Issue Brief: Wage Theft in New Brunswick
Prepared by Unity Square and New Labor
July 30, 2013
Unity Square56 Throop Ave.
New Brunswick, NJ 08901
(732) -545-0329
facebook.com/unitysq / New Labor
103 Bayard St., 2nd Floor
New Brunswick, NJ 08901
(732) 246-2900
newlabor.org
Issue Brief: Wage Theft in New Brunswick
Prepared by Unity Square and New Labor
July 30, 2013
Introduction:
This issue brief spotlights the high prevalence of wage theft within the City of New Brunswick in general, and within the Unity Square neighborhood in particular. It also examines recent actions that local governments across the U.S. have taken against wage theft, and proposes that New Brunswick consider doing similarly.
Wage theft refers to the non- or under-payment of wages to workers for work already performed, according to the terms of agreement between employee and employer and the mandates of the law. There are many forms in which wage theft occurs. The clearest form is when an employee is simply not paid for work that he has completed, or is not compensated for the total number of hours for which they worked. Other forms of wage theft include failure to abide by federal and state laws mandating a minimum wage of $7.25 an hour[i], and an overtime rate of time-and-one-half for hours worked in excess of 40 within a period of one week.
Recent survey research conducted by Unity Square and New Labor finds that one out of every six households in the Unity Square target neighborhood has experienced wage theft within the last two years. The majority (85%) of these households are unable to reclaim any of these stolen wages. Even the one-in-six figure understates the extent of the problem, as 21% of the households that reported being victimized by wage theft over the past two years reported multiple cases of wage theft.
The prevalence of wage theft in New Brunswick is also exhibited in New Labor’s reporting of the wage theft cases that it has handled: Over the last year and a half beginning in January 2012, New Labor has assisted New Brunswick residents in reclaiming over $183,000 in unpaid wages.
Across the country, local governments – from the cities of Chicago, New Orleans, Houston and Somerville, MA to Dade County, FL – are taking policy steps to curb the fleecing of their communities through wage theft. One line of policy action taken by Chicago and Somerville is to tie municipal business permits and licenses to compliance with the law with respect to wage theft, making licenses and permits revocable in the case of violations. Another line of policy action, recommended by researchers at Seton Hall Law School in 2011, seeks to facilitate greater involvement of the local police and municipal court in enforcing the existing yet relatively unknown NJ criminal statue against wage theft.
Both are explained in greater detail below. We look forward to initiating a conversation about taking similar policy action in New Brunswick.
The Data:
Survey of Unity Square Neighborhood Finds 1 in 6 Households Victimized by Wage Theft
Over the month of June 2013, staff and volunteers from Unity Square and New Labor knocked on every door within the Unity Square target neighborhood in order to gauge the prevalence of wage theft. The Unity Square target neighborhood is situated mainly in the Second Ward, and is bound by Commercial and Livingston Avenues, and Welton and Sandford Streets. Door knocking was conducted between 5:00 pm and 8:00 pm on weeknights. The survey yielded 205 responses, representing approximately 20% of the households in the target neighborhood. Surveys were conducted in both English and Spanish.
The survey found that 16.1% of all respondent households in the Unity Square neighborhood had experienced wage theft within the last two years. This averages to roughly one out of every six households in the neighborhood. Given that the Unity Square neighborhood contains households in which all residents are retired or are not participating in the labor force for a variety of reasons, the prevalence of wage theft among “working households” is likely even higher. Moreover, 21% of households that reported having been victimized by wage theft within the past two years reported multiple cases of wage theft occurring within that time period.
Respondents were able to recover some of the unpaid wages in only 15% of the instances of wage theft reported. Therefore, the vast majority of Unity Square households that had pay stolen from them were left with empty hands. While there was significant variation in the amounts reported, the average total quantity of wages stolen per incidence of wage theft amounted to $864.00. This sum is the equivalent of three weeks of fulltime work for someone earning the minimum wage, or two weeks of fulltime work for someone earning and hourly rate of $11.00. It represents a loss of more than 2.5% of total annual income for the nearly half of households in the Unity Square target neighborhood making less than $35,000 a year.
The survey found wage theft occurring in a variety of employment sectors, but concentrated mainly in the following three: restaurants, landscaping and construction, and warehouse work, often through employment agencies.
New Labor Recovers Over $180,000 In Wages Stolen from New Brunswick Workers in past Year and a Half.
New Labor, a non-profit labor rights organization, has been actively involved in educating New Brunswick workers about their employment rights, and helping them recover stolen wages when they are victimized by wage theft. Over the last year and a half beginning in January 2012, New Labor has assisted New Brunswick residents in recovering over $183,000 in unpaid wages. The employment sectors in which most of these occurred are the same that were found to have a high prevalence of wage theft in the survey of the Unity Square target neighborhood: restaurants, landscaping, construction, and warehouse work via employment agencies.
The amount of money in stolen wages that New Labor has enabled aggrieved workers to recover further demonstrates the extent of the problem of wage theft in New Brunswick’s communities. The wage theft cases that New Labor takes on are only those that are reported to the organization, and disproportionately come for workers who were also unjustly fired, meaning that the organization is only encountering a small segment of the total spectrum of wage theft incidents in New Brunswick. Additionally, for reasons due to inadequacies in the current law, New Labor is unable to reclaim wages in at least 25% of the total cases reported to it.
