Posted on April 18, 2017
Workers Find Winning a Wage Judgment Can Be an Empty Victory
The sign above Soft Touch Car Wash on Broadway in the Inwood neighborhood of Manhattan declares, “Open 24 hours,” but last month the bustling carwash suddenly closed. It was the same at the four other carwashes owned by the same family in New York City and the surrounding area: the phone lines disconnected, the hoses and wash mops idle and dry.
The operators of the small chain, José and Andrés Vázquez, agreed to pay $1.65 million to 18 employees to settle a federal lawsuit over stolen wages, a significant victory in the battles against wage theft in the city’s low-paying industries.
But the suddenly shuttered carwashes illustrate a persistent problem confronting many low-wage workers not just in New York but across the country: Winning in court is no guarantee that they will ever see much, if any, compensation.
The workers who toiled at the Vázquez carwashes battled for nearly six years before receiving the money they were due, their efforts hampered by the owners having filed for bankruptcy — a well-worn tactic used to avoid paying exploited workers, according to labor advocates. The owners could not be reached for comment.
Now, some New York State lawmakers are renewing a push for legislation that would put in place a type of insurance against this tactic, which crops up in industries from nail salons to restaurants. The measure would essentially enable employees who accuse an employer of wage theft to have a lien placed on the employer’s assets while the outcome is being determined.
“We are improving the lot of low-paid service workers; however, we haven’t attacked this fundamental problem of them giving their work, giving their time, and not getting compensated for it,” said Assemblywoman Linda B. Rosenthal, a Democrat who represents parts of Manhattan. “And it’s just not something we can tolerate anymore.”
In a setback for workers and their advocates, the measure was dropped from the budget agreement that state lawmakers reached. But a bill with the same measure, introduced this year by Ms. Rosenthal, is poised for a vote this spring in the Assembly.
Selling off houses and businesses — sometimes for a nominal sum, and frequently to a relative — and declaring bankruptcy is a move that experts say business owners often use to avoid paying back wages, overtime or damages, usually as a result of a court order. Under Ms. Rosenthal’s proposal, businesses would not be permitted to sell their assets while a wage dispute was underway.
“We know their tricks,” she said, referring to unscrupulous business owners. “This is an attempt to jump in front of their tricks.”
A 2015 report written by several worker advocacy organizations calculated that between 2003 and 2013, the New York State Department of Labor was unable to collect over $101 million that employers owed workers.
“It’s not surprising that people who are willing to cheat their workers are willing to transfer their assets to prevent their workers from getting what they are rightfully owed,” said Richard Blum, a staff attorney with the Legal Aid Society who works in the employment law division.
Small-business groups have opposed Ms. Rosenthal’s measure, saying it is an unnecessary and unfair burden on employers.
“It’s based on an accusation, not on proof,” said Denise M. Richardson, the executive director of the General Contractors Association. “An employee who feels aggrieved should not be able to tie up a business’s finances absent any proof that in fact they have been subject to wage theft.”
But workers say they need more powerful tools to battle employers who mistreat them.
“Right now, it is very easy for these sweatshop bosses to steal workers’ wages,” said Jin Ming Cao, who has yet to see any of the over $100,000 a judge ordered his former employer, a restaurant in Manhattan, to pay him in 2010, part of $1.5 million settlement involving a group of workers. “Even when they’re found out by a court, they just change names, it’s so easy.”
Laws allowing liens against business owners involved in wage disputes exist in half a dozen states — Alaska, Idaho, New Hampshire, Texas, Washington and Wisconsin — but only Wisconsin permits liens solely based on an allegation of wage theft, according to the National Employment Law Project. In the other states, a lien is allowed only after wage theft has been proved as a result of a lawsuit or an agency investigation, for example.
In New York, rules are already in place to protect workers in a few select industries where wage theft has been a widespread problem. In 2015, Gov. Andrew M. Cuomo imposed a requirement that nail salons carry wage bonds, a type of liability insurance designed to prevent the nonpayment of workers.
Nail salon owners have campaigned against the requirement, arguing that the price of carrying such insurance is too burdensome for small businesses like theirs. The cost varies depending on the coverage; carrying a $25,000 bond, for example, would cost an employer between $550 and $700 a year, according to providers.
Last week, lawmakers in West Virginia voted to remove, on similar grounds, a wage bond requirement that had long been in place for construction and mining industries.
On a sidewalk outside Manhattan Valley, an Indian restaurant on the Upper West Side, about 100 workers gathered recently to pass out fliers and chant that the proposed state measure, commonly known as Sweat — securing wages earned against theft — needed to become law.
When the restaurant was known as Indus Valley, a group of 10 workers sued and were awarded $700,000 in back wages by a federal judge in 2014. They still have not been paid. The owners have told the court that they sold the restaurant and that Manhattan Valley is a new restaurant with different owners. Workers and advocates claim that is a ruse to avoid payment and that the same owners still run the restaurant.
One of the workers is Efren Caballero De Jesus, 43. He delivered curries, bottled raita sauce and cleaned the kitchen at Indus Valley, often seven days a week, 10 or more hours a day, earning as little as $400 per week, for four years. “I felt degraded,” Mr. De Jesus said.
He was elated when a judge apportioned him over $180,000 of the award in 2015, but three years later, he wonders if he will ever receive anything from the two brothers who owned the restaurant, Phuman and Lakhvir Singh.
“I thought if we got the decision, we were going to collect the money,” Mr. De Jesus said. “I feel very angry.’’
Ahmed Hussain, a server answering the phone at Manhattan Valley on Thursday, said the Singh brothers no longer owned the restaurant. The Singhs could not be reached.