City Council passed an ordinance prohibiting the city of Cleveland from doing business with companies found to practice wage theft or commit payroll fraud.

Ordinance 892-2022 requires businesses seeking city contracts or financial assistance to report to the city’s Fair Employment Wage Board any adverse determinations by a government agency finding that they, or a subcontractor committed wage theft or payroll fraud within the last three years.

If a person fails to self-report such a finding against a business, they could be found guilty of a first-degree misdemeanor.

Wage theft is defined as any violation of state or federal law regarding the prompt payment of wages, payment of minimum wage, or prevailing wage rates.

Payroll fraud is defined as the concealment of a business’s true tax liability by not reporting or underreporting applicable wages or by paying employees under-the-table.

The Fair Employment Wage Board will be responsible for maintaining a list of businesses that have been found to commit wage theft or payroll fraud.