Wage Theft Got Worse During Covid. A Stalled Bill Could Give Workers Leverage To Fight Back

Cuomo pledged to deal with rampant wage theft this year, then failed to deliver. Now, a bill to recover stolen wages is unlikely to pass the legislature.

Amir Khafagy   ·   June 10, 2021
Jin Gou Ke, a Chinese immigrant, says he is owed wages for delivery work. | Amir Khafagy/New York Focus

This article was published in partnership with Gotham Gazette.

Since 2014, Jin Gou Ke, an immigrant from China's Fujian Province, has worked as a delivery worker for Tasty Hand-Pulled Noodles in Manhattan’s Chinatown. Paid a pre-tip salary of just $3 per order, far short of the city’s minimum direct cash wage of $12.50 an-hour for delivery workers, he worked long hours to earn enough to pay for the room he rented in Sunset Park, Brooklyn. Typically, Ke said, he worked 11 hour days, 7 days a week, with just one day off each month.

Work conditions were unfriendly: during the height of the pandemic, he said, he was illegally barred from using the restaurant’s bathroom, forcing him to relieve himself in a nearby public park. He knew he was being paid and treated unfairly, he said, but was still happy to have work. 

“I’m just working, so I can earn a living and so I can eat,” he told New York Focus. “As long as I keep working, I’m fine.”

After the pandemic hit, the restaurant closed and Ke found himself temporarily out of a job. When it reopened in July, he was grateful to be back to work. But the relief was short-lived: by December, Tasty Hand-Pulled Noodles was increasingly relying on food delivery apps, and told Ke they no longer needed his services. Ke was fired—and never received the total wages owed to him, he said.

“I worked so hard for so many years and they treated me so bad,” Ke said. “ I exposed myself to the virus so many times going out every day and I did so much for them. It’s not right.”

Rampant wage theft was already supposed to have been dealt with. Last year, a coalition of workers’ centers, elected officials, and activists rallied around the Securing Wages Earned Against Theft Bill (SWEAT), which proponents say would give workers more power to fight back against exploitative employers.

Governor Andrew Cuomo vetoed that legislation in 2020, citing “technical aspects” that made it constitutionally fraught. In his veto message, the governor pledged to enact provisions achieving the same goals in this year’s budget. “I am constrained to veto this bill but I look forward to enacting the necessary protections for workers very soon,” he wrote.

Yet, flouting that commitment, the governor omitted wage theft entirely from his 2021 executive budget. Freeman Klopott, the governor’s budget spokesperson, declined to comment. Klopott directed New York Focus to the state Department of Labor. A spokesperson did not respond to questions about Cuomo’s inaction on wage theft, but said in a statement, “the DOL continues to aggressively crack down on bad actors who have wage and unemployment insurance violations.”

“It's been almost a year and a half, and he has done nothing,”said Sarah Ahn, an organizer with the Flushing Workers Center, which serves predominantly Chinese and Korean workers. “Meanwhile, workers are suffering more than ever.”

Assemblymember Linda Rosenthal (D/WF-Manhattan), who co-introduced the bill along with State Senator Jessica Ramos (D/WF-Queens), agreed. “Without action to address wage theft, hardworking New Yorkers have become even more vulnerable to wage theft during this pandemic,” she said. “That's why it's vital that we pass the SWEAT bill again this session.”

Wage theft was not included in the adopted state budget, either—despite many prominent wins for progressives.

“Stuck waiting to be paid”

Even before the pandemic, as much as $1 billion in wages were stolen from New Yorkers annually, according to a 2014 study by the U.S. Department of Labor. A disproportionate number of them are undocumented workers, whose precarious legal status can make them especially vulnerable to wage theft and other workplace abuses.

Four workers centers across the state told New York Focus that they have seen a significant increase in wage theft cases since the start of the pandemic last March, corroborating recent research finding that low-wage workers face an elevated risk of wage theft during periods of high unemployment.

