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Don’t Just Raise the Wage—Enforce It Too

Amy Traub

Entire movements are based around these economic realities: the minimum wage is too low to live on. Eligibility for overtime pay must be broadened so that workers are fairly compensated for all of the time they work. Basic workplace standards need to be improved.

But improved standards only lead to improved lives when they’re enforced. If employers believe they can get away with violating the rules without consequence, the finest and fairest laws in the land won’t protect workers’ rights and livelihoods. Minimum wage violations cost working people an estimated $1 billion a year in New York State alone according to a report last year from the U.S. Department of Labor. An estimated 26,000 working families in New York were driven into poverty as a result of the looted paychecks. Another 68,000 were pushed deeper into poverty. The federal, state, and local governments also lose tax revenue and take on millions in extra costs for public benefits.

Does anyone ever get punished for this crime? And do they get more than a slap on the wrist if they do?

Today they did.

This afternoon, the owner of nine Papa John’s pizza franchises in the Bronx was arrested for cheating hundreds of employees out of pay and falsifying business records to cover it up. Prosecutors are seeking $460,000 in back wages and damages to workers, as well as a $50,000 civil penalty and jail time for the owner. The issue is not an inadvertent misunderstanding of the law but a deliberate scheme to steal worker pay. According to the New York Attorney General’s Office and the Department of Labor:

[The owner] Khokhar and BMY Foods, Inc. allegedly did not pay the overtime premium as required by law. Instead, charges allege they paid workers the same, regular rate of pay for all hours worked, including hours in excess of forty. To hide this practice, they allegedly paid for overtime hours in cash, to avoid creating a record. They also allegedly created fictitious names for employees to use in their computerized timekeeping system: once employees’ weekly hours reached 35 or 40 per week, they were allegedly required to use the fictitious names so that the employer’s failure to pay proper overtime for these hours would be concealed. Khokar and BMY Foods Inc. allegedly made the cash payments under the fake names and kept separate paper records reflecting both the check and cash payments made to the same workers. In a further attempt to conceal this scheme, the defendants allegedly filed fraudulent tax returns with the State of New York that omitted the cash payments made under fictitious names.

This is the ugly—and all too common—face of wage theft. As surely as the nation must fix overtime rules, raise the minimum wage, and establish other basic workplace rights we also need strong enforcement like this to ensure that once laws are on the books they actually provide the fundamental protection working people need.