SUBJECT
Title
STRENGTHENING WAGE THEFT ENFORCEMENT TO RECOVER STOLEN WAGES AND PROTECT WORKING FAMILIES (DISTRICTS: ALL)
Body
OVERVIEW
Across San Diego County, workers are losing wages they have rightfully earned due to wage theft. Wage theft is a widespread and persistent problem affecting low-wage workers, immigrant communities, and workers in industries where violations often go unseen or unreported. This loss of income impacts residents' ability to pay for basic necessities including rent, groceries, childcare, and healthcare for their families. When workers are underpaid, denied overtime, or not paid at all, the impact is harmful and immediate and forces families to absorb financial losses they cannot afford and perpetuates the consequences of poverty.
Wage theft is a pervasive and pernicious issue across the United States. Research published in the journal Preventive Medicine found that some employers in the United States steal tens of billions of dollars annually through wage theft, with total financial losses exceeding those from all other forms of property crimes combined. Local data also underscores the scale of this issue. In San Diego County, more than $29 million in unpaid wage theft judgments have accumulated since 2017, representing wages that workers have already been legally awarded through court judgements but have not yet received. This gap between judgment and recovery highlights a fundamental breakdown in enforcement and access to justice. A regional survey of hourly workers found that 87% experienced some form of wage theft within a calendar year, with many experiencing violations regularly. Despite the prevalence of these violations, awareness was critically low, as most affected workers did not recognize that they had experienced wage theft and nearly 90% of surveyed community members did not know where to report violations. Even when workers successfully navigate the system and obtain a legal judgment in their favor, recovery is far from guaranteed.
On May 4, 2021 (23) the Board of Supervisors (Board) established the Office of Labor Standards and Enforcement (OLSE) to begin addressing these gaps by providing education, outreach, and enforcement support within the County’s jurisdiction. In carrying out this mission, the County’s Wage Theft Enforcement Program investigates allegations of unpaid wages and other labor standard violations, supports workers through intake and case review, and coordinates enforcement actions to secure wages owed in collaboration with the Office of County Counsel and the District Attorney’s Office. Through strategic investigations, employer engagement, and targeted outreach, the program helps hold employers accountable, promotes compliance, and ensures workers receive the wages they have earned.
Since its creation, OLSE has taken on a growing number of cases, partnered with community organizations, and developed innovative tools such as the first Workplace Justice Fund in the United States to provide financial resources to impacted workers. The Fund provides short-term relief to workers who have already obtained legal judgments for unpaid wages but remain unable to collect from their employers, while the County pursues recovery on workers’ behalf. These efforts demonstrate both the demand for services and the County’s ability to play a meaningful role in protecting workers and supporting fair workplaces.
While these efforts have been important, the scale of wage theft continues to outpace existing resources. With limited investigative capacity, enforcement remains largely reactive, and many workers never receive the wages they are owed. Additionally, responsible businesses are placed at a disadvantage when competitors cut costs through illegal labor practices. Strengthening enforcement protects workers and reinforces a level playing field for employers who follow the law.
This Board action represents a targeted and necessary next step in advancing workplace justice in San Diego County. By expanding investigative capacity, strengthening coordination with the Office of County Counsel, enhancing community awareness, and evaluating opportunities to scale the Wage Theft Enforcement Program and Workplace Justice Fund, the County can advance a more proactive, accessible, and effective wage theft enforcement system. Together, these actions aim to ensure workers retain every dollar they’ve earned and help protect working families from the destabilizing effects of poverty.
RECOMMENDATION(S)
CHAIR PRO TEM PALOMA AGUIRRE
1. Authorize the addition of two (2.0) full-time equivalent (FTE) positions within the Office of Labor Standards and Enforcement (OLSE) to expand the County’s capacity to investigate wage theft complaints, enforce labor standards, and recover unpaid wages owed to workers, and to expand community outreach and education efforts, the Wage Theft Enforcement Program, and Workplace Justice Fund. Authorize the Department of Human Resources to classify the positions at the appropriate level, and refer to budget the appropriation of $300,000 based on General Purpose Revenue.
