*State law defines fast-food establishments as any chain with at least 30 locations nationwide where customers have to order and pay for their food before they consume it. The fast food worker minimum wage will increase to $15.00 statewide on July 1, 2021.

**For tipped workers, their combined tips and cash wages must be equal to or greater than the full minimum wage for their region.

The new law also eliminated the tipped wage for workers “miscellaneous workers” including nail salons workers, car wash workers, doormen, skycaps valets and hair dressers. Those workers must now be paid the full cash minimum wage even if they also receive tips.

In addition, the minimum salary requirement necessary for executive and administrative employees to be exempt from overtime pay rules has increased for most regions. The minimum salary requirement for employees in New York City remains at $1,125 per week. The threshold increased for workers on Long Island and Westchester from $975 per week to $1,050 per week. The threshold increased for upstate workers from $885 per week to $937.50 per week.   

Minimum wage workers in New York will receive pay increase in 2018 in accordance with state law signed in 2016.   The minimum wage is based on the county in which the employees work and within New York City, whether the employer has more than ten employees, whether they work in the fast food industry and whether their employer takes a tip credit to the basic minimum wage. The following table summarizes the increases.

New York State Paid Family Leave

Workers will be eligible for 12 weeks of paid family leave in 2018. The time may be used for caring for family members during a serious health condition or to support the worker’s family when a member is called to active military service. Workers must be employed for six months before being eligible to participate.

As with the minimum wage increase, New York is staggering the benefit increases, beginning with 50 percent of an employee’s average weekly wage, capped to 50 percent of the statewide average weekly wage. The average weekly wage will increase to 67 percent by 2021, with a 67 percent cap.

The program will be paid for by worker payroll deductions.

Yesterday, New York’s Acting Commissioner of Labor, Mario J. Musolino, issued an Order in response to the recommendations of the NY Wage Board, commissioned by New York Governor Andrew Cuomo last year.

The order will raise the minimum cash wage for tipped workers from $4.90-$5.65 per hour to $7.50 per hour. The increase is expected to impact more than 200,000 workers within the State. A copy of the Order is located here.  

Following outrage over the exclusion of tipped worker’s from New York’s recent minimum wage increases, Governor Cuomo commissioned the Wage Board to make recommendations concerning the State’s tipped minimum wage.

Federal law allows employers to pay tipped workers as little as $2.13 per hour, but many states, including New York, provide stronger protections.  Currently, New York’s minimum wage is $8.75 per hour. Employers may take a tip credit towards the minimum wage, but must pay a cash wage of $4.90-$5.65 per hour. New York’s minimum wage will increase to $9.00 per hour at the end of this year, but until yesterday, tipped workers were once again excluded from that increase. 

The Commissioner accepted four of the Wage Board’s five recommendations. First, the Commissioner accepted the Wage Board’s recommendation to reduce the current three tiered minimum wage for hospitality workers and create a single minimum wage for all tipped workers.

Second, the Commissioner accepted the Wage Board’s recommendation to raise the tipped minimum wage to $7.50 per hour effective December 31, 2015, when the increase in the minimum wage for non-tipped workers increases to $9.00 per hour.

Third, the Commissioner accepted the Wage Board’s recommendation to increase the cash wage of New York City’s tipped workers to $8.50 if the legislature enacts a minimum wage increase for the city.

Fourth, the Commissioner accepted the Wage Board’s recommendation to review whether the State should eliminate a minimum wage tip credit system altogether.

Fifth, the Commissioner rejected the Wage Board’s recommendation that tipped employees who make 20-50% more than the minimum wage, should be entitled to a cash wage of only $6.50.

The Commissioner called this latter proposal “complicated” and described its impact as “unclear.” He further noted, “I reject the underlying assumption that the relief provided would be used to increase compensation to employees in the back of the house.”

We contacted the National Consumers League, a leading worker’s rights advocacy group, for comment. Sally Greenberg, the NCL’s Executive Director responded to the Commissioner’s Order, saying, “At long last, restaurant and hospitality industry workers in New York will receive a much needed raise. For months, low-wage workers risked their livelihood, walking out on their jobs and protesting for better pay. Today, it is clear those risks paid off.”

Not everyone was celebrating. The New York State Restaurant Association, a lobbying group working hard to keep restaurant workers’ wages low, issued the following statement: “By rubberstamping an extreme, unprecedented 50 percent increase it becomes hard to believe New York is really ‘Open for Business.’”

The NYSRA is clearly wrong. The Commissioner did not rubber stamp the Wage Board’s proposals, but gave careful consideration to their impact. In fact, the Commissioner rejected the restaurant industry’s proposal to provide a smaller tip credit to some workers even though that proposal was recommended by the Wage Board. The suggestion that the Commissioner did not act independently is based more on sour grapes than reality.

Moreover, we find unconvincing the NYSRA’s argument that paying workers more is a threat to business. When the increase goes into effect, there will still be eight states with a higher tipped minimum wage than New York. For example, California provides no minimum wage tip credit whatsoever.   However, the restaurant industry is thriving in California. 

