Three Ways New York City Can Prevent Wage Theft
In recent months, crime has dominated public discourse in New York City. Notably absent from the discussion, however, is one of the most prevalent forms of crime in the US: Wage theft. It’s a crime that can take many different forms, including businesses stealing workers’ tips, paying them less than the minimum wage, or denying them access to paid sick leave.
A 2017 Economic Policy Institute report found that American workers likely lose $15 billion annually to minimum wage violations alone. That’s more than the value of property crimes committed each year, and it comes out of the pockets of low-income workers who are disproportionately people of color, women, and immigrants.
Should the US economy slip into another recession we will likely see an increase in such labor law violations, as unemployment increases and workers become more vulnerable. A study from Rutgers University’s Center for Innovation in Worker Organization found that during the 2008 recession increasing unemployment was closely tied to wage theft by employers.
Enforcement against wage violations lies at the State level (where there is considerable room for improvement in enforcement around wage and hour laws and misclassification). But there’s no reason for New York City to wait for the State to act; it’s often led the way in innovative labor policy, enacting paid sick leave, regulations around unpredictable shift scheduling, as well as a minimum pay rate for app-based food delivery workers and for-hire drivers. The Office of Labor Policy and Standards has shown impressive diligence; in 2021 they collected $19.9 million in compensation for workers and penalties resulting from labor violations.
With that in mind, here are three steps Mayor Eric Adams and the City Council can take to prevent further erosion and shore up workers' rights.
First, expand protections against arbitrary terminations. The current prevalent practice of “at-will” employment allows employers to abruptly and arbitrarily fire employees, which can prevent workers from speaking up about violations. A recent National Employment Law Project study found that 22 percent of surveyed workers feared employer retaliation for speaking up about working conditions or refusing to work under unsafe conditions.
A “just cause” legal standard for dismissals would change the balance of power by requiring employers to provide clear economic or performance-based grounds for dismissal. More broadly it would encourage employers to invest in workers and not use termination as a means of arbitrary punishment or intimidation. New York City has already enacted just cause protections for fast food employees and should expand that to workers in more sectors with many violations and low-wage workers.
Second, create a system of workplace monitors. Labor inspectors and their community allies cannot maintain a presence in every workplace. For that reason, New York City needs an on-the-ground presence within high-violation industries to monitor compliance with relevant labor standards around wages, paid sick leave, and workplace safety. Labor unions could serve as this internal monitor. However, union density in New York City sits at 21.4 percent – exceptionally high by US standards but still leaving most workplaces without any form of advocate for labor rights.
Workplace monitors can provide a solution for an unrepresented workforce. In a 2021 report, Dr. Lindsay Alexandra Owens of the Groundwork Collaborative outlined a comprehensive blueprint for a workplace monitor system. Monitors would be elected by workers and trained in the basics of relevant federal, state, and local employment law. They would receive access to internal records to check for compliance with employment laws and assist workers in identifying and reporting violations.
Third-party monitoring of employer compliance is not without precedent in the US. In the early 2000s, the New York State Attorney General set up a Greengrocer Code of Conduct. Employers agreed to submit to regular third-party monitoring of compliance with employment law in exchange for limiting liability for past violations.
The city of Austin (TX) has established a monitoring system for the construction sector in partnership with the Workers Defense Project. In return for offering high-quality jobs and opting into regular monitoring of compliance with relevant federal, state, and local laws, developers are granted an expedited building permit review. Two similar systems were implemented in Los Angeles by the LA Unified School District and the Board of Public Works. These local government agencies used their contracting process to put in place a system of prevailing wage monitors recruited from labor union staff.
In New York City a monitor system could be implemented for industries with higher rates of violations, such as construction and/or the food service sector. Monitors could be rolled out as a part of the city’s public contracting process, as a voluntary but incentivized part of the permitting process, or as a remedial measure for employers that have repeatedly violated the law. Election of monitors by the workers at the workplace would ensure their independence from management. They could be workers who had completed training in their new roles, or trained external professionals from a nonprofit or workers' center.
Essentially, monitors would act as a conduit between the relevant labor agency and their workplace. They would not have the power to penalize violators on their own initiative. Their primary function would be ensuring compliance rather than collective representation. Ultimately this arrangement would free up the resources of government inspectors, protect vulnerable workers from bad actors, and reduce unfair competition for law-abiding employers.
Third, preserve the Low-Wage Worker Support Initiative. New York City’s existing infrastructure around labor standards enforcement should not be weakened or dismantled. Unfortunately, Mayor Adams has proposed eliminating the Low-Wage Worker Support Initiative which funds legal aid for low-wage workers seeking redress after a violation of employment law. At a time of heightened risk for wage theft the city should not be rolling back support for vulnerable workers.
Enacted together or separately, these three policies would be significant steps in the right direction for workers' rights in New York City.
Nikko Bilitza is a second-year master’s student in the Public and Urban Policy program at the Milano School of Policy, Management, and Environment at The New School.
Photo by: Vincent Desjardins