New York AG’s $3.9M Settlement with Car Wash Owners Shines Light on Industry’s Underpayment of Workers

Two chains of New York City area car washes likely reaped some short-term benefit by paying their employees sub-minimum wages, but the practice proved costly for them in the end. An extensive investigation by the New York Attorney General into the businesses’ labor practices yielded settlements totaling $3.9 million, according to a report.

The investigation targeted the practices of the car wash chains from 2006-2012. The two chains that were the subject of the state’s investigation were interrelated businesses owned by the same three men, and they comprised 21 car wash locations across the New York City area.

The misconduct uncovered by the state’s investigation included nearly six years of failing to pay workers for all the overtime they worked and deducting for breaks that the employees never received. Additionally, the car washes’ managers sometimes kept the employees’ tips for themselves and wrongfully denied workers “call-in pay,” meaning the mandatory minimum pay due a worker who reports to work but is then sent home shortly after arriving.

The settlement contained elements relating to multiple different areas of misconduct. The owners agreed to pay a total of $2.22 million to roughly 1,000 workers for unpaid wages owed to them. Additionally, the settlement required the owners to pay more than half a million dollars to the state’s Department of Unemployment Insurance and $1.16 million to the Workers’ Compensation Board. The latter two amounts related to the chains’ alleged underreporting of the number of employees on their unemployment insurance returns and their failure to maintain unemployment insurance on all of their workers.

Beyond just the restitution for past conduct, the settlement also required the chains to undergo independent monitoring of their labor practices for as long as three years (at the owners’ expense) and to allow “unannounced on-site inspections and payroll audits.”

‘They will be held accountable for their actions’

Union leaders praised the Attorney General’s action in this case as an important step in reining in an industry that too often had grown accustomed to operating outside the bounds of applicable labor laws. In conjunction with the Attorney General’s announcement of the settlement, Stuart Appelbaum, President of the Retail, Wholesale and Department Store Union, stated that his organization was “amazed at the terrible conditions and culture of lawlessness that permeated the industry” of car washes. The multi-million settlement, he said, served to put car wash owners “on notice – they will be held accountable for their actions, and there is a steep price to be paid for those who would break the law.”

Workers in the car wash industry, along with any other field of work, should not have to tolerate sub-minimum wage pay and improper denial of overtime compensation, and there definitely should be a “steep price” for employers who don’t follow the law. If you believe your employer has not paid you all the wages you’ve earned, contact the New York wage violations attorneys at Phillips & Associates. Our skilled and hardworking employment attorneys represent the rights of workers in New York City and surrounding areas, helping them pursue actions to recover the wages owed to them. We practice at the municipal, state, and federal levels.

To schedule a free and confidential consultation, contact us today online or at (212) 248-7431.

More blog posts:

Attorney Possibly Entitled to Overtime Pay if Work Was ‘Devoid of Legal Judgment’, New York Employment Attorney Blog, Aug. 12, 2015

Diplomatic Immunity May Bar Lawsuits for Sexual Harassment Against Consular Officials in New York City, New York Employment Attorney Blog, Aug. 5, 2015

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