Congratulations to NY’s tipped workers and the organizations that support them, including the NCL, Restaurant Opportunity Center, and Interfaith Worker Justice who fought hard for this historic increase.  The impact of these organizations cannot be denied. By raising awareness and staging protests, they have fought for legislative and organizational change and they are winning.

Following more than a year of worker protests over low wages, Wal-Mart announced last week that it would raise its minimum wage to $9 per hour in April 2015 and to $10 an hour by February, 2016. This morning, TJX Companies, the owners of T.J. Maxx, Marshall’s and Home Goods stores followed suit, announcing similar increases.

Ms. Greenberg noted the NCL’s work is far from done. She said, “every worker in America deserves a living wage and the assurance that they can provide basic necessities for themselves and their families. We will continue to push lawmakers at the state and federal level to support America’s low wage workers.”

With well-funded organizations like the National Retail Association and the National Restaurant Association fighting minimum wage increases every step of the way, worker’s rights organizations like the NCL can use all of the support they can get.

Download attachments:

• 2.24.2015 Wage Order

This morning, New York Attorney introduced the Payroll Card Act, proposed legislation regulating the use of payroll cards.

Mandatory use of payroll cards has been roundly criticized by workers and numerous government agencies because of the lack of consumer choice and exposure to unfair, unavoidable, and/or hidden fees.  

In announced the legislation, Attorney General Eric Schneiderman said,

Workers should not have to pay unfair fees in order to cash their paychecks … “While payroll cards can be helpful for employees without bank accounts, programs often impose fees that chip away at people’s hard-earned wages. The Payroll Card Act will ensure that workers have free and clear access to their wages, while providing clarity to employers about how to offer payroll cards in compliance with the law.

If signed into the law the Payroll Card Act will bring meaningful reform and curtail some of the most egregious acts of worker exploitation caused by implementation of the use of payroll cards. First, employees would have the right to decide whether they will be paid through a payroll card, direct deposit or paper check.

Second, the law would require that employees receive clear notice of payroll card program terms and conditions, including potential fees and ways of avoiding those fees.

Third, employers would be prohibited from using payroll card programs that charge certain types of fees, and require them to use payroll card programs with at least one network of ATMs where employees can obtain access to their wages without paying a fee.

Last year, AG Schneiderman’s office issued a report titled, Pinched by Plastic: The Impact of Payroll Cards on Low Wage Workers identifying numerous problems and abuses in the payroll card industry, including the following.

Cardholder employees were often given insufficient information about how to obtain their wages without incurring a fee and, where the employer provided detailed fee data, approximately 75% of cardholder employees incurred some kind of fee while attempting to access their wages.

In some programs, fees reached as high as $20 per employee per month, on average. Workers were steered or required to be paid by payroll card: 40% of employers surveyed did not provide employees with the option of receiving their wages by a traditional paper check, and an additional 31% discouraged the selection of a paper check.

Many programs failed to provide sufficient means for workers to withdraw wages without incurring fees. One employer’s payroll card vendor brought in almost $70,000 in fees for fewer than 5,000 cardholder employees during a one year period, of which over $60,000 were for ATM transactions alone, the majority of them to access wages or check account balances.

More than one-third of employers used payroll card programs that included overdraft fees. One payroll card vendor received over $200,000 in overdraft fees from August 2012 to July 2013, with an average of 2,570 accounts open each month.

Worker exploitation through an employer’s mandatory use payroll cards first came to national attention in 2013 when Natalie Gunshannon, a former McDonald’s franchise employee filed a class action wage theft lawsuit against her employer arguing that it was illegal for an employer to require worker’s to be paid on a payroll card.

While the franchisor responded by changing its policy, a McDonald’s spokesperson took no responsibility, noting “franchisees are responsible for, and make their own decisions around, employment and pay related matters.”

Gunshannon later published a petition on Change.org asking McDonald’s CEO Don Thompson to establish a policy precluding franchisees from scalping workers through the mandatory use of payroll cards laden with heavy fees. The petition received more than 300,000 supporters.

The Consumer Financial Protection Bureau, an independent agency of the U.S. Government, issued a bulletin warning employers and financial institutions that Payroll Cards were subject to the Federal Electronic Funds Transfer Act, which “prohibits employers from mandating that employees receive wages only on a payroll card of the employer’s choosing.”

We here at the Marlborough Law Firm applaud Ms. Gunshannon and Attorney General Schneiderman for their efforts in seeking serious reform. We look forward to the passage of the Payroll Card Act and hope that other states take appropriate steps to address this nationwide problem.

Download attachments:

• CFPB Payroll Card Bullettin 
• NY AG Report: Pinched By Plastic 

Here are a few of the effects of the new law:

Reduces Written Notification to Some Workers

The legislation reduces the Wage Theft Prevention Act worker notification of pay rate requirements. Since 2011, employers have been required to provide their employees with wage rate notification statements at the time of hire, and on an annual basis. Workers in the hospitality industry must also receive written notice when their pay rate changes.

Since the law went into effect, employers have complained that the annual notice requirement was burdensome.

