Fighting for American Workers

Types of Wage Theft



Christopher Marlborough

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On March 2, 2015, Chris Marlborough, principal of the Marlborough Law Firm, will be the featured speaker at a meeting of the Nassau County Bar Association’s Labor and Employment Committee. 

Mr. Marlborough’s presentation titled, “Who’s the Boss?” will concern the application of the joint employer doctrine to wage and hour cases in the Second Circuit. The meeting is open to members of the Nassau County Bar Association. 

The meeting will commence at 12:30 pm at 15th and West Street Mineola, New York.

Continuing Legal Education credit is available.  For more information about the meeting, call the Nassau County Bar Association at (516) 747-4070.

 

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.

Friday, 13 February 2015 18:47

New York AG Proposes Payroll Card Reform

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.

The class action and individual lawsuits against the management of the Buffalo Jills Cheerleading squad have been pending in the New York Supreme Court for Erie County since April 2014 before the Honorable Timothy J. Drury, J.S.C.

The cases concern allegations that the NFL cheerleaders for the Buffalo Bills football team were misclassified as independent contractors and unlawfully deprived of minimum wage for hundreds of hours of work.

In January 2015, the Court granted a motion by Caitlin Ferrari, plaintiff in the class action to amend the operative complaint. The order permits plaintiff to: assert claims against additional defendants, including the National Football League (“NFL”); assert a claim for retaliation against Defendants Buffalo Bills, Inc. (the “Bills”); and add plaintiffs Alyssa U., Maria P., and Melissa M. as plaintiffs in the class action. The new class plaintiffs had originally asserted their claims individually.

Copies of plaintiffs' 78-page Second Amended Complaint and the Court's Decision and Order granting the motion for leave to amend the complaint are linked below.

Defendant NFL

The Court permitted plaintiff to add the NFL as a Defendant. As we noted previously, the Bills lost earlier motions to dismiss the cases against it. In its’ opposition to those motions, the Bills revealed evidence concerning the NFL’s participation in the classification of the Jills as independent contractors.

The Bills asserted that it was not the cheerleaders’ employer, but it merely licensed use of the Buffalo Jills trademark to certain third-parties, including Defendant Citadel Broadcasting Company. The Bills produced several licensing agreements which included independent contractor agreements that the Jills management were required to have the cheerleaders sign as a condition of their participation on the squad. Several of the licensing agreements were approved by Commissioner Roger Goodell.

Plaintiff has argued that the independent contractor agreements are void as a matter of law. In the new complaint, plaintiff sought to assert claims against the NFL for its participation in the misclassification scheme.   The Court noted in its decision:

The copies of the agreements between the Bills and Citadel, which in part concern the operation of the Buffalo Jills, as independent contractors, were approved by Commissioner Roger Goodell for the NFL and are arguably evidence of the NFL’s role in the conduct of the Jills cheerleading squad, which is at issue.

The Retaliation Claim Against the Bills

The Court permitted plaintiff to add a claim against the Buffalo Bills alleging retaliation against the cheerleaders.

In its answer to the complaints, the Bills asserted counterclaims against certain class members in the class action and the plaintiffs in the individual action for up to $100,000.

The Bills claimed that the independent contractor agreements that it required one third-party management company to have the Jills sign, contained a provision indemnifying the Bills for costs of the lawsuits.

Plaintiff argued that the independent contractor agreement that she was required to sign did not include the indemnificatin provision, and even it had, the agreement would be void and unenforceable as a matter of law.

After Plaintiff Ferrari brought the issue to the Court’s attention, the Bills withdrew the counterclaim without prejudice. They then asserted a claim against the management company for failing to include the indemnification provision in the independent contractor agreement that the cheerleaders were required to sign.    

Plaintiff sought leave to amend her complaint to add a claim against the Bills for filing the counterclaim in retaliation for bringing the lawsuit, and noted that because the claim was only withdrawn without prejudice, the Bills could later reassert the claim. The Court permitted plaintiff to add the retaliation claim, noting: “although the Bills have withdrawn the counterclaim, it has done so without prejudice.”

Christopher Marlborough, one of the attorneys for the plaintiffs commented on the Court’s decision:

We are pleased with the Court’s decision. We were shocked when we learned about the leagues participation in the misclassification of the Jills as independent contractors and appalled by the Bills' decision to file a counterclaim against its former cheerleaders. We remain hopeful that the situation can be resolved in time for the Jills to take the field for the start of the 2015 season.    

This isn’t the first time that members of the Jills have fought to improve working conditions for their fellow cheerleaders. In 1995, the National Labor Relations Board determined that the Jills were employees rather than independent contractors. That same year, the members of the Jills voted overwhelmingly to form the NFL Cheerleaders Association, the first and only NFL cheerleader labor union. They had hoped that other NFL cheerleading squads would join the cause, but their historic achievement was short-lived. By 1996, the union was forced to disband in order for the Jills to continue performing on the field.

