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Labor-law Violations Seen Costly for City Workers
Crain's New York Business
Daniel Massey

January 28, 2010
View the Original Article

Employer violations of minimum wage, overtime and other labor laws across an array of industries costs more than 317,000 low-wage workers in the city $18.4 million per week, according to a new study released Thursday.

The workers lose almost 15% of their earnings due to labor violations—$58 each per week, or $3,016 every year, according to the study by the nonprofit National Employment Law Project.

“America's core labor and employment laws are failing to protect significant numbers of workers in the nation's largest city,” argue the authors of the study, ”Working Without Laws: A Survey of Labor Law Violations in New York City”, which was funded by the Ford Foundation and four other grant making groups. “These protections—the right to be paid at least the minimum wage, the right to be paid for overtime hours, the right to take meal breaks, access to workers' compensation when injured and the right to advocate for better working conditions—are being violated at alarming rates in the city's low-wage labor market.”

Interviews with more than 1,400 workers and analyses of their payroll data showed that 54% never received money that was legally due to them. The study found 21% of workers were paid less than minimum wage and 77% of the almost 500 respondents who worked more than 40 hours a week did not receive overtime pay.

Of workers who reported violations of the state minimum wage, which was $7.15 per hour at the time of the survey, more than 50% were underpaid by $1 or more per hour. And among workers with an overtime violation, the average respondent worked 13 extra hours.

The study also found it common for low-wage workers not to receive required meal breaks and to be forced to work off-the-clock without pay. They also rarely used the workers compensation system when injured on the job—often because of employer threats—and frequently faced retaliation if they complain about conditions.

"This is literally a world of work without laws in which hundreds of thousands of New Yorkers lack protections most of us take for granted," said Annette Bernhardt, policy co-director of the National Employment Law Project and one of the report's authors.

Minimum wage violations were especially common in laundries, dry cleaners, private households, beauty salons, nail salons, barbershops and grocery stores, while overtime infractions occurred frequently in restaurants and child care centers, according to the report. Workers paid by the week or day instead of the hour had higher violation rates, an indication that employers try to disguise violations with flat-rate pay arrangements. And, the violation rates were also much higher for companies with less than 100 employees than for larger companies.

"This isn’t about a set of rogue employers," said James DeFilippis, a professor at Rutgers University and one of the report’s authors. "The scale of the violations show that at the beginning of the 21st century workplace violations are an accepted business strategy in whole sets of industries."

Foreign-born workers were particularly vulnerable to violations, the study shows, with 25% reporting minimum wage violations—twice the rate of their U.S.-born counterparts. The higher rates were concentrated among women—especially women who were undocumented immigrants, 40% of whom reported a minimum wage violation. Though women, immigrants and people of color were disproportionately affected, the report found violations hit all workers in the low-wage labor market.

New York state has overhauled its enforcement of wage and hour law under Commissioner M. Patricia Smith—conducting targeted sweeps instead of relying solely on complaints—but the report argues increased funding, tougher laws and more attention at the state and city level is needed to confront the issue. The state collected and disbursed a record $28.8 million to nearly 18,000 New York workers last year. Management-side labor attorneys say private wage and hour suits have also proliferated, especially since lawyers who represent workers can demand attorney fees as part of awards.

“Labor laws in the state are very weak,” said Pat Purcell, assistant to the president at United Food and Commercial Workers Local 1500. “The point should be to discourage bad behavior, but here the laws on the books are simply the cost of doing business—and that's if you get caught.”

The NELP study defines low-wage workers as those who earn less than $13.07 per hour, which is 85% of the city's median wage. That population includes 586,322 workers, or about 31% of all non-managerial employees and about 14% of all workers in the city.

New Yorkers like Jose Rosendo know the report's findings first hand. Mr. Rosendo earned $250 for 60-hour weeks during an eight-month stint as a cleaner, stocker and deliveryman at the upscale grocer Amish Market two years ago.

“It was enough for the rent and the lights and that's it,” said the 27-year old from Guerrero, Mexico who was one of 550 workers to share in a $1.5 million settlement the state Department of Labor reached with the company (which did not respond to a request for comment) in February. “I was exploited.”