ProPublica — Thousands Of New York Workers Have Been Victims Of Wage Theft

https://www.propublica.org/series/waiting-on-paychecksSERIES: WAITING ON PAYCHECKS: NEW YORK’S RAMPANT WAGE THEFT GOES UNPUNISHEDMore in this seriesCaretThis article was produced for ProPublica’s Local Reporting Network inpartnership with Documented. Sign up for Dispatches to get stories like this oneas soon as they are published.For Marcelino Zapoteco, the final straw came on a quiet night in 2018 at therestaurant Brioso on Staten Island. He was working alongside one of the managerswho had been pulled in by the restaurant’s co-owner Pietro “Peter” DiMaggio tohelp as a waiter. At one point during the shift, Zapoteco watched the managerslip tip money into his pocket, when he was supposed to pool it to be sharedwith others.Zapoteco, an undocumented immigrant from Mexico, said he knew that therestaurant was grossly underpaying him during the more than seven years heworked there. When he served as a runner, bringing food to customers’ tables, hereceived as little as $10 for lunch and dinner shifts — far below the requiredminimum wage even when tips were included, he said.But that night, when he saw the manager pocketing the tip, Zapoteco had enough.A few days later, he and his co-workers went to DiMaggio and complained — but tono avail. “If you guys don’t like me or don’t like Brioso, the door is overthere,” DiMaggio told them, according to a state investigator’s report, whichincluded a transcript of a recording of that conversation.Zapoteco quit and made his way to the offices of the New York State Departmentof Labor in Manhattan the next day, telling an investigator about what happened.“I explained to her everything that was going on. She said: ‘Don’t worry. We’regoing to investigate,’” Zapoteco said. “‘We’re going to help you.’”Every year in New York state, thousands of workers face predicaments similar tothat of Zapoteco and his former Brioso co-workers. From 2017 through 2021,federal and state investigators found more than 13,000 cases of wage theft,according to an analysis of two databases obtained from the U.S. and New YorkLabor departments. The databases provide previously unreported details on howmuch money has been stolen from workers and also shed light on which businesseshave committed wage theft.In all, federal and state investigators determined during the five-year periodthat more than $203 million in wages had been stolen from about 127,000 workersin New York, the analysis shows.The amount of wage theft is almost certainly a significant undercount, accordingto the U.S. Department of Labor. In 2014, for instance, the agency analyzedcensus and employment data to compare the reported wages of New York workersagainst what they should make under local minimum wage, and it estimated thatstate employers steal up to $1 billion from their workers every year.Federal and state investigators determined that more than $52 million had beenstolen from people working in restaurants, more than in any other industry inNew York, accounting for more than 25% of all reported wage theft, the analysisshows.Wage theft was also a problem in the health care industry ($28.4 million);construction ($27.6 million); janitorial services and retail stores ($5.9million each); and supermarkets and convenience stores ($5.8 million).State-to-state comparisons of wage theft are difficult because of how data iscollected locally. But an analysis of cases reported to the U.S. Department ofLabor and substantiated by federal investigators shows that New York rankedeighth highest in the amount of back wages owed per worker.Advocates say that the federal and state agencies are failing to stamp out wagetheft, and that they have little faith in the agencies’ ability to protectworkers’ livelihoods.“Wage theft is not taken seriously as a crime by this system, by the New Yorkstate law enforcement groups or the elected leaders of our state,” said JoAnnLum, executive director of the National Mobilization Against Sweatshops, a NewYork-based workers’ rights organization. “How are working people who are workingso hard expected to survive if it’s OK to have their wages stolen?”Hildalyn Colón Hernández, deputy director of New Immigrant CommunityEmpowerment, a New York-based worker advocacy organization, said, “Employers areoperating with no consequences.” One of the reasons, she said, is that thefederal and state agencies haven’t fully adapted to the changing businesslandscape — with technology and the so-called gig economy complicating theemployer-employee relationship — that makes wage theft even harder to address.Colón Hernández added that her organization now trains its employees on how toinvestigate wage theft because it would take too long if they had to rely onfederal or state investigators to recover back wages.The U.S. Department of Labor did not respond to requests for comment.Aaron Cagwin, spokesperson for the state Department of Labor, highlighted hisagency’s work with the Wage Theft Task Force, a collaboration with the stateattorney general’s office and other law enforcement agencies that began in 2015.Last year, Gov. Kathy Hochul announced that the task force had secured felonyconvictions of nine employers for a variety of charges, from defrauding the NewYork State Insurance Fund to falsifying business records and failing to paywages.Cagwin said his agency uses “every resource available to protect New Yorkers,ensure workers are paid what they’re owed and hold bad actors accountable.”Frank A. Oswald, a lawyer for the owners of Brioso, said his clients disputedthe wage theft allegations made by Zapoteco and other former workers. He notedthat the owners eventually agreed to settle the civil lawsuit that the formerworkers filed against them, and that was because of the Chapter 11 bankruptcythat the restaurant filed “due to the exorbitant costs of the wage litigation inthe District Court that threatened to put the restaurant out of business.”In 2018, a lawyer representing the Brioso owners at the time also wrote to astate investigator claiming that Zapoteco quit his job not because of wage theftbut because of a disagreement over payment method. Zapoteco, the lawyer wrote,insisted on being paid in cash, instead of through an automatic payroll system.Zapoteco denied the allegation.