The new amendment removes the annual notice requirement, but keeps the other notification requirements in place.

Increases Penalties and Exposure for Labor Law Non-Compliance

First, damages for failure to comply with the remaining notice requirements have increased. If an employer fails to provide the required notice within ten days of an employee’s date of hire, the employer can be liable for up $50 per day to a maximum of $5,000 per violation. Previously, the cap in civil cases was only $2,500 and accrued at a rate of $50 per week.

Second, damages for failure to provide pay stubs in compliance with the WTPA have increased from $100 to $250 per violation and the cap on such damages has increased from $2,500 to $5,000.

Third, recidivist wage thieves are subject to increased penalties. Employers with a wage theft violation in the last six years could be subject to an additional $20,000 penalty.

Fourth, contractors and subcontractrors will be required to disclose their wage violations to their employees by providing them with an attachment in their paychecks summarizing the violations. This will likely help workers determine if they are part of a larger group of workers being cheated in the same way. 

Cracks Down on the Corporate Shell Game

Several provisions of the new law target employers’ use of corporate entities to insulate themselves from liability for wage theft.

First, the new law closes the LLC loophole. New York law previously provided that the top ten shareholders of a closely-held corporation can be held personally liable for the company’s acts of wage theft.  Wage thieves easily avoided liability under this statute by forming a limited liability company to operate the business instead of a corporation.

Under the new law, members of a limited liability company with the ten largest percentage interests may be personally liable for the LLC’s wage theft. This provision removes the advantage of forming an LLC for the purpose of escaping personal liability for wage theft.

Second, it will now be more difficult to simply restructure or rename the business in order to avoid liability. Under the new law, successor entities with the same employees, the same ownership and which are engaged in substantially the same operation will be liable for the acts of the predecessor entity.

Overall, we support the new changes, which should have the effect of reducing the administrative burden on honest employers, increasing the cost of committing wage theft and bringing the hammer down hard on repeat offenders.

Download attachments:

• Assembly Bill A8106-C

The news is not so good for the tens of thousands of New York workers who survive on customer tips.

Under certain circumstances, employers can pay tipped workers less than the minimum wage by taking a credit against the tips that workers receive from customers.  

New York law provides for a separate tip credit for three categories of tipped workers: 1) food service workers; 2) service employees and 3) resort and hotel employees. 

While New York’s hourly minimum wage increased by $.75; the employer tip credit increased by the same amount for each category of tipped worker.

As a result, employers are not required to increase the minimum wages actually paid to qualifying tipped workers. 

The following tables explain how tipped workers are shut out of this year’s wage increase:

Moreover, absent legislative intervention, tipped workers will get stiffed on next year’s minimum wage increase as well.  While the regular minimum wage is scheduled to increase to $9.00 on December 31, 2015, the increase will be accompanied by  a  $.25 across the board increase to the tip credit.  Here’s how that breaks down:

If you think this is unfair, you are not alone. The Restaurant Opportunities Center of New York, a worker’s rights organization, has called for New York to abolish the subminimum wage for tipped workers. The organization notes that:

Millions of working American adults spend their careers in tipped jobs, yet tipped workers such as servers, bussers, bartenders, and barbacks face a poverty rate three times higher than the overall workforce. This is because the law allows employers to pay tipped workers less than the minimum wage, forcing workers to depend on unstable income from tips to support their families. This means restaurants are passing the obligation of paying wages onto their customers, even though tips are meant to be a gratuity that shows appreciation for good service.

Many states have raised their tipped minimum wages, and seven states have abolished the tipped minimum wage entirely and pay up to $9.19/hour to tipped workers. But New York’s minimum wage for tipped workers is only $5.00/hour – not nearly enough to support a family in the state with the highest cost of living in the continental U.S.

New York should be a leader in the fight for fair wages for tipped workers because abolishing the tipped minimum wage is a policy that is good for families, good for gender equality, and good for the restaurant industry and economy!

However, 2016 may turn out to be a good year for New York’s tipped workers after all.  In July 2014, New York Governor Andrew Cuomo directed the New York Department of Labor to convene a wage board to consider recommending a raise for tipped workers. 

We’ll keep you posted.

On December 23, 2014, Congressman Grimm pled guilty to aiding and assisting in the preparation of false and fraudulent tax returns.  In connection with the guilty plea, Mr. Grimm agreed to the following facts: 

On or about January 30, 2013, Michael Grimm testified under oath in a deposition in connection with a civil lawsuit pending in the United States District Court for the Southern District of New York. During the deposition, Grimm testified that Healthalicious employees had not been paid in cash. Grimm also testified that he did not generally correspond through email regarding the business of Healthalicious.

“Grimm further testified that, to the extent he used email in connection with Healthalicious, he used a ‘Yahoo’ account to which he no longer had access. In fact, Grimm knew at the time of the deposition that Healthalicious employees had been paid by cash, as detailed above.

In addition, at the time of the deposition, Grimm knew that he had sent and received many emails related to Healthalicious and had accessed and continued to use an AOL email account which he did not identity in the deposition and which contained many emails related to Healthalicious.