For inquiries concerning the case contact: This email address is being protected from spambots. You need JavaScript enabled to view it..

Monday, 26 January 2015 12:34

Chris Marlborough Helps Bridge The Gap

On January 24, 2015, Chris Marlborough, principal of the Marlborough Law Firm, co-presented a continuing legal education program at the Nassau Academy of Law before one hundred new admitted attorneys. The segment, entitled “Alphabet Soup of Labor and Employment Cases,” was part of the Nassau County Bar Association’s "Bridge-The-Gap" weekend which provides all the CLE credits newly admitted attorneys need for their first two years of practice.

Mr. Marlborough focused his portion of the program on minimum wage and overtime requirements of federal and New York State law.  Mr. Marlborough said that he was honored to participate and noted, “It was my privilege to provide such an impressive group of young lawyers with information about the wage theft crisis in America.”

On December 29, 2014, New York Governor Andrew Cuomo signed legislation amending the New York Labor law. The bill includes several amendments to the 2010 Wage Theft Prevention Act. Most of the new amendments go into effect on February 27, 2015.

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.

Wednesday, 31 December 2014 23:04

Not So Happy New Year For NY's Tipped Workers

Minimum wage workers in New York State will be ringing in the new year with a raise.  Beginning today, the State's minimum wage has increased from $8.00 to $8.75 per hour. 

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:

Effective 12/31/2013

Minimum Wage

Tip Credit

“Tipped Minimum Wage”

Food Service Workers:

$8.00

$3.00

$5.00

Service Employees:

$8.00

$2.35

$5.65

Resort Hotel Employees:

$8.00

$3.10

$4.90

Effective 12/31/2014

Minimum Wage

Tip Credit

“Tipped Minimum Wage”

Food Service Workers:

$8.75

$3.75

$5.00

Service Employees:

$8.75

$3.10

$5.65

Resort and Hotel Employees:

$8.75

$3.85

$4.90

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:

Effective 12/31/2015

Minimum Wage

Tip Credit

“Tipped Minimum Wage”

Food Service Workers:

$9.00

$4.00

$5.00

Service Employees:

$9.00

$3.35

$5.65

Resort Hotel Employees:

$9.00

$4.10

$4.90

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.

Tuesday, 23 December 2014 22:35

A Grimm Confession

In May 2014, we reported here that Republican Congressman Michael Grimm had been indicted on tax fraud and perjury charges related to a wage theft lawsuit against him.  Despite the pending charges, Mr. Grimm handily won re-election last November. 

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.

The Marlborough Law Firm is proud to announce that Christopher Marlborough has been selected to the 2014 New York Rising Stars list.  This is the second year in a row that Mr. Marlborough has received this honor.

Super Lawyers, a Thomson Reuters business, is a rating service of outstanding lawyers from more than 70 practice areas who have attained a high degree of peer recognition and professional achievement. The annual selections are made using a patented multiphase process that includes a statewide survey of lawyers, an independent research evaluation of candidates and peer reviews by practice area. The result is a credible, comprehensive and diverse listing of exceptional attorneys.

Each year, no more than 5 percent of the lawyers in the state are selected by the research team to receive the “Super Laywers” honor, and no more than 2.5% are selected as “Rising Stars.”

 

Chris was appointed Vice Chair of the Nassau County Bar Association for its upcoming term.  He will be serving alongside Committee Chairman Jeffrey M. Schlosseberg, Of Counsel with Jackson Lewis, P.C..  Chris responded enthusiastically to the appointment, saying "It is always an honor to be recognized by one's peers. I am particularly honored by this appointment, because the Committee includes some of the finest labor and employment attorneys in the country.  I have appreciated the diversity of viewpoiints expressed at the Committee meetings and look forward to contributing more actively as Vice Chair."  The one-year term runs from fall of 2014 until the summer of 2015.  

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"I have a message for those employers who break this nation's labor laws and prey on vulnerable workers: It ends today."

 - Hilda Solis, United States Secretary of Labor (2009-2013)

Why Choose Us

We have the experience, passion and commitment that it takes to litigate complex wage theft cases and consumer class action casesbr.

We concentrate our practice on class actions and seek recovery for as many workers as possible.

We accept most of our cases on a contingency fee basis, which means that you will not be required to pay anything unless your case is successful.

Meet The Team

Christopher Marlborough has been litigating class action cases since 2007. He is a former Chair of the Labor and Employment Committee of the Nassau County Bar Association.

Jennifer Marlborough is a seasoned attorney with more than 14 years of litigation experience.

Chris founded the Marlborough Law Firm in 2013 to continue his fight against corporate wage theft and consumer fraud practices. 

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If you think you may be the victim of wage theft or consumer fraud, do not hesitate to contact us. Consultations are always free.  


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