Cracking down on employers who ignore wage laws

State officials crack down on a wider array of businesses - especially those in service sector.

This week Ansoumana Faty, a former grocery deliveryman in New York City, will pick up a paycheck for $7,000. Meanwhile, in upstate New York, the waiters and waitresses at the New Delhi Diamond's Restaurant in Ithaca will share a cash payout of $10,000.

They are among hundreds of people in New York who are getting reimbursed back wages and unpaid overtime as a result of recent legal settlements. Many of the employees were paid as little as $2 an hour, in jobs they worked for 10 to 12 hours a day.

Across the country, a growing number of states, advocacy groups - and even individual workers - are fighting back against wage abuses in the workplace.

From New York to California, several state attorneys general are targeting violations of state and federal minimum-wage and overtime laws. One reason: State authorities believe the infractions are growing as the economy becomes more service-oriented - and are showing up in new industries.

"Historically, when people thought of minimum-wage violations, they thought of sweatshops and informal workplaces at the margins of the economy - the underground economy," says Annette Bernhardt, a senior policy analyst at the Brennan Center for Justice at New York University School of Law. "But increasingly, we're seeing violations in very formal workplaces - in retail, in grocery stores, in industrial laundries and nursing homes."

In New York City alone, researchers have identified 14 types of businesses - from maintenance contractors to the hotel industry - where minimum-wage and overtime laws have been routinely violated. In Florida, a survey of contract construction workers found that 27 percent who worked overtime didn't get paid time-and-a-half for it. And in Fairfax, Va., interviews with day laborers at four sites found that 54 percent were paid less than agreed - and at one time or another, 53 percent received no pay at all.

The minimum wage was set by the federal government back in 1968 as way to guarantee a floor that the country's most vulnerable workers could earn. It's been updated several times, most recently in 1997, when it was set at $5.15 an hour. Seventeen states have set their own, higher, minimum wage. The latest is Wisconsin, which this week has hiked its minimum wage to $5.70 an hour.

But many businesses consider the setting of a wage floor nothing more than government meddling that increases their costs, particularly for small businesses.

"We see it as the government arbitrarily determining a wage issue, and we believe that is better left to market forces," says Marc Freedman, director of labor-law policy at the US Chamber of Commerce. "What we see is that it's routinely used as an introductory or training wage. People who start don't stay there long. They're quickly promoted."

But advocates for low-income workers, particularly immigrants, say that's not always the case and many families are dependent on minimum-wage jobs for their income. Currently, 30 million Americans are in low-wage jobs that pay less than the poverty rate for a family of four.

"This isn't just about workers and their families. It's about everybody," says Cathy Ruckelshaus, a policy analyst at the National Employment Law Project in New York. "Our economy is never going to get back to where it needs to be until people are paid enough to live on."

Community activists also contend that more employers are actively trying to find ways around paying the minimum wage, by doing things like paying a flat rate or hiring outside contractors.

Mr. Freedman of the Chamber of Commerce counters that he is unaware of an increased number of violations of minimum-wage laws. But he does say that many are looking for creative alternatives.

"Companies are looking for legal payment approaches that do not rely on minimum-wage and overtime laws. That's their prerogative," he says. "We're not encouraging anyone from going beyond the law, but in a free society and in an open market, companies should have the ability to choose how they pay their employees, and employees should be able to choose whether to take those jobs or not."

But low-income and immigrant advocates say that workers don't always have a choice. Take Ansoumana Faty's experience as a grocery deliveryman. While he worked at a well-known chain in New York, he was paid a flat rate of $90 a week for seven days' work at 10 to 12 hours a day. That's the equivalent of less than $2 an hour, plus tips. Because the supermarket chain had contracted with an outside firm to provide the delivery services, it was not paying the workers directly and so didn't have to ensure they earned the minimum wage.

Mr. Faty had been a flight attendant on a Senegalese airline before coming here, and unlike many of the other delivery people, he recognized that his pay was wrong. But he initially had a difficult time persuading the others to complain with him.

"They don't speak English, and they are illegal, and they're afraid they can be deported for any reason. The employers play with that fear," says Faty. "Plus, for them, from where they came from, they were making a lot of money."

It took several years working with a local community group and the Attorney General's Office before a settlement was reached. Now the supermarkets employ the delivery people themselves at the appropriate minimum wage.

And Faty has moved on. He now drives a cab and is making "a good living."

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