A Hands-Off Labor Department Retreats From Wage Theft Enforcement

New York Focus interviewed six Labor Department staffers and former staffers, ranging from senior members to rank-and-file wage investigators, about the causes of the decline. They collectively described a severely understaffed wage theft division that never recovered from multiple pandemic-induced crises — and a leadership team whose priorities lie elsewhere.

Reardon, a holdover from former Governor Andrew Cuomo’s administration, rose to power under a domineering, hands-on executive; under the comparatively laissez faire rule of Kathy Hochul, the sources said, the DOL has struggled to reestablish its wage operations. The agency has effectively dismantled the anti-retaliation unit known for recovering millions in stolen wages and failed to hire more wage inspectors — despite specific allocations for their jobs.

As a result, the staffers said, the Labor Department is failing both to boost its own staffing and to recover wages for New Yorkers who have had them stolen.

“There’s something very seriously wrong,” said Jose Medina, a former wage investigator and union steward who retired from the department last year. “It means one, there’s a backlog in cases for previous years. It also means whatever staff there is, has not been able to finish cases.”

For Hermes Diaz, it’s been eight years and counting. He’s still fighting to recover wages from a case he filed with the DOL in 2015 against a construction contractor that he says didn’t pay him for a month’s work. In the meantime, he says he’s had his wages withheld two other times.

When he got the first job, Diaz had recently immigrated to the United States and was supporting his two daughters and wife. He didn’t have money for rent, groceries, or transit, so he scrambled to find a job within walking distance of his house.

“It was a very, very dark and difficult time,” he said, speaking through a translator.

The problem likely got worse during the pandemic, wage theft complaint data from the Office of the Attorney General suggest. Amid an unprecedented surge in unemployment, the already short-staffed Labor Department temporarily moved most of its investigators to work on unemployment insurance. It largely stopped processing wage claims, then resumed over the next year — at a considerably slower clip. When the investigators returned, the total amount of back wages they found workers to be owed was just over half of pre-pandemic levels.

Reardon’s handling of unemployment benefits came under fire — first for her office’s lag in getting the money out, then after a state comptroller’s audit estimated that billions of those funds were lost to fraud. (Reardon rejected his accounting.) But much less attention has been paid to actions that have undermined her agency’s effectiveness in recovering money owed to some of the state’s most vulnerable workers.

The total dollar amount of recovered wages doesn’t neatly measure the agency’s activity in a given period, since it often collects money years after a case is opened. But three and a half years after the pandemic started, the decline in recoveries has not abated.

“Protecting New York’s workers has always been a top priority for Commissioner Reardon and NYSDOL, and our investigative teams work diligently to recover stolen wages each and every day,” said Beau Duffy, a spokesperson who recently joined DOL from the New York State Police, in a statement to New York Focus. He added that the agency “is consistently making improvements to its wage theft investigations and wage recovery efforts.”

He also created the anti-retaliation unit, a team of two high-powered attorneys and several labor investigators who looked into allegations of retaliation over labor complaints. The litigators would pull employers into sworn depositions and pummel them with questions about their assets and business practices, aiming to get them to perjure themselves or settle with the workers. According to former staffers, the team raked in millions.

After Reardon got settled, staffers said, she showed no interest in spearheading worker protection initiatives of her own. Instead, Cuomo would hand initiatives directly down to the relevant staffers, who would report back to his office.

Hochul, by contrast, has taken a hands-off approach to wage enforcement, staff told New York Focus. Freed from the governor who appointed her, Reardon has room to pursue her own priorities — mainly pushing for new technology to modernize the wage enforcement system without fighting to fill vacant roles.

“I think the commissioner is pretty much a leftover of a situation where everybody was afraid of disagreeing,” said Medina. “[Cuomo] picked people who are not going to make waves, and say, ‘Hey, we have to raise salaries and we have to hire more people because we’re not getting the work done.’”

And while it may have gotten results, Cuomo’s management style disempowered rank-and-file staff, said Pico Ben-Amotz, the department’s former general counsel. It was “at the worst extreme of hands-on: micromanaging, and always looking down and second-guessing and questioning,” he said. The administration’s tendency to micromanage became especially severe during the pandemic, bringing in new administrators to scrutinize the agency’s response.

Departures soon rippled through the top of the agency. Ben-Amotz, who declined to comment on his exit, retired in the summer of 2020. Jim Rogers, a former deputy commissioner of worker protections and wage enforcement known as an aggressive wage litigator, left in the summer of 2020 — and multiple sources said he was pushed out. Rogers’s replacement, Milan Bhatt, left the agency last summer. (Rogers declined to comment for this story, and Bhatt said that he left to do work on a “grander scale” in international development.)