At the time of the indictment, we quoted NY City Councilman Rory Lancman who said,  “[i]f Al Capone introduced Americans to the seriousness of tax evasion, then hopefully Michael Grimm’s indictment will do the same for the seriousness of wage theft.” and “[w]hile tax, wire and mail fraud are the mainstays of federal white collar prosecutions, the justice department’s willingness to apply those heavy hammers essentially in defense of protecting wages and the integrity of our wage-based retirement and income security system should remind all employers that cheating working people is serious business.”

We hope that Mr. Grimm’s conviction will alert a few more wage thieves to the seriousness of their actions.

Download attachments: Michael Grimm Statement of Facts

This Grimm tale was covered in a recent Huffington Post article entitled Wage Theft is Grimm Business, written by New York City Councilman Rory Lancman. The article notes that “Basically, Congressman Grimm may be going to jail for wage theft.”

This somewhat of an oversimplification, Mr. Grimm was not criminally charged with wage theft. Several states, including New York and California are aggressively enforcing criminal laws against wage theft, but federal law does not provide for any criminal penalties for wage theft.

Nevertheless, Mr. Grimm was indicted on April 28, 2014 on twenty criminal counts in federal court relating to his alleged wage theft practices.  Those charges include conspiracy to defraud the United States, preparation of fraudulent tax returns, health care fraud, wire fraud, mail fraud, perjury and obstruction of an administrative proceeding.

Congressman Grimm’s alleged scheme to defraud the government unfolded in the course of a civil wage theft lawsuit brought by two former employees of Healthalicious, a restaurant in upper Manhattan owned by Grimm, filed in federal court in December 2011. The complaint in that case alleged that Grimm failed to pay the plaintiffs and other Healthalicious workers minimum wage and overtime required by federal law and failed to pay them minimum wage, overtime and spread of hours premium pay required by New York State law.

The civil wage theft case was settled confidentially in March 2013, two months after the Congressman provided deposition testimony in the case. The evidence obtained in the civil case left a trail of breadcrumbs for federal prosecutors to follow.

The criminal fraud charges against Grimm stem from his alleged failure to report nearly $1,000,000 in taxable income and his alleged scheme to pay his workers in cash “off the books” by failing to report those cash wages to federal and state authorities, thereby lowering the restaurant’s payroll tax and worker’s compensation insurance costs.

In addition, the perjury and obstruction charges concern Grimm’s alleged false testimony in the civil wage theft case. The government claims that “in January 2013, while a member of Congress, GRIMM lied under oath during a civil deposition about his role in operating the restaurant, including falsely denying that he paid Healthalicious’ workers in cash.”

Councilman Lancman correctly points out that wage theft “doesn’t merely hurt the cheated worker; taxpayers get fleeced, too. This is where Congressman Grimm finds himself in hot water. The federal government loses Social Security and Medicare revenue. State workers’ compensation and unemployment insurance systems become stretched, in some cases to the brink of insolvency. Governments at all levels lose income tax revenue.” 

Councilman Lancman bookends his article with the following opening and closing comments: “[i]f Al Capone introduced Americans to the seriousness of tax evasion, then hopefully Michael Grimm’s indictment will do the same for the seriousness of wage theft.” and “[w]hile tax, wire and mail fraud are the mainstays of federal white collar prosecutions, the justice department’s willingness to apply those heavy hammers essentially in defense of protecting wages and the integrity of our wage-based retirement and income security system should remind all employers that cheating working people is serious business.” 

I couldn’t have said it better myself.  Wage thieves beware.

Download attachments:

• Grimm Civil Wage Theft Complaint
• Grimm Criminal Indictment

Since, 1967, the Buffalo Jills have been the official cheerleading squad for the Buffalo Bills NFL football team.  

For decades, the Jills were subject to illegal pay practices and unfair working conditions, including not being paid anything for long hours spent working at Buffalo Bills home games, practices and numerous personal appearances.  They also were required to sell posters of the Jills squad and provide modeling services for those posters without compensation. 

In the mid-1990’s, the Jills fought back and worked collectively to improve their working conditions.  In 1995, the National Labor Relations Board determined that the Jills cheerleaders were employees not independent contractors and affirmed their right to vote to form a union.  The Decision and Direction of Election reads: 

The facts herein clearly establish that the cheerleaders are employees rather than independent contractors.  The Employer controls their rehearsal schedules, their costumes, their routines, the times and places of performances and requires each to maintain a specific weight.  The cheerleaders are not allowed to book their own performances and have no ability to employ or arrange for replacements.  The Employer places strict limits on their discretionary time, prohibiting fraternization with members of the Buffalo Bills team or staff, and requiring all their actions as an individual to reflect the Jills’ organization. All significant business decisions are made by the Employer which alone decides if and when appearances are made as well as how much, if anything will be paid for the appearance.

In February 1995, the members of the Jills voted overwhelmingly (29-2) in favor of making the National Football League Cheerleaders Association the first and only NFL cheerleaders labor union.  For the first time in Jills’ history, the unionized Jills received cash compensation for working the Buffalo Bills games and aspired to encourage other NFL cheerleaders to join their union.   

