Workers fight for unpaid wages
By Lee Davidson , Deseret News
Some Utah companies tap fears of a tight job market to mistreat employees
First in a three-part series
SALT LAKE CITY — In Utah's recession-choked job market, Julio Martinez sought work for four months, searching want ads daily and filing piles of applications. Finally, Salt Lake Valley Protective Agency hired him in February as a $10.50-an-hour security guard.
"I was so happy and excited," Martinez says, even though the job meant would he would miss church on Sundays and sacrifice evenings with his family. The father of one was still overjoyed at the prospect of long-needed wages to help with the mortgage, mounting utility bills and credit card debt. That joy would not last long.
"I deposited my first paycheck and then wrote out checks to pay some bills," he says. The paycheck bounced. That made the checks that he had written also bounce — slamming him with bank penalties.
He says Salt Lake Valley Protective Agency (SLVPA) told him it would make the paycheck good when some of its clients paid it money owed — so just keep working. He did for a month — supposedly earning $3,559 — but his checks were never made good.
"I was never paid a penny. I didn't even get a thank you. I was just conned," he says. He is among 35 SLVPA employees who filed wage claims with the state in the past two years saying the company intentionally wrote rubber checks constantly and paid weeks late, if at all.
Another claimant, Jordan Westing, said when he complained to SLVPA, "They told me to quit whenever I want, but good luck in finding another job in this economy." The company never responded to numerous Deseret News phone calls and e-mails seeking its response.
That is an example of how some companies may be using the recession to mistreat employees who fear they can find no other job. Also, other companies are failing in the recession, leaving employees unpaid. Some may cut costs in tough times by hiring illegal immigrants and stiffing them amid threats of calling immigration.
"There has been a big uptick in the number of wage claims filed. I can only assume it is because of the recession," says Brent Asay, the wage claim manager for the Utah Labor Commission.
Recession results
In the two years since July 2008, nearly 4,400 workers filed claims with the Utah Labor Commission for a combined $10.2 million in earned-but-unpaid wages, according to Deseret News analysis of state data that was obtained through an open records law request.
The number of claims was up by a hefty 28 percent over the previous two-year period. That's sobering news for this Labor Day weekend.
Individual claims ranged from a low of $50 to the legal maximum claim of $10,000 (which was claimed by 191 workers). Many claimants say their employers actually owed them more than $10,000 each, but that is the maximum that may be claimed with the Labor Commission.
Sensory Sweep Studios — a now-defunct video game publisher — had 37 employees file the maximum $10,000 claim each. Their claims said that the company persuaded them to work for months amid promises that pay was coming shortly, but it never did arrive.
Asay says that seeing 1,000 claims a year was once considered to be a lot by the state. But he has not seen that few in many years and now handles twice that or more. Meanwhile, the number of state investigators to handle them has remained essentially the same for many years.
He says claims jumped from 1,505 in 2006 to 2,721 in 2009 — an 81 percent increase in four years as the recession hit and deepened.
The Deseret News calculated which Utah employers had the most claims filed against them in the past two years — both by the number of employees filing, and by the amount of unpaid wages claimed.
At the top of both lists was Sensory Sweep Studios, where 88 employees claimed $663,142 in unpaid wages with the state. A separate federal court lawsuit alleged the company had not paid more than $2 million combined to nearly 200 workers. (See chart on this page for list of Top 10 companies with claims.)
Such claims tend to fall into three main categories: companies that don't pay employees (who worry about finding jobs elsewhere in the recession) but keep promising that money is coming; those that go out of business and don't pay final checks; and some that may be cutting costs by hiring and not paying illegal immigrants — and stiffing them amid threat of reporting them to immigration.
Today, the Deseret News looks at the first category. Asay estimates that 10 percent to 20 percent of wage claims are related to such "bad actors." Later parts of the series will look at the other categories — and the ability of the state to adequately address them.
Mistreatment
Salt Lake Valley Protective Agency's motto is "redefining professionalism." Several former security guards and other employees say it redefined it all right, but in a bad way. They say it constantly and knowingly gave them rubber checks every payday — and brazenly told some to go ahead and look for another job in the recession if they could find one.