New Labor’s Recovered Wages in New Brunswick, NJ, 2012Type of Employer / Total Amount Recovered / Number of Workers
Restaurant / $ 234.00 / One
Warehouse / $ 260.95 / One
Restaurant / $ 300.00 / One
Restaurant / $ 600.00 / One
Bakery / $ 2,000.00 / Multiple
Agency / $ 88.00 / One
Restaurant / $ 1,433.00 / One
Restaurant / $ 9,600.00 / Multiple
Agency / $ 30,000.00 / Multiple
Mechanic / $ 3,400.00 / One
Construction / $ 450.00 / One
Agency / $ 116.00 / One
Warehouse / $ 32,000.00 / Multiple
Warehouse / $ 7,172.00 / Multiple
Construction / $ 227.00 / One
Restaurant / $ 325.00 / One
Landscaping / $ 1,000.00 / Multiple
Grocery / $ 1,460.00 / One
Warehouse / $ 1,649.00 / One
Agency / $ 351.00 / Multiple
Warehouse / $ 1,472.00 / One
Warehouse / $ 1,160.00 / Multiple
Construction / $ 600.00 / One
Warehouse / $ 2,250.00 / Multiple
TOTAL (2012) / $ 98,147.95
Policy Recommendations:
The following two lines of policy action are presented as a way of starting a discussion around steps that the New Brunswick City Government can take against wage theft.
1. Tying Business Licenses and Permits to Lawful Behavior Regarding Wage Payment
The City of New Brunswick mandates, issues, and monitors a variety of licenses and permits governing commercial activity in the City. Most generally, these include zoning compliance certificates, mercantile licenses, and construction permits. These also include special license requirements for certain types of businesses, like restaurants, check cashing establishments, used electronics stores, scrap metal dealers, and entities that serve alcohol.
The New Brunswick municipal code assumes the principle that the welfare of City stakeholders requires that entities engaged in commerce in the City exhibit fair, honest, and civil conduct. It requires that applicants for all business-related permits and licenses submit to a criminal history review and provide evidence of their good character. Moreover, licenses can be revoked due to “fraud, misrepresentation or other dishonesty in the conduct of the licensed activity,” or conduct that represents a “menace to the public health, safety or general welfare.” The power to revoke licenses lies with the Police Director and the City Council.[ii]
Following the examples of Chicago and Somerville, MA, New Brunswick could similarly move to clarify the municipal code so that business licenses and permits are suspended, revoked, or denied to businesses found liable for wage theft by the NJ Department of Labor and Workforce Development or another judicial or administrative body. The cost of potentially losing one’s business license will go far in changing the risk calculus that unscrupulous employers face when engaging in wage theft. The goal, however, is not to revoke business licenses; rather, it is to prevent wage theft and make it easier for aggrieved workers to recover stolen wages.
2. Working More Closely with the Police Department and Municipal Court in Enforcing NJ Criminal Theft of Services Statue
New Jersey has a criminal statute, NJSA 2C:40A-2, that makes wage theft a disorderly person’s offense.[iii] However, as reported by researchers from Seton Hall Law School in 2011, “[t]his statute, the subject of the following section, is almost never employed by anyone. According to the Administrative Office of the Courts, only seven cases were filed under this statute last year. Indeed, we spoke with twelve municipal prosecutors and none recalled ever prosecuting a wage theft charge.”[iv]
This same Seton Hall group recommends enacting administrative changes at the municipal level so that: 1). this criminal wage theft statute is enforced, as violators are investigated and prosecuted, and 2). that qualified community groups that support New Brunswick workers – New Labor, Unity Square, PRAB, and the like – have a “direct line” with filing these complaints with the police or municipal courts. This could work exceptionally well in New Brunswick, which has a strong crime watch program run in partnership with police department and community groups. A similar forum could be created for wage theft issues. Or community groups could communicate directly with the NBPD’s community relations officers when wage theft incidences occur.
[i] There are certain exceptions granted under current law for positions in which it is customary to receive tips, like being a waiter at a restaurant. In these limited circumstances, an employer is permitted to pay these tipped employees a minimum wage of $2.13 an hour, provided that such an employee’s average hourly wage inclusive of tips is greater than or equal to $7.25 for a given work shift. In cases in which an employee’s average hourly wage inclusive of tips falls below the $7.25 threshold for a given work shift, the employer is mandated to pay the difference needed to bring that average hourly wage to $7.25.
[ii] New Brunswick, New Jersey, Code of Ordinances; Title 5 - BUSINESS LICENSES AND REGULATIONS, Chapter 5.04 Licenses Generally. <http://library.municode.com/index.aspx?clientID=16518&stateID=30&statename=New%20Jersey>.
See particularly sections: 5.04.020 and 5.04.090
[iii] NJSA 2C:40A-2. Violation of contract to pay employees
a. An employer who has agreed with an employee or with a bargaining agent for employees to pay wages, compensation or benefits to or for the benefit of employees commits a disorderly persons offense if the employer:
fails to pay wages when due; or
fails to pay compensation or benefits within 30 days after due.
b. If a corporate employer violates subsection a., any officer or employee of the corporation who is responsible for the violation commits a disorderly persons offense.
[iv] Seton Hall School of Law, Center for Social Justice, Immigrant Rights/International Human Rights Clinic, “All Work and No Pay,” White Paper, January 2011. http://law.shu.edu/ProgramsCenters/PublicIntGovServ/CSJ/loader.cfm?csModule=security/getfile&PageID=177699>.