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Session Wrap 2017: SWEAT- More to be done for Wage Justice

July 31, 2017

Author: Elizabeth Koo

Empire Justice Center and the SWEAT Coalition, consisting of over 70 groups representing workers, businesses, unions, anti-poverty groups and faith-based groups, worked hard to advocate for the Securing Wages Earned Against Theft (SWEAT) Bill [A.628 (Rosenthal)/S.579 (Peralta)] - legislation designed to fight against New York’s wage theft epidemic and wage collection crisis, and to close loopholes in our state’s labor laws.  While we made great strides during this year’s legislative session, ultimately, we were disappointed that SWEAT and its provisions to improve wage theft enforcement mechanisms were not passed. 

But we will not give up.  We will continue to work with bill sponsors Assembly Member Linda Rosenthal and Senator Jose Peralta, the Legislature and Governor Cuomo to make sure SWEAT is prioritized and passed.  Without SWEAT’s passage, workers who suffer from wage theft will continue to be deprived of their hard-earned pay, honest businesses will be forced to compete against scofflaw competitors, and the State will continue to be cheated out of millions of dollars in potential revenue and payroll taxes.  The SWEAT bill must pass to ensure justice and fairness for workers, law-abiding businesses, New York taxpayers and the State. 

New York’s Wage Theft Epidemic and Wage Collection Crisis

Across the state, employers regularly commit wage theft by paying workers less than the law requires by not paying minimum wages, overtime pay, prevailing wages or wages for all hours worked.  Despite existing labor laws, workers often cannot collect the wages that are stolen from them.  Even when workers successfully take their employers to court or to the Department of Labor, employers are frequently able to avoid paying what they owe by closing their businesses or transferring money and property to others.  More than $125 million in court judgments and Department of Labor decisions has not been collected in New York State. [1]  The US Department of Labor estimates that more than $1 billion in wage theft occurs annually in New York State. [2]

How SWEAT Protects Good Businesses

Under current laws, hard-working, law-abiding employers must compete against businesses that give themselves an unfair edge by exploiting loopholes to avoid paying one of their largest expenses: wages.  Existing laws offer protection from wage theft but lack effective enforcement mechanisms that would ensure accountability.  Businesses need SWEAT because of the tools that it creates to weed out illegal business competitors, while allowing businesses to run as usual while wage claims are ongoing.  SWEAT gives employers the power to:

  • Challenge a lien or try to remove it.  If the court determines that the amount stated in the wage lien is willfully exaggerated, the lien is void;
  • Require an itemized statement from the employee to provide more details about the wage claim;
  • Send a notice to the employee stating that they must either file a foreclosure action or action to obtain a judgment within 90 days; and
  • Remove the lien by posting a bond while the court determines the validity of a wage claim or by paying the amount of the wage claim and filing a notice of payment.


How SWEAT Protects Workers and the State

The SWEAT bill creates tools for employees and the State, giving them a better chance to collect the money they are owed from wage theft violators after a court or the Department of Labor judges in their favor by:

  • Expanding New York State’s mechanic’s lien law to allow all workers the right to put a temporary lien on an employer’s property when they have not been paid for their work;
  • Adopting Connecticut’s attachment standard to allow workers with wage theft claims to temporarily hold an employer’s assets during litigation, under the supervision of a judge, if the workers show a likelihood of success on their claims; and
  • Amending the New York Business Corporation Law and Limited Liability Company Law to help workers collect wage theft judgments from the principal owners of privately held corporations.


When businesses that commit wage theft are brought to court, they often exploit the months or years it takes to get a judgment and use that time to transfer money from their bank accounts, hide property and assets in the names of family members, close down businesses only to open again under a new name, create sham corporations to evade liability, and/or leave the country with their property.  As a result, by the time a judgment for stolen wages is won, the money is long gone.  SWEAT helps level the playing field for employees so that money is available to pay the judgment - wages workers have earned - after they prevail in a court case or a Department of Labor investigation.

Common Wage Theft Cases

  • In Ithaca, a group of restaurant workers from the Green Café thought they had found redress for thousands of hours of unpaid work when the New York State Department of Labor (DOL) found the owner owed $623,000 for labor violations at his Ithaca location, and a further $377,000 for his deli in New York City – all in all, a million dollars in unpaid wages and fines.  Shortly after this, the owner of the Green Café closed its doors.  Several years later, neither the DOL nor the workers have been able to collect a single cent of the money they are owed. 
  • The Worker Justice Center of New York (WJCNY) brought a case on behalf of 106 food processing employees but the workers were unable to collect the final $100,000 of a $250,000 settlement after the defendant ceased paying according to the settlement agreement.  After the plaintiffs successfully obtained a judgment for the remaining wages owed, the defendant owner closed the defendant corporation and, upon the sale of the company’s remaining assets, transferred all its proceeds to another corporate entity held by a relative of the owner of the defendant corporation, which was not named in the original lawsuit. 
  • In a case that LatinoJustice PRLDEF and the Asian American Legal Defense and Education Fund (AALDEF) won against the restaurant chain Kum Gang San, a judgment was secured in favor of Korean and Latino workers for $2.67 million, yet the workers have been unable to collect as a result of defendants’ transfer of assets to avoid paying workers what they are owed. 


If the reforms proposed by SWEAT had already been in place, these workers and many more across the state may have been able to claim all the wages due to them by successfully attaching and preventing the sale of their employers’ assets, by allowing workers to put a temporary lien on an employer’s property, and by holding all responsible parties accountable at the outset of litigation. 

SWEAT Legislation:

A.628 (Rosenthal)/S.579 (Peralta): An act to amend the lien law, in relation to employee liens; to amend the labor law, in relation to employee complaints; to amend the civil practice law and rules, in relation to grounds for attachment; to amend the business corporation law, in relation to streamlining procedures where employees may hold shareholders of non-publicly traded corporations personally liable for wage theft; and to amend the limited liability company law, in relation to creating a right for victims of wage theft to hold the ten members with the largest ownership interests in a company personally liable for wage theft. 

This bill strengthens the current laws to increase the likelihood that victims of "wage theft" will be able to secure payment of unpaid wages for work already performed from their employers.

Memo of Support and List of Supporters:


Media:
 


Reports:


Please join us in our efforts to pass the SWEAT Bill

Contact Elizabeth Koo at 585-295-5728 or ekoo(at)empirejustice(dot)org for information on how to join the coalition and support the SWEAT Bill’s passage.

End Notes:
 [1] “Empty Judgments” A report prepared by the Securing Wages Earned Against Theft (SWEAT) Coalition, available at https://cdp.urbanjustice.org/cdp-reports/emptyjudgements.
 [2] “The Social and Economic Effects of Wage Violations,” Prepared for U.S. Department of Labor by Eastern Research Group (Dec. 2014), available at http://www.dol.gov/asp/evaluation/completed-studies/wageviolationsreportdecember2014.pdf.

 





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