Crain's investigation: Unpaid wages a growing problem for Chicago-area workers
Monday, December 13, 2010
- Organization: Crain's Chicago Business
Jesenya Rodriguez couldn't pay her phone bill or muster the cash to complete her high school correspondence course, but it wasn't because she didn't have a job. Ms. Rodriguez, 20, of Hanover Park, earned $10.22 an hour as a machine operator and packer at Duraco Products Inc., a manufacturer of plastic lawn and garden accessories in Streamwood. Duraco b-egan skipping paychecks in March 2008, workers allege in a lawsuit against company President Kevin Lynch and his brother Michael. In November 2008, Duraco filed for Chapter 11 bankruptcy protection; it has since converted to Chapter 7.
Some 34 Duraco employees claim in court that they are owed almost $400,000 in unpaid wages. The U.S. Department of Labor also is suing Kevin Lynch, alleging Duraco allowed employees' health coverage to lapse while continuing to deduct more than $44,000 in premiums from their paychecks. Ms. Rodriguez says she missed $1,200 in paychecks, resulting in $300 in overdraft fees, calls from collections agencies and a missed graduation. “Thanks to them, I couldn't finish high school,” she says. “I wouldn't be in collections. Now my credit is totally ruined.” The Lynches didn't respond to requests for comment through their attorney, Gregory Jordan, of Jordan Kowal & Apostol LLC in Chicago. Mr. Jordan calls the allegations in both cases “suspect.”
In a court filing, Kevin Lynch denies failing to pay workers the wages they earned and states that he testified in a deposition that “Duraco couldn't pay its payroll due to its lender's refusal to authorize the payment of payroll.” Michael Lynch, in court pleadings, denies failing to pay workers and denies that he was a manager of Duraco. On Dec. 1, the bankruptcy judge ruled that the workers are entitled to $394,000 from the Duraco estate.
Duraco's workers have plenty of company in their struggle over wages. Researchers at the University of Illinois at Chicago released in April the results of a landmark survey of 1,140 low-wage workers in Cook County. Based on the survey, UIC estimates that almost half the county's approximately 310,000 low-wage workers had experienced a pay- related violation in the previous week. Worker advocates call these violations “wage theft,” a broad term encompassing practices like skirting minimum wage or overtime, forcing employees to work off the clock or not paying workers at all. (click on link to read full story)