The employer supporting Camilla Belich’s doomed ‘wage theft’ law

Sunday, 4 February 2024

Barbara Joppa and Eric Rowe, owners of Eden's Edge Lodge in Motueka. Joppa has seen enough worker exploitation that she decided to support the criminalisation of wage theft.

Barbara Joppa is an employer who thinks it’s past due for New Zealand to introduce laws making wage theft a crime.

Joppa, who owns the Eden’s Edge Lodge in Tasman with her partner Eric, is at odds in that view with the Business New Zealand lobby group, which wants to see the Labour-sponsored Crimes (Theft by Employer) Amendment Bill scrapped.

“It’s important that we protect our workers against unscrupulous employers,” says Joppa, who swapped California for New Zealand 20 years ago.

California is one of a number of US states to criminalise wage theft, and when Joppa saw the attempt by Labour MP Ibrahim Omer, who lost his seat in October’s general election, to introduce a similar law here, she decided to throw her support behind it.

“As a small business owner, it is my responsibility to pay all of my employees their due wages as per their contract. This includes all holiday pay, KiwiSaver, and other wages due. I feel it is important for business owners to speak up in support of this bill.”

Norway and the Australian state of Victoria have also made wage theft a crime, and the Australian Federal Government could soon do the same.

But New Zealand under a National-led government looks set to bury the bill, which if passed would add wage theft to the Crimes Act with penalties of a fine of up to $5000 and/or up to one year’s imprisonment for individuals, and a fine of up to $30,000 for companies and other employing entities.

Both National and ACT, while in opposition said they would not support the bill, which passed its first reading before they won power in the October election.

But while the law looks doomed to fail, its progress to the Education and Workforce Select Committee has surfaced allegations of how widespread instances of wage theft are, including claims that tip theft in the hospitality sector is rife.

Labour MP Camilla Belich, who stepped in to sponsor the bill following Omer’s departure from Parliament, said: “It’s about fairness.”

“Not committing theft against your employees is a pretty minimal standard,” she said.

The Raise the Bar Hospitality Union said wage and tip theft was one of the biggest issues faced by people in the hospitality sector.

Labour MP Camilla Belich is now the sponsor of the doomed wage theft bill.

“We have often gone over our members' timesheets (in particular chefs/kitchen staff) who have been contracted for 30 or 40 hours but are often working 50 to 70-hour work weeks and are not paid for these additional hours above their contractually agreed hours,” it said in a submission published on Parliament’s website.

“Time and time again we speak with hospitality workers all over the motu who have not been paid their wages owed, have been underpaid, had breaks they never took deducted from their pay, not receive all of their 8% accrued holiday pay, and the lowest of the low; had their tips stolen by their employer,” the union said.

One of the union’s member said she regularly urged customers at her workplace not to give tips via eftpos payments as they were often not passed on to workers.

National MP Scott Simpson said his party would not support the wage theft bill.

The argument made by supporters of the bill was that when an employee stole from an employer, they would be reported to Police, and could be prosecuted, while employers who routinely and intentionally failed to pay their workers their dues, were not subject to Police reports and investigations. Instead, they would generally only face a civil claim for unpaid wages from workers.

The Council of Trade Unions’ (CTU) submission said: “Workers who commit theft face financial penalties, the possible loss of liberty and lifelong reputational damage.

“Yet holding employers accountable for theft against workers is limited to civil action that can only be taken at the workers’ expense,” it said.

But Business NZ said: “It is, and always has been, unlawful to withhold employees’ wages, holiday pay or any other entitlements and means of redress already exist and are about to be strengthened.”

Neither Business NZ or the Community Law Centres expect police to want to investigate wage theft claims.

One of those means of redress was seen in action last month in a case that went before the Employment Relations Authority involving the case of an employer paying a young migrant woman for 30 hours work each week, but requiring her to work 50 to 60 hours a week. The employer was ordered to pay the woman the wages it should have paid her, interest on the sum, and penalties.

Business NZ did not think that criminalising wage theft would result in many cases being taken by Police to courts that were already “overwhelmed”.

The CTU shared the fear that police would have little desire to investigate wage theft, and suggested the government create a “wage inspectorate” to investigate allegations.

Some feared that criminalising wage theft could have unintended consequences for workers, including dragging them into multi-year court battles for offences the Community Law Centres (CLC) said would be “very difficult to prove and … very easy to defend”.

That could create long delays in them getting paid the money they were owed, MPs were told.

CLC worried criminalising wage theft could also have the unintended consequence of encouraging business owners to stop employing people, and instead, offer take them on as independent contractors with fewer rights.

ACT MP Simon Court, arguing against the bill in August last year while in opposition, said another unintended consequence could be criminal complaints against the likes of government departments and councils, citing failures to properly calculate workers’ holiday entitlements.

Belich dismissed that fear, saying employers who made innocent mistakes had nothing to fear from the proposed law.

What is “wage theft”?

The CTU said based on complaints to the Labour Inspectorate, the annual repayment of payroll “errors“, and research detailing the extent of wage theft in comparable countries, it was ”reasonable to estimate that at least tens of millions of dollars are stolen from workers annually in New Zealand.“ It claimed intentional wage theft included:

• Failing to pay KiwiSaver and/or superannuation.

• Failing to pay for breaks.

• Failing to pay overtime.

• Withholding of wages on the basis that it will put visa status at risk.

• Not paying for trial or training periods.

• Not paying personal, annual or paid leave.

• Phoenixing-type activity, where a firm goes into administration or liquidation to avoid having to pay employee entitlements, then re-emerges under a different legal structure but with the same or related individuals in control.

• Inappropriate deductions from workers’ wages such as inflated rent and transport costs.

• Charging employees for personal protective equipment.

• Paying “all-inclusive“ flat hourly or daily rates of pay without regard to specific entitlements.

• Non-payment of shift allowances or penalty rates.

• Salaried workers working extra hours in breach of the Minimum Wage Act.

• Incorrectly asserting all sort of conduct as “serious misconduct” so as to deprive workers of notice pay.