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Because of the coronavirus pandemic, New York’s unemployment fund is running on empty. The state will soon be forced to borrow from the federal government to stay afloat. But New York workers were hurting long before this economy crashed and prosecutors failed to protect them. Why? Because too many bad corporate actors steal wages and evade taxes that pay for unemployment insurance.
New York— the original epicenter of the crisis— accounts for five percent of the country’s unemployed, but eight percent of the country’s overall GDP. While over 21 million people are unemployed in the United States, high unemployment in the Empire State—which last year sent $26.6 billion more in taxes to the federal government than it got back—has consequences for all Americans, no matter where they live. And prosecutors who fail to hold corporate wage thieves accountable impact the country, too.
Law enforcement often overlooks crimes committed by companies against workers. Wage theft occurs when a worker is not paid for all the hours worked. It can be as subtle as a nail-salon owner refusing to pay their workers for hours spent cleaning supplies or as blatant as a construction company failing to pay its employees for all the overtime accrued. It is neither a new practice nor a new crime. Wage theft victims range from restaurant workers, delivery messengers, retail workers, freelance professionals, to home health aides.
Despite falling “street” crime, wage theft is a growing problem. Employers steal over $3 billion from 2.1 million New Yorkers annually, according to a report by Make the Road New York and the Center for Popular Democracy. The true number is likely much higher since workers fear retaliation from their employers and generally shy away from reporting, unaware that both the criminal and the civil law are on their side. Part of the solution is to pass a bill, introduced by author Cruz, that codifies wage theft as larceny. Stealing wages is not an accident or an oversight, it’s a crime.
In our combined experiences as a prosecutor for almost 25 years and former chair of the Governor’s Exploited Workers Task Force, respectively, we vigorously pursued wage-theft cases under the current set of laws. When companies faced criminal investigations, their attorneys expressed disbelief and then dismay that we were using the power of the penal law to hold them accountable. They had good reason to worry. We found that often when a company cuts corners on pay, they cut corners elsewhere. This includes violating health and safety laws, failing to pay state unemployment taxes, and defrauding Workers Compensation Insurance companies.
In good times, this practice is grossly unfair because it rewards businesses that cheat the system. Our country’s largest corporations— like Amazon and oil companies— don’t pay a single dollar in corporate taxes but often get tax breaks for job creation and nebulous promises of “community investment.” These same companies have some of the worst health and safety violations. But instead of penalizing offenders, honest businesses and taxpayers make up the shortfall through increased income and property taxes and sky high insurance premiums. Every dollar we have to make up is a dollar we could have spent on our schools, mass transit and public housing. Wage theft steals more than just worker’s livelihoods— it is the stealth killer of economic prosperity across the state.
Now in the midst of the pandemic, state unemployment coffers are stretched beyond limits. Unemployed and furloughed workers are our family members, friends, and neighbors. In addition, our city and state budgets are facing billion-dollar deficits, and essential and frontline workers could face more lay-offs. Allowing companies to get away with skimming wages and unemployment taxes in the past is a huge reason why states are facing empty unemployment reserves now.
Wage theft is corruption, pure and simple. In order to pursue wage theft, prosecutors, civil regulators like the Department of Labor, unions, and community groups must partner together to target the most shameless offenders who exploit their workforces repeatedly. And every local district attorney should be tackling this widespread fraud by dedicating resources and creating specialized labor units.
When author Florence ran the Manhattan District Attorney’s Construction Fraud Task Force, it successfully pursued wage theft cases. Other jurisdictions— like the Pittsburgh City Council and Philadelphia DA Larry Krasner— created similar prosecution models. District Attorneys must prioritize wage theft and related crimes as a system-wide problem that affects everyone.
To protect every day New Yorkers, prosecutors need to treat a wage theft case as seriously as, if not more so than, a smartphone stolen on the street. Until prosecutors stop viewing the enforcement of these crimes as optional and start investigating them like other crimes, unscrupulous companies will continue to incorporate fraud into their business model. Workers will suffer. And we will all continue to pay the price.
Catalina Cruz is a Democratic Assemblymember from Queens and the former head of New York’s Exploited Workers Task Force. Diana Florence is the former head of the Manhattan DA’s Construction Fraud Task Force.