The Jills employer responded bitterly to the formation of the union, stating, “to me, jumping around on the sidelines isn’t really work. It isn’t labor at all” and “It’s not like they work in the coal mines.  They’ve never been instructed to stand under 3,000-degree iron ore in a steel mill.”

The Jills’ historic success did not last long.  WIithin months, the Jills filed a grievance with the National Labor Relations Board after their employer cancelled the Jills’ public appearances and failed to notify them of upcoming tryouts in an effort to keep these uppity women off the squad and thwart their efforts to receive a fair day’s pay for a fair days work.  After this management lockout, their employer then folded the corporation that managed the Jills and they struggled to find a new sponsor.  The Jills found a temporary sponsor after merging with the International Brotherhood of Electrical Workers, also known as the IBEW.

In 1996, the Jills were forced to dissolve the union as a condition of obtaining a new sponsor.  Many of the improvements in the working and pay conditions that the unionized Jills had worked so hard to achieve were rolled back by management in the ensuing years.  In 1996, one member of the Jills was Stephanie Mateczun, who is now the Jills’ Cheerleading Co-ordinator and President and CEO of the corporation that manages the Jills.   

On April 22, 2014, Caitlin Ferrari, through her attorneys Christopher Marlborough of the Marlborough Law Firm, P.C. and Shane Rowley of Levi & Korsinsky, LLP filed a class action lawsuit challenging the pay practices of her employers.  According to the class action complaint, by the time Ms. Ferrari joined the Jills in 2009, the Jills were not being paid for participating in Buffalo Bills games, cheerleading practices, numerous personal appearances, modeling sessions, or auditions required to stay on the team.  They were also required to provide “professional instruction” to young girls in the lucrative Junior Jills cheerleading clinic program.

The complaint alleges that defendants failed to pay Ms. Ferrari and her fellow Buffalo Jills cheerleaders and non-performing ambassadors minimum wage for all hours worked and spread of hours premium pay for working more than ten hours in a single workday.  Moreover, the Complaint alleges that Ms. Ferrari and other Jills were required to pay more than $500 for their own uniforms and to pay for other expenses that should have been paid by their employer and to purchase Jills swimsuit calendars and event tickets to sell on their own time.

Another lawsuit containing similar allegations was filed by five former Jills on the same day as a non-representative action.

On March 24, 2014, two days after the lawsuits were filed, Mateczun announced that her company was suspending all operations of the Jills pending the outcome of litigation.  Once again, the Jills were out of work due to another management lockout.

Mateczun later admitted that the Buffalo Bills have been pulling the strings of the Buffalo Jills enterprise all along, stating, “If people believe they don’t maintain influence and control over every part of their operation, including their cheerleaders, they are mistaken.”  Mateczun’s lawyer also noted that the Buffalo Bills had offered to supplement the Jills’ pay for the 2014 NFL season weeks before the lawsuit was filed, but withdrew that commitment to fund the squad in light of pending litigation. 

On May 8, 2014, the NFL held its annual Draft Day at which the Jills traditionally particpate in support of the Buffalo Bills.  However, due to the management lockout, the Jills were benched for this event.  Mateczun’s lawyer commented, “[t]hat is a day that the Jills would ordinarily be expected by the Buffalo Bills to participate in their promotional activities around Draft Day.  We are not going to conduct business as usual as long as these legal issues remain unresolved.

On May 9, 2014, Ms. Ferrari filed an amended complaint adding new allegations concerning the Buffalo Bills control over the Jills and the management lockout.

Like her predecessors, the heroic women of the 1995 -1996 Buffalo Jills, Ms. Ferrari understands the power of collective action.  She filed her case as a class action and will be seeking court certification of a class including all current and former Buffalo Jills since April 22, 2008.

Ms. Ferrari wants to see the Buffalo Jills prosper and continue to support the Buffalo Bills on and off the field, while ensuring that she and other class members are compensated fairly and in accordance with the law for the substantial amount of work that they have provided to their employers.

If you have any information about the employment practices concerning the Buffalo Jills or have any questions about the case, please contact Christopher Marlborough: chris@marlboroughlawfirm.com or call (212) 991-8960. 

A Copy of Ms. Ferrari’s Amended Complaint is Attached Below.

First Amended and Supplemental Class Action Complaint

Hats off to Dan O’Regan of Long Island Business News and Tom Incantalupo of Newsday.com for their coverage of this issue.

Here are the names of the restaurants and their respective Yelp.com pages.

• Kashi Sushi and Steak House, Rockville Centre, NY – Yelp
• Crystal Garden Chinese Buffet, Riverhead, NY – Yelp
• Crystal Garden, Ronkonkoma, NY – Yelp
• Good Taste Buffet, Commack, NY – Yelp
• Kumo Sushi and Steakhouse, Stony Brook, NY – Yelp
• Nikishi Hibachi and Sushi, Selden, NY – Yelp
• Hotoke Japanese Steakhouse, Smithtown, NY – Yelp

I like a nice steak but I will not be patronizing any of these establishments. Allegations of systematic and pervasive wage theft make me lose my appetite.

