Working Without Laws: A Survey of Employment and Labor Law Violations in New York City

Executive Summary

This report exposes a world of work in which America’s core labor and employment laws are failing to protect significant numbers of workers in the nation’s largest city. These protections—the right to be paid at least the minimum wage, the right to be paid for overtime hours, the right to take meal breaks, access to workers’ compensation when injured and the right to advocate for better working conditions—are being violated at alarming rates in the city’s low-wage labor market. The sheer breadth of the problem, spanning key industries in the economy, as well as its profound impact on workers and their communities, entailing significant economic hardship, demand urgent attention.

In 2008, we conducted a landmark survey of 1,432 workers in low-wage industries in New York City. We used an innovative, rigorous methodology that allowed us to reach vulnerable workers who often are missed in standard surveys, such as unauthorized immigrants and those paid in cash. Our goal was to obtain accurate and statistically representative estimates of the prevalence of workplace violations. All findings are adjusted to be representative of front-line workers (excluding managers, professional or technical workers) in low-wage industries in New York City—a population that we estimate numbers more than a half-million (586,322) workers.

Finding 1: Workplace violations are severe and widespread in New York’s low-wage labor market

We found that many employment and labor laws regularly and systematically are violated, impacting a significant part of the low-wage workforce in New York City. Here we summarize only key violations; Table 3.1 lists all the violations measured in our study.

Minimum wage violations: ƒ

• Fully 21 percent of workers in our sample were paid less than the legally required minimum wage in the previous workweek.* ƒ
• These minimum wage violations were not trivial in magnitude: 51 percent of workers were underpaid by more than $1 per hour.

Overtime violations: ƒ

• More than one-third of our respondents had worked more than 40 hours during the previous week. Of those, 77 percent were not paid the legally required overtime rate by their employer.
• Like minimum wage violations, overtime violations were substantial in magnitude. The average worker with a violation had worked 13 hours of overtime in the previous week—hours that either were underpaid or not paid at all. ƒ
• New York also has a daily overtime requirement when employees work more than 10 hours in a single day. The vast majority of workers (93 percent) who qualified for this daily overtime pay did not receive it.

“Off-the-clock” violations:

• Nearly one-third (29 percent) of the workers in our sample came in early and/or stayed late after their shift during the previous workweek. Of these workers, 69 percent did not receive any pay at all for the work they performed outside of their regular shift.

Meal break violations: ƒ

• The large majority of our respondents (90 percent) worked enough consecutive hours to be legally entitled to at least one meal break during the previous week. Of these workers, more than two-thirds (70 percent) received no break at all, had their break shortened, were interrupted by their employer or worked during the break—all of which constitute a violation of meal break law.

Pay stub violations and illegal deductions: ƒ

• According to New York state law, workers are required to receive documentation of their earnings and deductions, regardless of whether they are paid in cash or by check. However, 55 percent of workers in our sample did not receive this mandatory documentation in the previous workweek. ƒ
• In New York, employers generally are not permitted to take deductions from a worker’s pay for damage or loss, work-related tools or materials or transportation. But 33 percent of respondents who reported deductions from their pay in the previous workweek were subjected to these types of illegal deductions.

Tipped job violations: ƒ

• In New York State, workers who receive tips have a separate, lower minimum wage requirement. Of the tipped workers in our sample, 37 percent were paid less than the tipped worker minimum wage in the previous workweek.

Illegal employer retaliation:

We found that when workers complained about their working conditions or tried to organize a union, employers often responded by retaliating against them. Just as importantly, many workers never made complaints in the first place, often because they feared retaliation by their employer. ƒ

• Nearly one-quarter (23 percent) of the workers in our sample reported they had made a complaint to their employer or government agency, or attempted to form a union, in the last year. Of those, 42 percent experienced one or more forms of illegal retaliation from their employer. For example, employers cut workers’ hours and/or pay, fired or suspended workers or threatened to call immigration authorities. ƒ
• Another 23 percent of workers reported they did not make a complaint to their employer during the past 12 months, even though they had experienced a serious problem such as dangerous working conditions or not being paid the minimum wage. Of these workers, 41 percent were afraid of losing their job and 40 percent thought it would not make a difference. Fear of retaliation and expectations of employer indifference, then, figure strongly in workers’ decisions about whether to make a complaint.

Workers’ compensation violations:

We found that the workers’ compensation system is not functioning for many workers in the low-wage labor market. ƒ

• Of the workers in our sample who recently experienced a serious injury on the job, only 11 percent filed a workers’ compensation claim. In addition, fully 47 percent reported they were required to work despite their injury, and an additional 33 percent said their employer refused to help them with the injury. ƒ
• When the injured workers in our sample sought medical attention, 75 percent either had to pay their bills out of pocket or use their health insurance to cover expenses. Only 6 percent had their medical expenses paid by workers’ compensation insurance. ƒ
• When workers told their employer about the injury, 16 percent experienced an illegal employer reaction; for example, employers fired or threatened to fire workers if they filed a claim, called or threatened to call immigration authorities, or instructed the workers not to file for workers’ compensation.

When workers are exempt from workplace laws: ƒ

• Some workers either are partially or completely exempt from employment and labor laws— because of archaic exemptions of specific industries and occupations, or because they are considered to be independent contractors. ƒ
• We surveyed one group of workers often considered exempt from coverage—“in-home” child care workers who provide care in their own homes. When we analyzed their working conditions (separately from the rest of the sample), we found that 88 percent earned less than the minimum wage. This finding underscores the need to ensure that all workers who are in an employment relationship receive full legal protection.