2. Direct the Chief Administrative Officer (CAO) to implement an expanded enforcement and engagement strategy within the Office of Labor Standards and Enforcement that includes:
a. Increased investigative capacity to address wage theft complaints;
b. Enhanced enforcement of local and state labor standards; and
c. Expanded community outreach and education efforts, including:
i. The design and implementation, in coordination with County Counsel, of a comprehensive public awareness and Know Your Rights campaign on wage theft;
ii. Efforts to increase awareness of worker protections, reporting mechanisms, and available County resources, including the Wage Theft Enforcement Program and Workplace Justice Fund, through culturally competent, multilingual, and community-based outreach; and
iii. Engagement strategies tailored to workers and industries at heightened risk of wage theft, including partnerships with trusted community-based organizations and worker-serving institutions
3. Direct County Counsel, in coordination with the CAO and the Director of OLSE, to strengthen wage theft enforcement through enhanced legal coordination, including:
a. Streamlining referral processes between OLSE and the Office of County Counsel;
b. Expanding litigation pathways to pursue wage theft violations and recover unpaid wages; and
c. Identifying and assigning appropriate legal resources to support a more proactive and effective enforcement strategy.
4. Direct the CAO to evaluate opportunities to strengthen and expand the Wage Theft Enforcement Program and Workplace Justice Fund, including:
a. Identifying sustainable funding sources, such as penalties, fees, settlements, grants, and other revenue streams associated with wage theft enforcement;
b. Assessing strategies to increase access to these programs for workers with unpaid wage judgments;
c. Evaluating strategies to improve the efficiency and timeliness of employer-side collection and cost-recovery efforts as enforcement capacity expands; and
d. Identifying opportunities to align these programs with expanded enforcement efforts to maximize recovery and direct financial relief to impacted workers.
5. Direct the CAO to report back to the Board within 120 days with a written update on implementation of this Board action, including progress on staffing, enforcement, outreach, public awareness efforts, Wage Theft Enforcement Program and Workplace Justice Fund improvements, and any additional resource or policy recommendations for Board consideration.
6. Direct the CAO to express the County’s support for State Assembly Bill 1838, consistent with Board Policy M-2.
EQUITY IMPACT STATEMENT
Wage theft disproportionately harms low-wage workers, immigrant communities, women, and workers of color. These populations already face structural barriers to economic mobility and legal protections. Many impacted workers are employed in industries with high rates of exploitation and are less likely to report violations due to fear of retaliation, language barriers, or lack of access to legal resources. As a result, those most vulnerable are often the least likely to recover wages they are rightfully owed. Expanding the County’s enforcement capacity through additional staffing and targeted outreach directly addresses these inequities by increasing access to justice, improving recovery outcomes, and ensuring that all workers regardless of background are protected and paid for their labor.
SUSTAINABILITY IMPACT STATEMENT
The proposed action to expand wage theft enforcement strengthens economic, social, and health sustainability by ensuring workers receive earned income that supports household stability and community well-being. When wages are withheld, families are more likely to rely on public assistance, increasing strain on County systems and undermining long-term economic resilience. This initiative advances County Sustainability Goals by promoting just and equitable access to protections, supporting economic stability, and protecting health and wellbeing through reduced financial stress and insecurity. Strengthened enforcement also supports a fair and competitive business environment, discouraging unlawful practices and reinforcing responsible economic activity across industries.
FISCAL IMPACT
There is no fiscal impact for Fiscal Year (FY) 2025-26 for the addition of 2.0 staff years as requested in Recommendation 1. If approved, there will be ongoing costs and revenue of $300,000 starting FY 2026-27 that will be referred to budget deliberations in the Office of Labor Standards and Enforcement based on available General Purpose Revenue. Subsequent fiscal year costs will be included in future years Operational Plans based on available funding.
Funds for the actions requested in Recommendations 2-6 are included in the Fiscal Year 2025-26 Operational Plan and the Fiscal Year 2026-27 CAO Recommended Operational Plan based on existing staff time in the Office of Labor Standards and Enforcement, Office of County Counsel, and the Office of Economic Development and Government Affairs (EDGA) funded by existing General Purpose Revenue. At this time, there will be no change in net General Fund cost and no additional staff years associated with these recommendations. There may be fiscal impacts associated with future related recommendations which staff would return to the Board for consideration and approval.