Turnover in the lower ranks of the agency, which staffers said had been “brutal” for years before the pandemic, became even more pronounced. Within the Labor Standards division, the primary branch in charge of enforcing minimum wage and non-payment cases, headcount has fallen for three years straight.

When wage investigators get stretched thin, delays like those in Diaz’s case become more common. It took labor investigators years to process his case, which he needed to pursue collections in court himself. The Labor Department originally brokered a settlement with his employer in 2017, but the employer issued one partial payment and then disappeared. Diaz notified the department that he never received his wages, but the agency didn’t file a formal “order to comply” until September 2022.

“They should have more people managing these cases,” he said.

The DOL said that it has completed “the investigation phase” of nearly 80 percent of new cases that were filed in 2022. Staff said this figure was likely weighted by the fact that some cases require little more than a form letter, and after the initial investigation, delays often come in cases — like Diaz’s — where the employer doesn’t pay or agree to settle. Such cases require serious staffing power.

Some of the staffing holes long predate the recent departures. Until at least 2022, staff reported the DOL had only two clerk positions and one supervisor dedicated to pursuing employers who refuse to pay what they owe. Unlike hospitals, which issue repeated warning letters and hound patients over their medical debt, the department does not have a practice of escalating collections, staffers said.

“We have cases that are 20 years old that we haven’t been able to close because nobody’s working on them because there’s two and a half people collecting money,” said Medina, the retired wage investigator.

A DOL spokesperson said that the agency has seven positions dedicated to collections, but did not answer a subsequent question asking what the title of those positions was.

According to Cristobal Gutierrez, who is representing Diaz as a lead attorney for Make the Road New York, the organization files about 200 wage theft cases every year. In his eight years at Make the Road, Gutierrez said he’s seen the agency collect “once, maybe twice.”

And that formidable anti-retaliation unit?

In April, Reardon announced an “expansion” of the unit that DOL staff said actually would effectively end it. In lieu of the team of attorneys and investigators dedicated to the most egregious anti-retaliation cases, the new system relegates that work to all regular investigators, under the guidance of one advisor who specializes in anti-retaliation.

A spokesperson contested the idea that the unit had been dismantled and said that investigators have always performed anti-retaliation work, referring New York Focus to the department’s press release.

The aggressive attorneys whose know-how made the unit a success have been transferred out of Labor Standards, staffers said. With them goes the reputation that once deterred corrupt employers.

The department did need new tools, staffers said, like iPads that field inspectors can use to fill out case files on the move. But Reardon had been asked about wage enforcement. According to staffers who spoke to New York Focus, her attitude shows a resistance to simple hiring strategies.

“I don’t want to downplay the importance of having modern technology, but I also think human minds are important,” said Scarlett Ahmed, the DOL employees’ union steward. “Labor law is complex and it takes a lot of good training to get someone on board with being a labor standards investigator. I don’t think an iPad is a replacement for that.”

The starting rate for a wage inspector trainee is between $47,000 and $49,000. Its salary classification hasn’t increased since at least 2010, even as inflation has risen by 33 percent. Starting around 2015, Medina led a push to increase starting salaries to a little under $55,000. Reardon told the union that the Department of Civil Service, which oversees personnel policies across state government, rejected the offer.

A Labor Department spokesperson said that the agency hires some investigators with a higher title and salary based on experience. The Public Employee Federation, or PEF, the union that represents DOL workers, won a three percent increase for all of its employees in a contract it ratified in July.

According to Ahmed, it’s common for new hires to get trained as wage inspectors, realize how much work it is for the salary, and then go work for another agency that pays better, like the Workers’ Compensation Board or the New York City Department of Consumer and Worker Protection.

Last week, in a press release sent out following New York Focus’s questions, the agency said it had enlisted the Department of Civil Service to study wage investigators’ salaries.

Beyond understaffing and low pay, staffers described a crisis of morale. “This Department of Labor is so politicized from the top down that the directors are totally powerless and they can’t say anything about, ‘Hey, we really need more people and they need to be paid better,’” Medina said.

PEF is beginning a campaign for a pay bump for all of Worker Protection, the umbrella division that includes Labor Standards and Worker Safety. Ahmed predicted the effort would take until at least the next budget cycle and involve a fight with the Civil Service Department.

“That’s not gonna be a quick thing,” she said.