Finding 2: Job and employer characteristics are key to understanding workplace violations

Workplace violations are the result of decisions made by employers—whether to pay the minimum wage or overtime, whether to give workers meal breaks and how to respond to complaints about working conditions. We found that workplace violations are profoundly shaped by job and employer characteristics. ƒ

• Workplace violation rates vary significantly by industry and occupation. For example, minimum wage violation rates ranged from as little as 2 percent in some industries to as much as 53 percent in other industries, and the range across occupations was similarly wide. ƒ
• Some industries and occupations are rife with multiple types of violations; for example, laundry, dry-cleaning and private household workers faced very high rates of minimum wage, overtime and off-the-clock violations. Other industries and occupations had high rates of some violations but not others; for example, home health care workers had relatively few minimum wage violations but high rates of overtime, off-the-clock and meal break violations. Workers in industries such as restaurants, retail and manufacturing usually fell into the middle of the distribution. (See Figures 4.1 to 4.9 for complete industry and occupation results.)
• Workers who were paid a flat weekly rate or paid in cash had much higher violation rates than those paid a standard hourly rate or by company check. In particular, non-hourly pay arrangements virtually guarantee that workers will experience overtime violations. ƒ
• Workers employed by companies with less than 100 employees were at greater risk of experiencing violations than those employed by larger companies. But the problem of workplace violations is by no means limited to small firms; more than one out of 10 workers at large companies experienced a minimum wage violation, and among those who worked overtime, 58 percent were underpaid or not paid at all for the extra hours. ƒ
• Not all employers violate the law. We found a range of workplace practices—offering health insurance, providing paid vacation and sick days and giving raises—that were associated with lower violation rates. This suggests that employers’ decisions about whether to comply with the law are part of a broader business strategy shaping the workplace.

Finding 3: All workers are at risk of workplace violations

Women, immigrants and people of color are disproportionately likely to be employed in low-wage industries, and therefore are at greater risk of workplace violations. But violations are not limited to immigrant workers or other vulnerable groups in the labor force—everyone is at risk, albeit to different degrees.

We found that a range of worker characteristics were correlated with higher minimum wage violations: ƒ

• Foreign-born workers were more than twice as likely as their U.S.-born counterparts to have a minimum wage violation. The higher rates were concentrated among women—especially women who were unauthorized immigrants, 40 percent of whom had a minimum wage violation in the previous week. ƒ
• U.S.-born workers of color had minimum wage violation rates ranging from 8 percent to 17 percent, in stark contrast to U.S.-born white workers, who in our sample did not have any minimum wage violations in the previous workweek. ƒ
• Higher levels of education offered some protection from minimum wage violations, but even college-educated workers still were at significant risk.

By contrast, worker characteristics were only weakly correlated with overtime, off-the-clock and meal break violations. On the whole, job and employer characteristics were more powerful predictors of the workplace violations considered in this study than the demographic characteristics of the workers.

Finding 4: Weekly wage theft in New York City

Wage theft not only depresses the already meager earnings of low-wage workers, but also adversely impacts their communities and the local economies of which they are a part. ƒ

• Workers: More than half (54 percent) of our sample experienced at least one pay-related violation in the previous workweek. The average worker lost $58 out of average weekly earnings of $397. Assuming a full-time, full-year work schedule, we estimate that these workers lost an average of $3,016 annually due to workplace violations, out of total earnings of $20,644. That translates into wage theft of almost 15 percent of earnings. ƒ
• Communities: We estimate that in a given week, approximately 317,263 workers in New York City have at least one pay-based violation. Extrapolating from this figure, front-line workers in low-wage industries in the five boroughs lose more than $18.4 million per week as a result of employment and labor law violations.

How New York can strengthen worker protections

Everyone has a stake in addressing the problem of workplace violations. When impacted workers and their families struggle in poverty and constant economic insecurity, the strength and resiliency of local communities suffer. When unscrupulous employers violate the law, responsible employers are forced into unfair competition, setting off a race to the bottom that threatens to bring down standards throughout the labor market. And when significant numbers of workers are underpaid, tax revenues are lost.

Policy reforms are needed at the federal level, but state and local governments have a significant role to play as well. This report lays out a comprehensive policy agenda to protect the rights of workers in New York (see Section 7), driven by two core principles: ƒ

• Strengthen state and city enforcement of employment and labor laws: New York is well-placed to tackle the problem of workplace violations, given the state’s strong labor laws, significant enforcement resources and energized community advocates. In recent years, state enforcement has been improved substantially through the use of proactive investigations and outreach to community groups, but recent budget cuts have strained resources and slowed progress. New York State must recommit resources toward enforcement, institutionalize recent successes and enact new legislation to strengthen enforcement tools. New York City must do its part by enforcing the labor standards that fall under its authority. It also should dedicate resources to public education campaigns and support enforcement efforts by community-based organizations, worker centers and legal services providers. ƒ
• Update legal standards for the 21st century labor market: Strong enforcement is important, but so are strong legal standards that recognize the changing organization of work in the United States. The strength of laws and the strength of their enforcement are deeply intertwined—weak employment and labor laws send the wrong signal, opening the door to low-road business strategies to cut labor costs. Raising the minimum wage, closing loopholes that exclude workers from key protections and ensuring state and city resources are used to create living wage jobs are all key improvements that would raise compliance in the workplace and improve the competitive position of employers who play by the rules.

* In this summary we are not able to elaborate the complexity of employment and labor laws; see the main report for details on federal and state legal standards and coverage.