Fight Wage Theft Blog
Chris Marlborough is a class action attorney representing workers seeking wages owed to them by their employers.
The corporations call this wage and hour litigation, those on the side of the workers call it wage theft.
This blog will explore the civil and criminal legal aspects of the American wage theft crisis as well as its social, economic and moral implications.
The U.S. Department of Labor has filed complaints against seven Long Island restaurants for failure to pay back wages and overtime to hundreds of workers. The Defendants in those cases have agreed to pay more than $1.7 million in back wages, damages and penalties.
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 http://www.yelp.com/biz/kashi-sushi-and-steak-house-rockville-centre
Crystal Garden Chinese Buffet, Riverhead, NY http://www.yelp.com/biz/crystal-garden-chinese-buffet-riverhead
Crystal Garden, Ronkonkoma, NY http://www.yelp.com/biz/crystal-garden-ronkonkoma
Good Taste Buffet, Commack, NY http://www.yelp.com/biz/good-taste-buffet-commack
Kumo Sushi and Steakhouse, Stony Brook, NY http://www.yelp.com/biz/kumo-sushi-and-steakhouse-stony-brook
Nikishi Hibachi and Sushi, Selden, NY http://www.yelp.com/biz/nishiki-hibachi-and-sushi-selden
Hotoke Japanese Steakhouse, Smithtown, NY http://www.yelp.com/biz/hotoke-smithtown
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.
Last week, I attended a panel discussion concerning recent efforts by the alt labor movement to push back against poverty level wages and worker oppression. Titled: Alt Labor Rising: Organizing Wal-Mart and the Fast Food Industry. The panel was moderated by Salon Staff Writer, Josh Eidelson and sponsored by public policy organization Demos.
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: http://blackfridayprotests.org/.
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.
The thieves received no jail time because they own the place.
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
Following every natural disaster, television screens are filled with images of heroic rescuers, victims of devastation, and looters. We feel proud for the woman who risks herself for others. Our sympathy goes to the victim for his loss. But for the looter, we reserve our derision. Hurricane Sandy was no exception.
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.
I am a class action wage theft attorney. Many of my colleagues, family and friends are not familiar with the term wage theft. In the legal field wage theft attorneys are generally known to practice wage and hour litigation. It sounds much nicer than calling it what it is: stealing wages from workers.
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.