“Employers were using the pandemic as an excuse to not pay workers,” said Glendy Tsitouras, an organizer with the Workers Justice Project, a Brooklyn-based worker center that serves day laborers and domestic workers. “They would tell workers that something happened and that they will pay next week—but that never happened.”

In April of 2020 alone, Tsitouras said, her organization was flooded with between 30 and 35 cases. Pre-pandemic, they typically received around 15 cases a month.

NYC Council Member Carlina Rivera speaks at a rally for delivery workers. Workers Justice Project

Sarah Ahn described wage theft as a systematic way to maintain a permanent and insecure low-wage labor force.

“When we talk about minimum wage increases, a lot of workers think, ‘it doesn’t matter, my bosses don’t care what it is, they won’t pay me,’” she said. “Undocumented workers don’t have a right to work. They are literally an underclass that is criminalized for working. If workers speak out, they are threatened with ICE.”

Osmar Figueroa, a client of Tsitouras, said he was fired from his construction job with Cassway Contracting in December after he demanded nearly $4,000 in unpaid wages. 

A day laborer from Guatemala, he and 14 other construction workers labored 9 hours a day, 6 days a week at a construction site in Manhattan, Tsitouras said. They were paid the first and third week, he said, but Cassway, a construction company, claimed there was no more money to pay them at the end of December, she said. When they refused to continue working without being paid, Figueroa said, all 15 men were fired and replaced with a new batch of workers. 

Out of a job and without cash, Figueroa struggled to make rent, buy food, or send money back to Guatemala.

“It was harder because it was the holidays and we didn’t have money,” he said. “My co-workers have kids, they have families and they weren’t able to buy gifts for them. They couldn’t celebrate Christmas because they didn’t have money.”

Guillermo Cruz, a Nicaraguan day laborer with KML Restoration Corp, described a similar experience. After one of the owners of the company died of Covid-19 in May, the company claimed it was unable to pay its 10 employees, he said. 

Collectively, KML Restoration owed the workers $20,000 in wages, Cruz said. Although Cruz worked through the pandemic, risking his health, he was left with little to show for it. 

“It was terrible because we were exposed to the virus, but we did the work for the company and they used us to finish the work and not pay us,” he said. “I feel frustrated because I need to feed my family and pay my rent. I’m just stuck waiting to be paid.” 

In Buffalo, Mary Lister, an organizer with the Queen City Workers Center, is working with the former staff of the Hotel Henry Urban Resort and Conference Center, who are suing to reclaim nearly $800,000 in unpaid wages. In February, the hotel abruptly closed without settling up with its staff. 

“We have definitely seen a huge increase in the number of workers who are contacting us during the pandemic,” said Lister. “Many of them, like the workers at Hotel Henry, had first contacted a lawyer before contacting the workers center, but after seeing the limitations of the messed up legal system where even if they win, employers will be able to hide their assets, [initially decided not to file lawsuits].”

Cassway Contracting did not respond to New York Focus’s repeated inquiries. KML Restoration Corp could not be reached for comment. Hotel Henry declined New York’s Focus request for comment.  

Amy Liu, manager and daughter of the owners of Tasty Hand-Pulled Noodles, denied the allegations and said that the establishment has never employed Ke or any independent delivery worker.

“I never know this guy. I don’t know who you are talking about,” she said over the phone. “I never hired a delivery guy.”

Told that New York Focus reviewed checks made out to Ke from Tasty Hand-Pulled Noodles, Ke declined to comment. When reached again and offered another opportunity to comment on Ke’s allegations, Liu said, “I just know that he is a liar. That’s it.”

“Don’t have a shot at winning”

Even when workers file and win lawsuits against employers and are awarded stolen wages, they are often left unable to collect the money they are owed. As cases make their way through the courts, employers can take complicated measures to hide assets, for example closing their business and then reopening under a different name, to avoid having to pay up.