BUSINESS IMPACT STATEMENT
Strengthening wage theft enforcement promotes a fair and competitive business environment by holding all employers to the same labor standards. Unlawful practices such as wage theft disadvantage businesses that comply with the law and invest in their workforce, creating an uneven playing field across industries. Expanding investigative capacity will improve enforcement outcomes and reinforce accountability, while also supporting long-term compliance. At the same time, OLSE provides education, training, and resources to help businesses understand and meet their obligations to their workforce. This approach balances enforcement with support, fostering responsible business practices and a more stable and equitable local economy.
Details
ADVISORY BOARD STATEMENT
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BACKGROUND
Wage theft remains one of the most pervasive and under-enforced forms of economic harm affecting working families in San Diego County. It occurs when workers are paid less than the minimum wage, denied overtime, have earned wages withheld, are misclassified as independent contractors, or face retaliation for asserting their rights. Although these violations take different forms, their effect is consistent: workers are deprived of income they have rightfully earned, forcing them and their families to absorb losses that directly undermine housing stability, food security, access to health care, and overall economic well-being.
These violations are particularly prevalent in industries with high concentrations of low-wage and vulnerable workers, including restaurants, construction, janitorial services, hospitality, and home health care. These sectors often involve subcontracting, informal employment arrangements, night and shift-based labor, or general working conditions that can make violations harder to detect and less likely to be reported. Immigrant workers and workers with limited knowledge of their rights are especially affected, not because violations are rare occurrences, but because enforcement gaps and systemic barriers make recovery more challenging.
On May 4, 2021 (23), the Board of Supervisors established the Office of Labor Standards and Enforcement (OLSE) to provide a local and accessible enforcement resource for workers and employers and to help close these longstanding gaps in labor standards enforcement within the County’s jurisdiction. Since its creation, OLSE has assumed an increasingly important role in responding to worker complaints by issuing demand letters, conducting preliminary investigations, and connecting workers to support through partnerships with community-based organizations. OLSE has also developed tools such as the Workplace Justice Fund, which provides financial assistance to workers who have secured a judgment but have been unable to collect the wages they are owed. The Wage Theft Enforcement Program investigates allegations of unpaid wages and other labor standard violations, supports workers through intake and case review, and coordinates enforcement actions to secure payment of wages owed in collaboration with the Office of County Counsel and the District Attorney’s Office. Through strategic investigations, employer engagement, and targeted outreach, the program works to hold employers accountable, promote compliance, and ensure workers receive the wages they have earned.
Together, these efforts reflect both the substantial demand for local labor standards enforcement and the County’s growing role in advancing workplace justice but also highlighting that OLSE’s impact remains constrained by available staffing and investigative capacity.
Why Expanding Investigative Capacity Matters
Prompt Enforcement Improves Timely Relief
Timely enforcement is essential to an effective wage theft response system. When claims remain unresolved for extended periods, the likelihood of recovery can diminish, workers may lose confidence in available remedies, and violations may persist without meaningful consequence. National reporting has documented that labor standards frequently go unenforced because public enforcement systems often lack sufficient investigative staffing, contributing to delays, limited oversight, and unresolved claims. For workers already facing economic hardship, those delays can deepen instability and further undermine access to justice.
Expanding OLSE’s investigative and outreach capacity would strengthen the County’s ability to respond to current case volume, streamline case processing timelines, and deliver timely outcomes for workers whose wages have been unlawfully withheld, helping to ensure a more resilient and responsive approach to meeting community needs. Additional staffing would not only increase OLSE’s operational capacity, but also improve the accessibility and effectiveness of local enforcement. In practice, a more responsive enforcement system can increase worker participation, support earlier intervention, and improve the County’s ability to secure recovery before cases grow more complex or more difficult to resolve.
Recent experience from the City of Denver illustrates the practical value of expanded local enforcement capacity. In its 2024 Annual Wage Theft Report, Denver Labor reported closing more than 750 cases, assisting 4,505 workers, and recovering a record $2,070,153 in restitution in a single year. The report further states that new staff and expanded legal authority allowed the office to help more workers and recover more wages than ever before, demonstrating how increased enforcement capacity can improve case throughput and strengthen recovery outcomes.