Download attachments:

• Here is a copy of the Consent Judgement in the case against Good Taste Buffet and its owner Mei Qing Huang 

The discussion commemorated the one-year anniversary of the first Wal-Mart employee walkout in which workers demanded to be paid a living wage. Since that time, there have been a number of walkouts in Wal-Mart stores across the country, fast food workers have held walkouts in sixty cities, and the alt labor movement continues to grow. 

Tomorrow’s Black Friday is expected to include the largest Wal-Mart employee walkout ever and will be accompanied by protests at Wal-Mart stores across the country.  Information about protests can be found here.

The Wal-Mart Movement

Patricia Locks was a panelist at the Demos event and a longtime employee of Wal-Mart.  She participated in the front lines of the Wal-Mart walkouts.  Patricia is part of the organization United for Respect at Wal-Mart (OUR Wal-Mart).  They are fighting to be paid a living wage and for Wal-Mart to stop retaliating against workers who speak up.  Wal-Mart has allegedly fired or disciplined one hundred OUR Wal-Mart leaders and Patricia reported observing Wal-Mart’s retaliation first hand.    

On November 15, the General Counsel of the National Labor Relations Board found  merit in allegations that Wal-Mart: 1) unlawfully threatened employees with reprisal if they engaged in strikes on Black Friday last year, 2) “unlawfully threatened, disciplined, and/or terminated employees for having engaged in legally protected strikes and protests,” and 3) “unlawfully threatened, surveilled, disciplined, and/or terminated employees in anticipation of or in response to employees’ other protected concerted activities.”  The Office of the General Counsel has authorized the filing of a complaint against Wal-Mart for these alleged violations of the National Labor Relations Act.

While fear of unlawful retaliation by Wal-Mart may be limiting participation in its employees efforts to organize, other workers have continued to speak out. 

The Fast Food Movement       

Naquasha LeGrand is a member of Fast Food Forward, a movement led by fast food workers to improve wages and working conditions in the industry.  She participated in the first wave of fast food walkouts earlier this year, when she walked off her job at KFC.   Naquasha discussed her employer’s wage theft practices, such as automatically deducting time from her pay records for breaks that she never took.    

In the short time she has been participating in the walkouts, she has observed its exponential growth.  While the first action was small with about two hundred workers walking out on their jobs, three times as many workers participated in the second walkout.  The third walkout expanded to twelve cities across the country and the fourth to sixty cities. 

The Black Friday Creep

Patricia’s noted that she would be spending her Thanksgiving holiday working at Wal-Mart. She is not alone. The company has decided to follow a recent trend among retailers by starting its so-called “Black Friday” specials a day early and putting 1.1 million of its employees to work on Thanksgiving to handle the customer volume.

Wal-Mart is among a number of retailers that that have failed to take a stand against the “Black Friday creep” in to what will hopefully remain a traditional family holiday.  The Black Friday creep has bled into the fast food industry as well, where restaurants are opening on Thanksgiving in order to profit from serving hungry holiday shoppers. 

CNN reported today on the story of Tony Rohr, a manager at a Pizza Hut restaurant who was allegedly fired for taking a stand against the Black Friday creep.  When he refused to open his store on Thanksgiving, he was instructed to write a letter of resignation.  Instead, Tony refused to quit, but was fired anyway after telling his employer the following:      

I accept that the refusal to comply with this greedy, immoral request means the end of my tenure with this company . . . I hope you realize that it is the people at the bottom of the totem pole that make your life possible.

After Tony’s story made national headlines, he was quickly offered his job back.  While exposing the employer’s conduct may have worked to get Tony his job back, shaming corporations for their oppressive conduct is not likely to stem the tide of the Thanksgiving creep on a larger scale.

I applaud Patricia, Naquasha, and Tony, for taking a stand to support worker’s rights.  I respect you guys, even if your employers don’t. Happy Thanksgiving.

Last June, an Illinois man was sentenced to three years in prison for walking out on a $70 restaurant bill. It should come as no surprise that “dining and dashing” is a crime, and most people understand that the practice should be treated as any other kind of theft. Sill, while the defendant had previous convictions on his record, the punishment seems rather severe. His sentence breaks down to a year in jail for every $23.

By that measure Tassos Strifas and George Strifas, cousins and co-owners of the Colony Diner in East Meadow, New York would have received more than 14,000 years in jail for stealing worker’s wages between January 2009 and March 2011 in connection with tens of thousands of meals served at the diner.

At one time, the Strifas’ faced up to four years in prison for their own form of dining and dashing. However, they copped a plea and received no jail time whatsoever.  Instead they were ordered to pay $338,000 in stolen wages and $163,000 in liquidated damages to their workers.

They were also required to pay $64,000 in back taxes and fines to the government. Wage thieves are also often tax cheats as well and the Strifas’ were no exception.   Not only were they stealing from their workers, they were also stealing from the government. The diner’s tax returns indicated that it operated with 11-15 workers, when they actually employed 35-40 employees in a given week. For more than half of their workers, the diner paid no payroll taxes and did not contribute to the unemployment and worker’s compensation systems.  