SWEAT, which was reintroduced by Assemblymember Rosenthal in January after Cuomo vetoed the original bill, would make it harder to evade court judgements by allowing a lien to be placed on an employer’s business or assets while a case is being heard, preventing fraudulent transfers and closures. To file for a lien, workers would have to show evidence in court that they are likely to win a wage-theft case.

The strategy is modeled on New York’s existing mechanic’s lien law, which allows contractors and suppliers who have gone unpaid on a construction project to file a lien to secure payment. Laws similar to SWEAT have been passed in states including Washington, New Jersey, and Virginia.

The difficulty of collecting owed wages leads many workers not to challenge wage theft, proponents of the bill said.

“Working-class people don’t have a lot of extra time or money to be throwing lawsuits around,” Lister said. “People really don’t want to come together if they don’t have a shot at winning. Without the SWEAT bill, it will be really hard for the workers to get the justice they deserve [even] if they do every single step they are supposed to do.”

When workers do file lawsuits, the difficulty of collecting owed wages often leads them to settle rather than taking their cases to court. A 2015 report on wage collection in New York found that “the majority of cases are resolved for far less than is actually owed due to the fear that a judgment for the full amount owed will never be paid.”

SWEAT has met forceful opposition from the business community. Many New York trade groups representing industries in which wage theft is rampant, such as the Business Council of New York State, the Manufacturers Association of New York, and the New York City Hospitality Alliance, say the bill would have a detrimental effect on small businesses and employment in New York State. Instead, they advocate for judicial review on all lien requests.

Ken Pokalsky, vice president of the Business Council of New York State, told New York Focus the bill would deprive business owners of due process. “It allows this lien on the personal property based on allegations before any actual facts are found,” he said.

He also took issue with the multiple definitions of employer in the bill that would force liens on employers who aren't actually paying the workers and therefore are not responsible for the theft. The bill would extend  personal liability to the 10 largest shareholders of non-public companies by making them liable for wages as well as for interest, penalties, damages, attorneys’ fees, and costs incurred by the employee.

“They don’t approve payroll, they don’t withhold payroll, but they happen to be in supervisory positions relative to the employee, and to us that makes absolutely no sense,” Pokalsky said.

Andrew Rigie, Executive Director of the New York City Hospitality Alliance expressed a similar view. “We understand the positive intent of this legislation, but it removes due process for small business owners, mid-level managers and the investors in these businesses, by allowing a lien to be placed on their personal assets based on accusations, not legal findings,” he told New York Focus.

In his veto last year, the governor echoed these arguments, suggesting that the bill would provide “inadequate due process” for employers and that the bill “creates a broad definition of ‘employer’ that includes business entities, owners, and lower-level managers and subordinates.”

The Associated General Contractors of New York State, a leading opponent of SWEAT, has been a contributor to the governor, donating $137,675 to Cuomo campaigns. 

Refuting industry opposition, Sarah Ahn argued that the only party that is being denied due process is the worker. 

“What we have been fighting for is that there are no due processes for workers. What we do know is that it’s near impossible to collect on [wage theft] judgments.”

Rosenthal, the primary sponsor of the bill in the Assembly, agrees. “It [SWEAT] doesn’t increase the cost of doing business. The only employers who would be affected by this act are those who have committed wage theft.”

In the meantime, workers like Osmar Figueroa are hoping the law will eventually change in his favor. “I would like to see more support from the government and see laws passed like SWEAT that gives us real rights,” he said.

As for Jin Gou Ke, he has reached out to the Chinese Staff and Workers Center, a workers center in Chinatown, hoping he can launch a lawsuit against his former employer.

“As long as I have the energy, I will fight.”

An earlier version of this article incorrectly stated that the Building Contractors Association (BCA) opposes SWEAT. BCA opposed somewhat related legislation specific to the construction industry, but did not take a position on SWEAT.

Amir Khafagy is an award-winning freelance journalist based in New York City. His reporting has been featured in The New Republic, Vice, Bloomberg, The Guardian, The Appeal, Documented, and In These Times. He Is currently working on a book about the union drive… more
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