Fighting Back Against Wage Theft

Edgar Juarez used to work 72 hours a week at Artie’s Delicatessen on 83rd Street, almost double the average American’s workweek of 40 hours. He was only paid $2 an hour. Juarez eventually organized his co-workers and successfully sued the owner over the underpayment. But he says he has yet to receive any of the resulting compensation.

At his next job, at a restaurant called U Like Garden, on 105th Street and Columbus Avenue, the conditions were the same—72 hours a week, two dollars an hour. The workers demanded a meeting with the owner and told him he had to follow New York State’s labor law, which at the time mandated a minimum wage of $7.25. The owner closed the business and declared bankruptcy.

“All we wanted was minimum wage,” Juarez said, “But he said he didn’t have any money.”

His current job, at a franchise called Hummus Kitchen on 80th Street, is relatively better but not completely devoid of problems. He claims the management “steals” about four hours of his work a week. After the minimum wage was increased to $8 at the beginning of this year, he waited a month for a raise before speaking to his manager. The manager’s response: “That’s not my problem, that’s the governor’s problem.” Edgar and his fellow workers are currently battling the franchise in yet another lawsuit.

Juarez is one of many low-income workers in New York City who say employers cheat them out of their wages on a regular basis. According to a 2012 report by the National Law Employment Project, an economic advocacy and policy analysis group, low-wage workers in three cities — New York, Chicago and Los Angeles—lose more than $56 million per week in unpaid wages. The report also says New York State loses $427 million in tax revenue every year due to wage theft.

But some of New York’s workers are fighting back. They have formed an alliance called the SWEAT (Secure Wages Earned Against Theft) coalition, in order to fight for their rights and for reforms in the labor law. The SWEAT Coalition, led by a workers membership organization called National Mobilization Against Sweatshops comprises nearly 40 organizations. These include various workers’ unions, labor organizations like Domestic Workers United and the Worker’s Justice Project, legal advocacy groups like the Urban Justice Center and The Legal Aid Society, and even students from the CUNY Law School Labor Coalition.

Together, they are lobbying to pass the SWEAT bill, a bill that will, if passed, allow workers who initiate legal action to recover stolen wages to put a hold, or a lien, on employers’ property until those wages are paid. Under the current law, this option is only available to home improvement workers like mechanics and gardeners, but the SWEAT bill aims to extend it to all low-wage workers.

Workers will also be able to put a hold on employers’ assets until a wage-related lawsuit is resolved, to prevent them from disappearing, as advocates say they often do. And finally, the bill proposes giving workers the ability to hold the largest shareholders of companies personally liable for wage theft—even if they are not directly involved in the transaction.

According to the General Minimum Wage Act, employers must pay all employees in New York State $8 an hour, a number that will be increased to $8.75 at the end of this year and $9 at the end of 2015. However, advocates say, these numbers apparently mean nothing to some of the city’s restaurant and small business owners, who openly flout labor laws. They argue that this is because they know they’ll hardly ever face the consequences. Selling the business and other assets to family members at a low price, as Edgar’s former employer did, is common practice. So is declaring what a judge in one case called “fake bankruptcy.”

The SWEAT bill, introduced last June in the New York State Assembly by Linda Rosenthal and in the New York State Senate by Jose Peralta, aims to put greater restrictions on employers and corporations that are adept at finding legal loopholes to get out of paying their employees. “Here is a simple solution to a technical problem,” said Peralta at a SWEAT Coalition event at CUNY Law School last month. “I’m excited that this is going to actually happen.”

Kate Bronfenbrenner, director of Labor Education Research at Cornell University’s school of Industrial and Labor Relations, says the SWEAT Bill has a chance of getting passed, but there are no guarantees. She refers to a similar bill, the farmworkers’ fair labor practices act, which was withdrawn last April after coming up one vote short.

“I think they can get this passed,” Bronfenbrenner said. “We’re talking about enforcing a law that already exists, we’re talking about not stealing workers wages.” However, she also says that passing the bill will require support from the public as well. “This is going to involve going neighbor to neighbor, educating the public so the public can educate the legislature.”

The bill has received sizeable backing in the state assembly, with five sponsors besides Rosenthal as well as 12 co-sponsors.

There has been no significant opposition to the bill either. Small business associations across the state, for the most part, have not raised objections, says JoAnn Lum of the national organization against sweatshops in spite of outreach by various groups within the SWEAT Coalition. The Business Council of New York State did not responded to requests for a comment, while the Manhattan Chamber of Commerce was unaware of the SWEAT Bill and the New York State Restaurant Association declined to comment.

The provision to hold corporations accountable for the actions of their franchisees stems from a recent lawsuit against Domino’s Pizza by a group of New York City deliverymen, who claimed that the franchise they worked for violated minimum wage, overtime and tip-credit regulations, and even retaliated against workers who complained.

Carlos Rodriguez, the worker who initiated the Domino’s legal action, said he used to work 66 hours a week for an hourly wage of $4.40. “When I spoke up for my rights, they fired me,” he said. The franchisee Dave Melton, who owned two stores in New York and another two in Connecticut, filed for bankruptcy midway through the lawsuit.. However, in a major victory for the workers, the court ruled that Domino’s corporation was also liable for the actions of their franchisee, and in January this year, awarded 61 workers $1.3 million in damages. The workers will get payments ranging from $400 to $61,000 based on the number of weeks they worked at the stores.

But such victories are few and far between, and the obstacles for workers keep increasing. According to workers associations and unions, employers often go to extreme lengths to prevent workers from speaking up. In some cases, workers say they even resort to bribery, threats and even physical assault.

“Employers take labor laws as a suggestion,” said Sarah Ahn of the Flushing Workers Center. Ahn cited the case of an owner of an auto body shop in Flushing, who she says hired goons to attack workers asking for fair wages, and even threatened their families.

Amy Tai of the Urban Justice Center, one of the major legal organizations in the SWEAT coalition, says wage theft is rampant in New York, and mentioned restaurants and construction sites as the “two major problem industries.”
She also explained that employers are getting savvier at evading the law. “A judgment of a million dollars after years of fighting means nothing if the workers can’t collect on it,” she said.

Tai says wage liens already exist in seven other states, but New York is behind the curve. “We need to get this bill passed to help workers in New York State,” she says.