The Salt Lake company did not answer those claims to the state Labor Commission, nor did it respond to numerous Deseret News interview requests.
"They commit felonies every payday," Michael Daniels, a former sales executive with the company, said in a Deseret News interview. "Intentionally issuing checks that they know are not good is a felony." He said he told that to police but could not persuade them to investigate.
Numerous employees say that as the company hands out paychecks every two weeks, it warns most employees not to cash them until they are told that enough money is in accounts to cover them.
"Certain key people know when money is in the account and are told to go cash their checks now," said former security guard Robert Aswin. Another former guard, Jordan Westing, added, "It was very selective. Some people got priority and were told when money was available."
Westing added that it was common when rumors spread that money was available to see a long line of fellow SLVPA employees at America First Credit Union (where SLVPA had its payroll account) hoping funds would not run out before their turn — with some trying to cash several weeks' or months' worth of old checks.
He said co-workers constantly called the credit union to see if funds were in the account. "I don't know why the credit union put up with it," he said.
Martinez said nobody warned him about the problem with paychecks when he was hired, so he deposited his first check. It bounced and made checks that he wrote depending on that money to bounce, too.
Several said that when they finally quit because of the constant hassle and nonpayment, the company threatened to cut their pay — usually around $11 an hour — to minimum wage for their final pay period. Some said that was threatened because they didn't give two weeks' notice.
"But they didn't pay me anything anyway in the end," said former guard Michael Dowse — who filed a claim for $4,572 in unpaid wages with the state. He said he put up with the situation hoping it would get better and worried he might not be able to find another job.
Daniels, among others, also complained that at the same time the company was not paying employees, it was remodeling its rented offices. (However, it lost an eviction lawsuit over those rented offices this spring that ordered it to pay SNT Enterprises $17,677 for unpaid rent, punitive damages and attorney's fees).
Claims — with the state and federal government, and in other employee lawsuits field directly with courts — say SLVPA has done the same thing with paychecks for years. Asay, with the state, said, however, that the Labor Commission by law must consider each case separately and on its own.
But if the Labor Commission sees a pattern of what it believes is unlawful behavior, it can make a referral to the attorney general for possible criminal investigation. "That's rare," he said, and did not say if that has occurred with SLVPA.
None of the SLVPA workers contacted by the Deseret News had yet received any money from claims they filed with the state. Several had Labor Commission decisions in their favor — and even had amounts ordered for them increased by 50 percent because the company had not paid them within deadlines.
Asay said the state pushes hard for payment. He said it can go to court and seek orders to pay and seize assets and sometimes turns cases over to a collection agency. He said the state may do such things as seize tax refunds owed to the company or its principals for payments.
SLVPA employees have attempted their own vengeance with online complaints about the company — often making fun of its motto of "Redefining Professionalism.
SLVPA owner Mike Vigil responded online to one complaint by inviting anyone concerned to visit and talk. "We have nothing to hide, and would love to show you what we mean when we say "Redefining Professionalism," his posting said.
More worries
Sensory Sweep Studios was another company that had numerous complaints showing recession-worried workers went months without pay, while the company promised it was coming just as soon as clients paid it money.
The now-defunct company once based in West Valley City developed and released such video games as "Jackass: The Game," "Alvin and the Chipmunks" and "Major League Eating: The Game."
Most of its games received lousy to mediocre reviews. For example, one review about "Major League Eating" complained it was "crafted with about as much care as contestants in this sport use to cram hot dogs down their throats."
But Sensory Sweep's employees gave the company even worse reviews for how it treated them in their complaints filed with the Labor Commission.
"We hadn't been paid for almost five months," complained Henry Elmo Bawden, a technical art lead who was promised $45,000 a year. He filed the maximum-allowed $10,000 claim for unpaid wages — which he was eventually awarded by the Labor Commission plus another $5,000 because Sensory Sweep did not pay him when ordered.
"They kept promising to pay us and then never did. It dragged on for months and they kept promising a check every week. They never paid up. The federal government already has a case for part of the month — this $10,000 is more — but still not all of what they owe me," Bawden wrote in his state claim.