Zapoteco moved to New York City from the Mexican state of Guerrero in 2009 insearch of work and education opportunities. A year later, he began working atBrioso after a cousin who had been living in the city told him about the job.Zapoteco became a busser, taking dirty plates to the kitchen. He was soonpromoted to runner after a worker in that role quit.Throughout his time at the restaurant, Zapoteco said, he experienced wage theft.Carlos Ortiz, a state investigator assigned to the case, detailed in reportsobtained by Documented and ProPublica a number of ways DiMaggio stole money fromhis workers: DiMaggio deducted 5% of their tips “supposedly to pay for thecomputer system” and sometimes took more in certain circumstances, such as whencustomers complained about their food — a form of wage theft under New York law.Ortiz also found that DiMaggio made some workers buy uniforms and pay for brokenplates — another form of wage theft.Labor experts say wage theft is prevalent in the restaurant industry because itsworkforce is heavily made up of undocumented immigrants, who are less willing tospeak up because of their status.More than 60% of restaurant workers living in New York City are immigrants,according to a 2020 study by the New York state comptroller’s office. Of the317,800 workers in the industry, 44% were Hispanic and 20% were Asian, the studyfound.At Brioso, Ortiz found that the workers’ immigration status left them exposed.When one employee complained about stolen tips, for instance, DiMaggio respondedby threatening to report the employee to the immigration authorities, slammingtables and then firing him.“Mr. DiMaggio would make statements to the Hispanic employees, such as, ‘I’llpersonally make sure that you all get sent back to Mexico,’ or, ‘Thank god thatTrump is doing everything possible to get you guys the fuck out of here,’” Ortizwrote.In New York, the state’s minimum wage rules can also work against restaurantemployees. The normal rate is $14.20 to $15 an hour, but it’s $9.45 to $10 forfood service workers — with a requirement for their employers to make up therest if tips don’t cover the difference. This creates a complex system thatmakes it easy to exploit workers, said Teofilo Reyes, chief program officer forRestaurant Opportunity Center United, a national organization advocating forbetter pay and working conditions for restaurant workers.Elizabeth Joynes Jordan, co-legal director at Make the Road New York, animmigrant-rights organization, said wage theft is essentially “the businessmodel” for restaurants.Some places are exploring banning the two-tiered minimum wage system entirely.Washington, D.C., for instance, voted in November to phase out the system by2027. But no similarmeasures have been adopted in New York.Like restaurant employees, experts say, construction workers in New York oftenexperience wage theft, given that the industry also employs a high number ofundocumented immigrants.About 1,600 construction companies — including ones that specialize incarpentry, electrical work and iron work, as well as general contractors — werefound to have stolen wages from more than 7,700 New York workers from 2017through 2021, the analysis shows.Health care workers, including nurses and employees at hospitals and nursinghomes, faced about as much wage theft as construction workers, the analysisshows.Lum of National Mobilization Against Sweatshops said the unique workingconditions of many health care workers make them vulnerable to wage theft. Forinstance, home health care aides, who had the highest amount of wage theft foundby federal and state investigators among all professions in the industry, oftenhave to work 24-hour shifts but are not paid for breaks built into the schedulefor eating and sleeping. Lum said this payment structure rarely reflects thereality that patients need care at odd hours of the night, meaning workers areon call continuously.“When they try to report that they don’t sleep, then they’re ignored andretaliated against, or even punished,” Lum said.Some members of the National Mobilization Against Sweatshops were involved inarbitration claims filed in 2019 against 42 home health care companies allegingthat they underpaid more than 100,000 workers in New York. In February, anarbitrator awarded a $30 million fund, paid for by the companies, to compensatethe workers.Some workers are unhappy with this outcome and say they are owed as much as $6billion.Lum said the arbitrator’s ruling amounts to a slap on the wrist for thecompanies. “It sends a message to the employers that you can continue doing whatyou’re doing,” she said.