The two felons pleaded guilty in April to failing to pay wages, offering a false instrument for filing and falsifying business records. The latter two charges came to light after a search warrant revealed that the Colony Diner was cooking a lot more than french fries with mozzarella cheese, they were also cooking the books.   Authorities discovered two sets of books. One included falsified pay records while a second set of records including the actual hours and pay rates worked by the diner’s employees.

The case resulted from a joint investigation of the Nassau County, District Attorney’s Office and the U.S. and New York State Departments of Labor. “Labor laws exist to ensure that hard-working employees are paid every penny of their wages, as well as hold accountable unscrupulous bosses who steal from their workers,” Rice said in April.

Hats off to the investigators who uncovered the Strifas’ criminal scheme. I applaud the authorities’ efforts to get these workers their money back. However, until we see more employers receiving jail sentences commensurate with the crimes they commit, the deterrent for other thieves like the Strifas’ will be minimal.

While, 14,000 years may be an excessive jail sentence, seeing the Strifas’ do some time in the clink or losing their business license could have deterred unscrupulous employers from following in their footsteps. Here’s the message to wage thieves from this conviction: If the statute of limitations expires before you get caught, you are home free. If you are the rare employer who gets prosecuted for stealing wages, pay the money back with a small penalty and its business as usual. Opportunity missed.    #wagetheftperpwalk

District Attorneys promised to prosecute looting cases “to the fullest extent of the law” and proclaimed, “zero tolerance for looters.” Though most of the looting cases were subsequently thrown out of court, at least we all had something to rally against for a while.

Then we went back to our lives. We began to rebuild after the storm. And the real looting began.

Yesterday, New York Newsday reporters Keith Herbert and Sarah Creighton published a series of articles concerning employer wage theft in the wake of Hurricane Sandy. Creighton has been on the story since at least November 2012. At that time, she reported that some Long Island, New York municipalities were not requiring contractors on government clean-up projects to pay wages commensurate with local prevailing wages.

She and Herbert followed up with a second article in April 2013, when the District Attorneys of Nassau and Suffolk Counties issued a series of subpoenas to local governments for payroll records and contracts for Sandy clean-up projects to ensure compliance with New York’s prevailing wage laws.

According to the authors’ most recent series of stories, these government investigations have borne fruit. They expose rampant abuses in the industry including prevailing wage fraud, independent contractor fraud, and outright refusal to pay promised wages.

They reveal that hundreds of workers were potentially deprived of hundreds of thousands of dollars in wages and benefits due to violations of state labor laws. Moreover, they reported that several municipalities acknowledged that they failed to comply with their obligations under the law.

The alleged looters, on the other hand, aren’t saying much.

Prevailing Wage Violations

The focus of the Newsday series was compliance with New York’s prevailing wage law in the wake of Hurricane Sandy.

The law requires that contractors with state and local governments on construction projects pay their worker on par with those in the local community. The prevailing wage rates are determined according to a schedule based on union level wages and benefits.  

Prevailing wage laws encourage high quality workmanship by requiring wages high enough to attract competent workers. By taking wages out of the equation, prevailing wage laws organize competition around quality, productivity, and efficiency without encouraging contractors to low-ball bids on government contracts and underpay their employees to compensate for it.

The Newsday series notes that four out-of-state workers are awaiting a hearing before an administrative law judge to determine whether they are entitled to prevailing wages for their work clearing Long Island Rail Road lines for Custom Tree Care, an out of state subcontractor for Long Island-based Looks Great Services, Inc.   Looks Great has a number of municpal contracts which it claims are not subject to prevailing wage laws.  If successful, the New York Department of Labor estimates that the four workers will be entitled to about $60,000.

Nassau County District Attorney, Kathleen Rice found violations of the prevailing wage law in seven cases resulting in $424,000 owed to workers. Rice was quoted as saying, “We won’t tolerate unscrupulous businesses cheating workers on Long Island, whether it’s after a major disaster like Sandy, or during any other time of the year.”

As of late August, the New York Department of Labor had recovered $113,000 in back wages and benefits for workers as a result of their post-Sandy wage verification investigations.

New York Attorney General Eric Schneiderman recently reported that contractor Signal Restoration Services was ordered to pay more than $500,000 in back wages to its employees. In a press release, Schneiderman commented, “Employees who worked long hours to rebuild New York after Hurricane Sandy deserve fair wages and the fullest protection of the labor law.”

Since Hurricane Sandy more than $2.2 million in back wages owed by contractors has been recovered.

The Politics of Prevailing Wage Law

It’s not just employers who need to be monitored, but local governments as well. Some strapped local governments don’t want to pay contracts that include prevailing wages. While adhering to prevailing wage laws during an emergency may costs governments money, it also prevents exploitations of low wage workers in devastated communities.