Increased Enforcement Strengthens Compliance and Deterrence
Visible and consistent enforcement is a critical component of labor standards compliance. When employers perceive a meaningful risk that violations will be investigated, publicly identified, and enforced, they are more likely to comply with wage and hour laws in the first instance. In this way, enforcement serves not only a remedial function after violations occur, but also a preventive function by shaping employer conduct before violations take place.
Research supports this deterrent effect. A leading economic study examining OSHA’s use of public enforcement disclosures found that publicizing violations led peer facilities in the same sector and geographic area to substantially improve compliance and experience fewer subsequent violations. The study concluded that publicity can produce deterrent effects extending beyond the directly cited employer, demonstrating that visible enforcement can influence broader compliance behavior across similarly situated employers. This finding is especially relevant to wage theft enforcement, where many violations occur in industries with fragmented employment structures, low reporting rates, and limited worker leverage absent meaningful public oversight.
Research specific to wage theft also indicates that stronger enforcement and more robust penalty structures can reduce noncompliance. A national study of wage theft laws found that stronger state-level policies were statistically associated with lower rates of minimum wage violations, and that reforms increasing punitive consequences were linked to meaningful declines in noncompliance. Together, this evidence supports the conclusion that increased local enforcement capacity can improve voluntary compliance, deter repeat violations, and reduce unlawful labor practices before workers are harmed.
Expanded Capacity Improves Detection of Systemic Violations
Expanded investigative capacity would also strengthen OLSE’s ability to identify systemic violations that extend beyond individual complaints. Wage theft frequently does not occur as a single, isolated event. Rather, it can reflect broader business practices such as repeat noncompliance, employee misclassification, payroll manipulation, retaliation, or layered corporate arrangements that obscure responsibility and make enforcement more difficult. With additional staffing, OLSE would be better positioned to move beyond a purely reactive, complaint-driven model and identify patterns of unlawful conduct across employers, industries, and worksites.
This shift matters because complaint-based enforcement alone can miss widespread violations. Existing research has found that official complaint data provide only a partial picture of wage theft because workers may be deterred from reporting violations due to fear of retaliation, job loss, or lack of knowledge of their rights. As a result, enforcement systems that rely too heavily on individual complaints risk overlooking broader patterns of abuse. Greater investigative capacity allows an enforcement office to connect cases, detect repeat offenders, and pursue more strategic interventions that address underlying business practices rather than only isolated incidents.
Research in both corporate deterrence and wage theft enforcement supports this broader approach. A meta-analysis of corporate crime deterrence strategies found that regulatory policies involving consistent inspections and mixed enforcement approaches can have significant effects on reducing offenses, and that the complexity of corporate misconduct often requires multiple intervention strategies rather than a single enforcement tool. Similarly, recent wage theft scholarship has emphasized that fissured employment relationships, subcontracting, franchising, third-party management, and employee misclassification can obscure employer accountability and create conditions under which wage theft becomes more difficult to detect and remedy. In this context, expanded investigative staffing is essential not only to process more cases, but also to identify systemic violations early, develop industry-specific enforcement strategies, and ensure that enforcement reaches the full scope of unlawful conduct.
Strong Enforcement Protects Public Funds and Supports Honest Businesses
Robust wage theft enforcement protects not only workers, but also the integrity of public spending and the fairness of the marketplace. When labor violations occur on publicly funded projects or in connection with government-supported work, taxpayer dollars can effectively subsidize unlawful practices, undercut responsible contractors, and weaken confidence in public oversight. Strengthening investigative capacity would improve the County’s ability to monitor compliance, identify violations earlier, and ensure that County policies and publicly supported programs are carried out consistent with applicable labor standards.
This function is especially important in sectors where public dollars, contracting relationships, and layered business structures can make accountability more difficult to track. Investigative capacity allows enforcement agencies to verify payroll practices, review records, assess classification decisions, and determine whether contractors and subcontractors are complying with wage requirements tied to public work. In practice, that oversight helps protect public investments while ensuring that compliant employers are not disadvantaged by competitors that lower costs through wage theft or misclassification.