In September 2018, seven months after Zapoteco quit his job and went to the NewYork State Department of Labor, the agency’s investigators visited therestaurant and interviewed several workers. Several months later, as theinvestigation continued, a Brioso employee called Ortiz, complaining that he andhis co-workers had been subjected to retaliatory actions by DiMaggio.The employee “alleges that Mr. DiMaggio has always yelled at and intimidated theemployees, but has become more aggressive since the Department’s visit,” Ortizlater wrote in his report.The agency eventually reached out to Make the Road New York to see if it couldhelp protect the workers.Joynes Jordan said Make the Road took on the case after learning that it was“one of the worst cases in terms of conditions that we’ve seen.”Cagwin, the Labor Department spokesperson, said his agency was able to build “athorough case” in October 2019 and turned it over to the Richmond CountyDistrict Attorney’s Office, which handles cases on Staten Island.Criminal convictions for wage theft are rare, but the district attorney’s officeinitially expressed interest in pursuing the case, Joynes Jordan said.The district attorney’s office interviewed several Brioso workers, and in March2020 a waiter was scheduled to appear before a judge in order to get a searchwarrant for the restaurant’s computers. But then COVID-19 hit, and his testimonywas canceled.When Make the Road lawyers followed up three months later, the districtattorney’s office told them that it needed more information. “We were informedthe information they had gotten from our clients was stale at that point,”Joynes Jordan said.James Clinton, a community liaison for the district attorney’s office, declinedto comment.ProPublicaRead MoreNew York Workers Are Waiting on $79 Million in Back WagesMeanwhile, concurrently with the criminal investigation by the districtattorney’s office, the Department of Labor investigators were still working torecover back wages from Brioso. But Zapoteco and his former co-workers had heardnothing from them. With the case dragging on, Make the Road lawyers and a probono partner asked the agency to close the case so that the findings from itsinvestigation could be shared with them and used in a federal civil lawsuit theywere planning to file on behalf of the workers. They filed the lawsuit inDecember 2020, demanding more than $12 million.During the lawsuit’s discovery process, lawyers found that Brioso had twoprevious wage theft claims against it: one from a decade earlier in which theagency ordered Brioso to pay a worker more than $12,000, and another from 2017that it settled for $75,000.In November, the owners of Brioso agreed to settle the lawsuit with Zapoteco and11 others for $700,000, with roughly a third of it covering the lawyers’ fees.In May, roughly five years after he went to the New York State Department ofLabor, Zapoteco received his payment from Brioso. But he said he was frustratedwith the experience of working with the agency, saying it “doesn’t work wellbecause it took so long — we were waiting forever.”Zapoteco said neither the agency nor the district attorney’s office was able tohold DiMaggio accountable for what he did. “I wanted him to fix the way he wasdoing things,” he said.

ABOUT THE DATATo examine the prevalence of wage theft in New York state, Documented andProPublica analyzed federal and state databases of labor violations obtainedfrom the U.S. and New York Labor departments.Documented filed a public records request for the state database in 2019. Whenthe New York State Department of Labor refused to release it, Documented tookthe agency to court. The agency has since released to Documented and ProPublicaits internal database containing information on nearly 97,000 cases that beganand concluded from 2005 to Feb. 21, 2023. But the database only provides thedates of when cases began, so we focused our analysis on cases from 2017 to2021.For the federal database,we couldn’t use exactly the same time frame because it does not containinformation about when cases were opened and closed. Instead, it provides a datewhen the findings in the case occurred. To try and match up the periods analyzedfor both federal and state databases, we focused on the 4,900 cases with datesof findings from 2017 to 2021.Both federal and state databases provide a number of details on each case,including the names and addresses of businesses that committed the violation,the number of workers who were affected and cited labor law violations.For the state comparisons, we used the federal database to tally the amount ofback wages owed in each state and then adjusted them using labor force size datafrom the U.S. Bureau of Labor Statistics.For the industry comparisons, we manually reviewed the industry codes includedin both databases and grouped them into larger categories, such as restaurants,construction and health care.