agency spokesperson Matthew Erlich said the zero in the report that was issued in December “was an oversight” and as of March 29, the collections unit has recovered $306,500 of what was owed last year. Erlich said, “We believe a portion of that total should have been in the report. We don’t have a point-in-time report from the time that data was pulled.”

Five years earlier, in 2018, the collections unit was able to collect about $1.2 million out of $2 million owed by holdout businesses — a success rate of about 60%. The next year, 2019, that rate dropped to 51.5%, then to 42.8% in 2020, 29.5% in 2021 and 12.7% in 2022.

Beaty said the agency’s duty to collect wages isn’t “something that we take lightly.”

“Anyone that is not paid by their employer and then we’re unable to collect the money, that’s a frustration for our staff along with obviously the employee themselves,” he said. “We are really focused on trying our best to get that money back for those employees.”

The agency continues collection efforts for cases from previous years, Beaty said, meaning these yearly reported numbers may have risen in the time since each annual report to the Legislature.

“As we move along, we’ll probably see that over time, we’ll get back up into, hopefully, the 40 to 50% range, at least,” Beaty said. “Ideally, we’d love to collect 100%. But we know that that’s not a possibility, because not everyone is going to be able to pay us.”

In most cases where L&I can’t collect wages, it’s because employers simply don’t have the money, Beaty said.

“When an employer gets to the point where they can’t pay their wages of their workers, they’re generally in a financial situation that doesn’t allow them to come up with the money,” Beaty said. “We have a lot of businesses that are no longer in business, they’ve gon

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