He wasn't alone, as 87 other workers filed state claims — the most against any single company in the past two years — and a federal lawsuit said that money was owed to nearly 200 employees there.
"I received only two partial paychecks over a six-month period," wrote animator Matthew Dibb, who also filed and won a maximum-possible $10,000 claim. "There seemed to be a new reason every week, mostly that they were waiting for checks from other companies."
Video game concept artist Nasan Hardcastle wrote in his $10,000 claim, "The company is months behind in paying wages. … Each month they promise money that will be coming in the following month."
Some employees complained to federal as well as state labor officials. The U.S. Labor Department filed a civil suit in January 2009 against the company (then also using the name of Fooptube) and principal Dave Rushton on behalf of 196 current and former employees claiming they were owed more than $2 million in back wages.
Rushton and the company promised in February of that year to pay $942,00 to the employees by the following September. They did not keep that promise, and in May of this year were found to be in contempt of court. A federal judge stopped the company from selling or shipping video games until the workers were paid.
Amid such problems, Rushton and Sensory Sweep also lost a $654,240 eviction case in August 2009.
Worse, in April 2009 the state filed six felony charges against Rushton and his wife, Maureen. Dave Rushton eventually pleaded guilty to two counts: failure to render a proper tax return, and a pattern of unlawful activity. He is scheduled to be sentenced on those charges later this month.
Dave Rushton's lawyer, Darin Goff, said that at his advice, Rushton was declining comment for this story as the sentencing is pending. Goff said that Sensory Sweep has gone out of business amid the difficulties.
Yet others
Other companies in the Top 10 for receiving wage claims by employees were also accused of similarly stringing along employees with promises of coming money.
For example, Digital Bridge of Orem — which advertises services to permit "digital conversation" between systems that "historically have been unable to share information efficiently" — had dozens of employees file wage claims totalling $163,000 against it saying the company kept promising money would come soon.
"We were continually assured that new funding would arrive soon," Jeremy Scott Robertson said in a claim seeking the maximum-allowed $10,000.
More troublesome, he wrote, "Insurance premiums were deducted from my check … but were not used to pay medical insurance." He said he received notice from the company's health insurance that its policy was canceled retroactively for lack of payment.
The company admitted in filings with the state that it owed Robertson $12,548.
Robertson told the Deseret News he now bears the company no ill will because he understands it ran into recession-related trouble. "I held on as long as I could. When I couldn't hold on anymore I started looking for a new job. I found one relatively quickly," he said.
Digital Bridge did not respond to Deseret News inquiries.
Another example from the Top 10 lists was ZooMobile, a mobile phone vendor in St. George — where at least, according to state files, most claimants settled with the company or said they were eventually paid what they were owed.
But in original claims, for example, employee Adam M. Schweitzer wrote while seeking $10,000, "Owner claims that he has not received funds to pay payroll," leaving three dozen employees unpaid while he said the owner still managed "to pay other people he does business with and travel."
Also, employee Audri Wadsworth said in her $10,000 claim, "The company claims to be waiting on an international transfer, but every week there is another delay in its arrival. They always promise it's on its way."
Phone attempts to contact ZooMobile were unsuccessful. Its phone message said its mailbox was full and would not accept more messages. E-mails to the company were not returned.
About all such nonpayment by many companies, Martinez — the security guard who was never paid by Salt Lake Valley Protective Agency — says, "I think this is business fraud. It's a nightmare."
He said the nonpayment upset his family, stressed his wife and made it hard for them to meet their mortgage, utility bills and credit card payments. "It was a very frustrating thing," he said. He could find only a few temporary jobs in the months he quit SLVPA for nonpayment, until this month he finally found a factory job.
Martinez added, "It breaks my heart that I worked hard and ended up with nothing for it. This isn't right. I hope that others don't go through what I did."
NEXT: Stiffing illegal immigrants?
FULL DISCLOSURE: Reporter Lee Davidson has a son who worked for Salt Lake Valley Protective Agency and had trouble receiving pay. That gave Davidson the idea to look into overall problems in the state.
e-mail: lee@desnews.com