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Albany's New Wage Theft Bill Could Halt the Hidden Crime Wave

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Nearly a billion dollars were stolen in New York City last year, and the thieves aren't even worried about getting caught. If this were an epidemic of street crime, the city and state would have acted long ago.

Instead, the crooks in question are corrupt bosses who steal their employees' earnings by paying less than minimum wage, making them work off the clock, pilfering tips, misclassifying employees as independent contractors, and a host of other schemes. As a result, the theft is harder to detect. But Albany is finally on the case. The Wage Theft Prevention Act, introduced this week by Senator Diane Savino and Assemblyman Carl Heastie, stiffens penalties for cheating employees out of wages, encourages workers to come forward, and provides new avenues for investigating and prosecuting wage theft cases - and ensuring violators will pay up. The bill builds on the best practices of states like Ohio and New Mexico to not only punish wage-stealing employers but create a powerful deterrent to cheating employees - and the public - in the first place.

The bill is particularly urgent in a time of budget deficits and recession. New York loses hundreds of millions of dollars in revenue when, in the process of stealing wages from their workers, employers also underpay payroll taxes, unemployment insurance, and workers' compensation. Cornell University researchers estimate that between 2002 and 2005 the state lost more than $175 million just from unemployment insurance taxes on employees whose bosses wrongly classified them as independent contractors.

As I recounted in January, New York's hidden crime wave was quantified for the first time this year with shocking research from the National Employment Law Project. They found that more than 300,000 low-wage employees in New York City alone are victims of wage theft every week, with annual losses totaling nearly a billion dollars. Workers that average only $20,644 a year see more than 15% of their pay stolen by the boss. But as alarming as these findings are, they don't capture the full scope of New York State's problem.

The epidemic of wage theft doesn't stop at the city borders, or end with low-wage employees. A 2007 study from Cornell University found that more than 700,000 workers statewide were treated as independent contractors by their employers even though they effectively acted as employees. Many are middle-class employees who are not even aware of the pay and benefits being illegally denied to them. For example, the New York State Department of Labor reported on a mortgage service company that was wrongfully classifying all of its loan processors as independent contractors. In another case, a movie production company tried to pass off its part-time film editors and production assistants as contractors. From truck drivers to construction workers, misclassified employees throughout the state are denied overtime pay, unemployment coverage, and access to workers' compensation if they get injured on the job. New York is already taking important steps to combat employee misclassification, but the Wage Theft Prevention Act would help the state go further, stiffening penalties and making it easier to pursue claims.

Whether the victims are retail workers cheated out of the minimum wage or high tech engineers robbed of their overtime despite 70-hour work weeks, New Yorkers deserve to get the pay they work hard for every day. The Wage Theft Prevention Act will help ensure they receive it. Albany must stop looking the other way on wage theft and pass this bill immediately.