Wage theft, corporate profits show CA divide

Though California leaders like to tout the state as the world’s fifth largest economy, it can appear that California has two economies: One where some workers still aren’t paid what they’re owed, and another where some California corporations are raking in big bucks.

In one major case, the state’s Labor Commissioner’s Office is having a hard time tracking down the janitorial workers who are owed back pay from a $1 million wage theft settlement with The Cheesecake Factory, writes CalMatters Capitol reporter Jeanne Kuang. 

Only 42 of the former janitors received their settlement money, leaving more than 500 still to be found and $700,000 of unclaimed money in state accounts. Officials have sent letters to workers’ last known addresses, posted on social media, done a TV interview and created a hotline. 

A senior deputy labor commissioner said that low-wage workers, who are the focus of most labor violations investigations, are often immigrants, and may have moved or left the country. There is no deadline for workers to claim the money​​, but the lengthy legal proceedings don’t help: The janitors in the The Cheesecake Factory lawsuit cleaned the restaurants sometime between 2014 and 2017. 

Alma Idelfonso, who received $20,000 earlier this year, says it’s not enough compared to what she’s owed, but she still urges fellow workers to report labor violations. She keeps the hotline number handy to tell others about the settlement.

Idelfonso: “That money did help me. It is worth it to fight … so they understand that they can’t abuse people anymore.”

Learn more about the delays in wage theft payments in Jeanne’s story.

On the other end of the spectrum, the state received an influx of unexpected corporate tax revenue this summer — nearly $2 billion higher than estimates since April. 

As CalMatters economy reporter Levi Sumagaysay explains, an especially large amount came in July, including $800 million more than expected in a single day. While tax records are confidential, state officials and accounting experts say they believe the extra money came from a few Silicon Valley companies, particularly the booming artificial intelligence chipmaker Nvidia, which reported $16.6 billion in profits for the second quarter.

The windfall illustrates the tense relationship between the state and Big Tech. Though the state is often accused of overregulating tech companies (Newsom signed six bills on AI this year, though he vetoed one fiercely opposed by tech companies), California also relies on their tax revenue. 

Read more about the unexpected tax money in Levi’s story.

Of the roughly 1,000 bills Gov. Gavin Newsom signed this year, he issued only 18 signing messages, including for one that changes protections for consumers who purchase defective cars, writes CalMatters Digital Democracy reporter Ryan Sabalow. 

But Newsom’s concerns over the legislation and his calls for lawmakers to amend it, raises the question: Why did he sign it at all?

Critics of Assembly Bill 1755, which includes consumer groups and foreign car makers, say the bill was written by lobbyists behind closed doors and rushed through the Legislature. But the biggest red flag for critics is that General Motors, which has the highest rate of lemon law cases filed against it, is one of the law’s biggest backers.

Rosemary Shahan, Consumers for Auto Reliability and Safety: “The companies that make the most lemons and fail to invest in what it takes to build quality cars … are the ones that are being rewarded by this bill.” 

But proponents of the law, which takes effect next year, say it will reduce the backlog of lemon law cases in the courts and help car buyers. Under the new law car makers will have to respond to a written consumer complaint within 30 days (currently, there is no deadline), and companies must fix a defective vehicle or replace it within 30 days after that.

Learn more about the new lemon car law in Ryan’s story.

Newsom vetoes: Gov. Newsom blocked about 1 in 6 bills sent to his desk this year for policy, cost or other reasons. But 90% of those measures passed both the Assembly and Senate by the two-third majority needed to override his vetoes, reports CalMatters’ Sameea Kamal. 

Don’t expect lawmakers to do that, however. It hasn’t happened since 1979 under then-Gov. Jerry Brown, and there are powerful forces against fellow Democrats bucking Newsom now — namely party loyalty and fear of punishment. 

Dan Schnur, politics professor at the UC Berkeley, USC and Pepperdine University: “A governor who’s been overridden is generally not a happy governor — and unhappy governors tend to issue more vetoes, especially against the members who voted to override.”

Read more about overriding vetoes in Sameea’s story.

Speaking of consumers, especially those struggling to pay the bills, some help is on the way. 

On Wednesday Gov. Newsom announced that 11.5 million California households and 1 million small businesses will receive a “climate credit” on their October electricity bill. Funded through the state’s cap-and-trade program, the credits range from $32 to $174 and average $71 (yours truly received notice of a $55 credit on my PG&E bill).

Combined with the credits that were issued in April, Californians will receive an average of $217 total, according to Newsom’s office.

Californians pay more than twice the national average in electricity, with bills nearly doubling within the last decade. Small businesses, particularly in rural areas, also struggle with high electric bills. A legislative proposal to give households a one-time credit on their bills, which would have been funded by cutting programs that help low-income customers, failed in August.

And for Southern California drivers, Attorney General Rob Bonta is urging residents who bought gas between Feb. 20, 2015 and Nov. 10, 2015 to submit an online claim for a possible payout. In July, gas trading firms settled a $50 million lawsuit that alleged they were secretly colluding “to tamper with and manipulate spot market prices for California gasoline.” 

State senators are meeting next week in a special session to consider a bill passed by the Assembly that would require oil refineries to keep a minimum inventory of fuel to ease gas price spikes.

California officials have accused for-profit schools of misleading students with promised skills and jobs, but the state is also referring students to these schools. CalMatters community college reporter Adam Echelman and video strategy director Robert Meeks have a video segment on this issue as part of our partnership with PBS SoCal. Watch it here.

SoCalMatters airs at 5:58 p.m. weekdays on PBS SoCal.