Recent enforcement examples illustrate these broader public benefits. Denver Labor’s 2024 Annual Wage Theft Report states that prevailing wage violations include failures to pay required wages on publicly funded construction projects or service contracts. The same report highlights a case involving a nonprofit project supported by nearly $17 million in taxpayer-backed financing, where investigators determined that workers were underpaid and collected more than $356,000 for 202 workers after disputing an improper project classification. The report also expressly states that Denver Labor’s enforcement work promotes fair competition through comprehensive wage and hour enforcement and describes misclassification practices as giving unlawful businesses an unfair competitive advantage over law-abiding firms.
Taken together, these examples demonstrate that strong enforcement is essential to safeguarding public resources, reinforcing fair competition, and ensuring that responsible businesses are not placed at a disadvantage by unlawful labor practices.
Expanded Capacity Improves Access to Enforcement and Recovery for Vulnerable Workers
Expanding investigative capacity would improve the County’s ability to make wage theft enforcement more accessible to the workers most likely to experience exploitation and the least likely to obtain meaningful relief without public intervention. Low-wage workers, immigrant workers, women, and workers of color are disproportionately affected by wage theft, yet many face barriers to reporting violations, navigating formal complaint processes, or pursuing recovery through private legal action. Additional investigative staffing would help OLSE strengthen outreach, build trust in underserved communities, and connect more workers to available enforcement tools and recovery mechanisms, including programs such as the Wage Theft Enforcement Program and the Workplace Justice Fund.
This type of capacity is important not only for case processing, but also for the advancement of racial, gender, and economic justice. Effective enforcement depends on workers being able to recognize violations, understand their rights, file complaints safely, and obtain relief without having to shoulder the full burden of legal enforcement on their own. Protecting Low-Wage Workers from Exploitation: A Mapping Study of Wage Theft Laws in the 40 Largest US Cities found that local laws are proportionally more likely than state laws to include features that facilitate worker complaints, including worker education, retaliation protections, evidentiary burden shifting, and access to city complaint processes. The same study explains that local-jurisdiction complaint systems can make enforcement more accessible by allowing workers to file with a local government agency rather than having to proceed in court.
The public health implications are also significant. That research notes that ensuring low-wage workers are fairly paid is important to health and health equity and summarizes evidence that the experience of wage theft is associated with diminished self-rated health, as well as increased psychological distress, stress, and burnout. The study further concludes that stronger wage theft protections may help address poverty, economic inequity, and related health harms.
Alignment with Complementary State Policy
The proposed support for Assembly Bill 1838 reflects the importance of aligning local enforcement efforts with complementary state policy tools. By advancing greater transparency and accountability in public contracting, AB 1838 would help strengthen scrutiny of wage-and-hour compliance among certain bidders on local public works contracts. In doing so, it would reinforce the broader goals of this Board action by promoting labor standards compliance, supporting fair competition, and helping ensure that public dollars are not awarded without regard to an employer’s wage-and-hour record.
This Board action represents a targeted and necessary next step in advancing workplace justice in San Diego County. By expanding investigative capacity, strengthening coordination with the Office of County Counsel, enhancing community awareness, and evaluating opportunities to scale the Wage Theft Enforcement Program and Workplace Justice Fund, the County can move toward a more proactive, accessible, and effective enforcement system. Together, these actions aim to ensure workers retain every dollar they’ve earned and help protect working families from the destabilizing effects of poverty.
LINKAGE TO THE COUNTY OF SAN DIEGO STRATEGIC PLAN
Today’s proposed action aligns with the Economic Opportunity, Justice, and Health Strategic Initiatives in the County of San Diego’s 2026-2031 Strategic Plan by dismantling barriers to economic stability, promoting equitable enforcement of labor standards, and ensuring workers receive wages essential to their well-being. By strengthening enforcement capacity and improving access to wage recovery, this action advances economic resilience, supports equitable access to protections, and contributes to safer, healthier, and more stable communities.
Respectfully submitted,
PALOMA AGUIRRE
Supervisor, First District
ATTACHMENT(S)
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