For some reason, politicians have seized on natural disasters as the perfect opportunities to scale back on worker’s rights by suspending prevailing wage laws in connection with those tragedies. In New Jersey, one legislator proposed a law that would exempt public works projects related to Hurricane Sandy relief from that state’s prevailing wage law. Fortunately, that legislation went nowhere.

In 2005, George W. Bush suspended the enforcement of the David-Beacon Act, the federal prevailing wage law, in areas hit by Hurricane Katrina. However, in the face of bipartisan pressure, Bush backed down and reinstated the law only six weeks later.

Creighton and Herbert note that some municipalities required provisions in their contracts that clean-up workers be paid the prevailing wage according to state law, while others did not. The Islip Deputy Town Attorney, Mike Walsh, reported receiving “pushback” about his insistence on ensuring that clean-up workers are paid a prevailing wage.

Independent Contractor Fraud

In a related article, the authors report on three Custom Tree Care workers who claim to have been misclassified as independent contractors.

Misclassifying employees as independent contractors is one way in which employers often avoid the payment of prevailing wages, overtime and other benefits to their workers. They also avoid the payment of payroll taxes, worker’s compensation insurance and other costs. This gives the wage thieves an unfair advantage over their competitors.

As Thomas Perez, U.S Secretary of Labor put it:     

“Some people call the practice “misclassification.” I call it what it is: workplace fraud. Workplace fraud has three victims: the worker of course; the employers who do the right thing but find themselves undermined by an un-level playing field; and the government, which gets cheated out of unpaid taxes.”

The independent contractor rules in New York can include a large number of factors. However, in 2010, the New York legislature responded to massive misclassification abuses in the construction industry by passing the Construction Industry Fair Play Act, which streamlined the test for workers in the industry. Under the new “ABC” test, a worker in the construction industry is an employee and not an independent contractor unless: A) the worker is free from the employer’s direction and control; B) the work performed is not the usual work done by the employer; and C) the worker has an independently established business.

Outright Wage Theft

The series further notes that, out-of state-laborers were allegedly lured to New York by employers with promises of high paying job. Only after they traveled to New York and began working, did these laborers learn that they would be paid less they were promised and less than they could have earned had they not relocated.

One worker traveled from Topeka, Kansas to New York to work for Custom Tree Care. He claims he was promised $20 per hour. However, when he received his fist paycheck, he was paid only $10.00 per hour and $15.00 for overtime. He complained to his foreman, to no avail. Several other workers told similar stories about their experience working for Custom Tree Care.   

Greg Gathers, CEO of Custom Tree Care declined comment for the Newsday story.

Stealing wages is nothing new, employers have been doing it to their workers for centuries.  I consulted my copy of Black’s Law Dictionary that I bought in law school.  However, the nation’s leading law dictionary was no help.  It did not have any entry at all for wage theft.

I then consulted a more authoritative source: Wikipedia.  Wikipedia describes wage theft as “the illegal withholding of wages or the denial of benefits that are rightfully owed to an employee.”

That looks like a good working definition for the purposes of this blog, so let’s go with that. 

Why Is Wage Theft Treated Differently From Other Kinds of Theft?

The improper withholding of wages earned by a worker is theft of services.   If a kid sneaks into a movie theater without paying for it, he can be prosecuted for larceny.  Get caught jumping the turnstile in a New York City subway station and it will cost you $100, forty times the regular fare.  Moreover, people don’t think twice when companies press charges against their employees for embezzlement, taking company property or stealing cash from the till.  Why is it different when the victim is an employee and the thief is the company she works for?

I thought about whether there are any other crimes where the relationship of the victim to the perpetrator can be so decisive to the analysis.  I came up with the case of marital rape.  Historically, criminal laws exempted husbands from being convicted of raping their wives.  The origin of these laws has been traced to the idea that women are essentially the property of their husbands and marital rape was thus an impossibility.  As stated by Sir Matthew Hale, Chief Justice in England, marital rape could not be recognized since the wife “hath given up herself in this kind unto her husband, which she cannot retract.”  The effects of this policy persisted for centuries in the United States.   The criminalization of marital rape in the United States did not begin until the mid-1970s and by 1993 it was a crime in all 50 states; however, some exceptions for marital rape continued long after that.

I do not know if our blindness to wage theft is a relic of the European history of serfdom or some other aspect of the relationship that makes people think differently about it.  I do know that it is time to change the dialogue.

Are Attitudes Changing?

Hopefully it won’t take decades to turn the tide on wage theft.  Thanks to the hard work of a number of worker’s rights groups, politicians, media outlets, and concerned citizens, the wage theft crisis has received more recognition in recent years.  California and New York have enacted Wage Theft Prevention Acts and other states are following suit.  In New York a few employers have been criminally prosecuted for stealing their workers wages.  Yesterday, the New York Attorney General announced the arrest of the owner of a cleaning company who was charged with failure to pay wages under the state labor laws and retaliation.       

Rapists and thieves should be prosecuted without regard to their relationship to the victim.  When husbands rape their wives they should go to jail.  When an employer refuses to pay his workers in a manner that constitutes theft, he should be prosecuted as vigorously as any other thief.