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Angelina Palafox has been working as a nail specialist for more than 20 years in various New York salons. At her most recent job, she was paid both in cash and by check. Palafox noticed, though, that when she was paid in cash, she would always get less than the agreed upon wage of $100 a day that she received when paid by check.
When Palafox confronted her boss, the owner took away her customers for a week and then fired her. “This was salary theft and an unjustified layoff,” Palafox testified in Spanish before a joint hearing of the state Senate’s Labor and Judiciary Committees last week.
Palafox’s story of wage theft is a common one for many workers in New York State, and particularly so for those employed in the restaurant, construction, food delivery, cleaning, home care and logistics industries, advocates say.
That was the message emanating from the State Senate committee room at 250 Broadway last week when dozens of workers, union leaders, lawyers and advocates testified about the problem at a hearing called by State Senator Jessica Ramos ahead of what the lawmaker hopes will be the enactment of the Securing Wages Earned Against Theft legislation or, more commonly, the SWEAT Act.
Leaders of unions representing construction trades spoke at the hearing about the difficulty in trying to recoup stolen wages for undocumented workers on non-union job sites, waitstaff described having their tips taken away and home care and laundry workers testified about being paid below the minimum wage.
Ramos, the Labor Committee’s chair, held the hearing to highlight the many workers in her Queens district and throughout the state that have experienced wage theft. It’s estimated that wages lost to theft tally nearly $1 billion a year. The SWEAT Act would allow victims of wage theft to anonymously petition for a lien to be placed on their employer's assets until legal proceedings conclude and they are paid what they are owed. The legislation would also prevent employers from transferring those assets or cloaking their money in different bank accounts or shell companies.
The SWEAT bill, first introduced by Upper West Side Assembly Member Linda Rosenthal, passed both the state Senate and Assembly in 2019 but was vetoed by Governor Andrew Cuomo, who said that while he was supportive of the bill’s intent, he was concerned about its constitutionality.
‘A cost of doing business’
While those who testified at the hearing, which lasted nearly eight hours, overwhelmingly support the bill, the extent of the crimes described by workers and the lack of timely legal remedies cataloged by lawyers who spoke at the hearing made it clear that the passage of just one bill wouldn’t be able to fully tackle an issue estimated to victimize two million New Yorkers annually.
“Wage theft really is the biggest crime that no one talks about in New York State,” Ramos said at the hearing’s start. “When an employer steals from workers, they are harming the family that relies on those wages as well as taxpayers and honest small business owners who are subsidizing these predatory business practices.”
The issue has received increased interest from law enforcement. In February, Manhattan District Attorney Alvin Bragg announced the formation of a Worker Protection Unit to prosecute wage theft. The DA also created a stolen wage fund in partnership with the state’s Department of Labor to help victims of wage theft recoup their lost funds.
Rachana Pathak, who heads the new Worker Protection Unit, said that the Manhattan DA has recouped more than $6 million in stolen wages for city workers in the last five years, primarily from the construction trades. “For many companies, wage theft is part of a company's business model,” Pathak said at the hearing. “Too often when a company is caught stealing wages from its workers it simply pays back what it owes and continues its exploitative conduct. It is a cost of doing business.”
Bragg and Pathak have been pushing state lawmakers to take up a separate law that would classify wage theft as a grand larceny felony, arguing that the elevated charge could act as a deterrent and dovetail with the SWEAT Act’s focus on civil penalties and restitution.
Widespread and endemic crime
Karen Cacace, the labor bureau chief in the state Attorney General’s Office, told lawmakers at the hearing that the office has received more than 2,160 complaints since 2021 concerning improper payment of wages. “Wage theft is endemic across all demographics especially in low-wage industries,” she said, noting that immigrant workers are especially at risk.
Since last year the office of state Attorney General Letitia James has been investigating claims of wage theft at UPS, allegations brought by Teamsters Local 804, which represents more than 8,000 UPS workers in New York.
“UPS, like other large employers, commits rampant wage theft against its workers,” Josh Pomeranz, Local 804’s director of operations, said at the hearing. “Enforcement mechanisms and penalties must be enhanced if we are ever going to curtail corporate America’s immoral and criminal behavior.”
Cacace said the most common kinds of wage theft are done through failures to pay minimum wage or time-and-a-half for overtime work, tip theft and the intentional misclassification of workers. Lawyers from the Legal Aid Society and the National Employment Lawyers Association also spoke in support of the bill, arguing that it would help shorten the time for wage theft claims to be adjudicated and settled, and could act as a deterrent for employers who may otherwise cheat their workers out of wages.
Critics of the SWEAT bill, from the NYC Hospitality Alliance and the Latino Bar and Restaurant Association, argued at the hearing that the bill would remove due process for business owners, create additional expenses and burdens and encourage frivolous lawsuits. “What investor is going to want to put money into a new restaurant or a growing local company if they know that there could be a lien placed on their own personal assets?” Andrew Rigie, the Hospitality Alliance’s executive director, asked the committee.
Ramos and other supporters of the bill pointed out that workers would have to supply evidence of wage theft to have lien placed on employers’ or investors’ assets and that the hold on assets would only be temporary.
Following the pandemic, which raised the public’s awareness of worker exploitation, and a new executive in Governor Kathy Hochul, Ramos and other SWEAT supporters are hoping the bill can finally become law. “We are tired of wage theft, tired of low salaries and tired of being exposed to dangerous chemicals all day long without ventilation or adequate protection,” Palafox said at the hearing. “We demand your support for all workers.”
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