For the first time, Philly enforces its wage theft law by suing an employer who stiffed workers

For the first time in seven years, the City of Philadelphia has sued an employer who broke the city’s wage theft law.

The lawsuit represents an escalation of the city’s efforts to enforce its 2016 wage theft law. In some cases, it can take years for workers to get paid after they win a wage theft claim; some never get paid at all.

The Law Department, which hired a dedicated attorney last spring to handle these kinds of cases for the Department of Labor’s Office of Worker Protections, has begun taking legal action “to force bad actors into compliance,” a spokesperson for the Office of Worker Protections said in a statement. Lawsuits are “an avenue of last resort,” the spokesperson said.

Bad actors are employers that broke the law but refuse to comply with city orders and pay workers what they’re owed. More than 90% of employers that have broken the law comply, the spokesperson said.

The city filed a complaint in Common Pleas Court earlier this year against Joe Carvalho, a Philadelphia construction company owner who the city says broke its wage theft law twice.

» READ MORE: As Philadelphia Labor Department faces proposed budget cuts, advocates seek more funding for worker’s-rights enforcement

In March 2021, Carvalho didn’t pay an employee for eight days of work, owing him $1,105 in wages and overtime, a city investigation found. Carvalho had said he would pay the worker $130 per day.

The following month, the worker repeatedly asked for his pay and Carvalho ignored the texts or “responded with curse words,” according to a city violation notice.

Carvalho told The Inquirer that there had been a misunderstanding and that he had paid the worker in full but didn’t have the records to prove it. He said he would settle the case because it would cost more in time and money to fight it.

“I’ve agreed to pay him because it’s not that big of a deal, it’s like, $1,100,” he said Tuesday, adding, “I ignored the issue, I thought it’d go away, it clearly didn’t, and it escalated.”

That was the second wage theft violation Carvalho received from the city. The first, dated September 2020, was for stealing $4,822 from a different worker.

In January 2021, after four months without a response from Carvalho, the Office of Worker Protections placed Carvalho Construction on its bad actor list, designed to shame employers into complying. That same month, Carvalho texted a city investigator saying his company had gone out of business.

The worker eventually got paid last June after winning his case in Municipal Court. Carvalho ultimately paid $12,135 in wages, damages, and attorney’s fees after the worker’s attorney located and garnished his bank account.

Carvalho said he did not pay this worker in full because the worker and his crew had done shoddy work and Carvalho had to pay others to fix it.

Asked why he did not respond to the city’s orders, he said, “that was just my fault, being delinquent.”

Carvalho said he no longer runs his own construction business. “I got tired of being self-employed, having to do everything myself and everything on my shoulders,” he said.

» READ MORE: Employees at 15 Philadelphia airport restaurants thought they got a contract in June. Management denies any agreement was made.

Though the city repeatedly told Carvalho that he could face fines and penalties up to $2,000 per week, officials did not levy penalties. Wage theft enforcement experts say penalties are necessary to deter future violations.

The city waited nearly 18 months from the date of the initial violation notice before filing the court case, first sending Carvalho a reminder to pay in September 2021 and a final notice two months later.

The Office of Worker Protections spokesperson said most of its cases are resolved within six months, but “thorough investigations … can be a time-consuming process in order to reach a resolution” and that Carvalho Construction was unresponsive several times throughout the investigation.

The Department of Labor became a permanent office in 2020 after voters approved its creation. Previously, it was housed within the Mayor’s Office. The department is currently facing a cut to its budget.

“While this is the first case we’ve filed, it certainly won’t be the last,” the spokesperson said. “We will continue to exhaust every possible strategy to defend the city’s labor laws and do right by workers when these critical rights have been violated.”