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A plan to fight wage theft is taking shape in New Haven

Labor organizations rallying in Stamford in July 2023.
Labor organizations rallying in Stamford in July 2023.

Some businesses employ creative tactics to avoid paying their employees. They write bad checks, misclassify workers, falsify work hours or simply not pay them at all.

Lina Segura, for example, says she worked multiple 80+ hour workweeks last year and was not paid thousands in wages. But that’s just a fraction of at least $17 million identified as stolen from workers across Connecticut since 2019 after thousands of state investigations.

John Jairo Lugo, co-founder of immigrant rights organization Unidad Latina en Acción, is fed up. For over a decade, he’s pushed for an idea: What if a city’s health department could suspend or revoke the food and beverage licenses of cafés, bars and restaurants that commit labor violations?

After advocating for the idea since 2013, a version of it could soon become a city ordinance in New Haven. Eamon Coburn, a member of the HAVEN medical-legal partnership at Yale University, which provides legal services and works with health care providers to tackle non-medical factors that affect people’s health, presented the idea to city officials in June 2023, according to the New Haven Independent. Since then, a draft of the ordinance has been in the works.

Once they overcome some legal hurdles, the ordinance could be formally introduced. If it passes, New Haven would join several cities, from Boston to San Francisco, that have created wage-theft deterrents at the local level.

Small case, big impact

Working seven days a week, from 7 a.m. through 8 p.m., at a New Haven restaurant was a typical week for Lina Segura. It’s how she provided for her son with her husband. But after several 80+ hour workweeks last year, she said, the owner of the restaurant stopped paying her for weeks at a time, amounting to thousands in owed wages.

“Andrés, the owner, told us that we were almost family,” Segura said in an ULA press release earlier this month. “But after days of working hard and not receiving money, we looked more like slaves for Andy.”

After submitting a complaint to the state Department of Labor with the help of ULA, Segura received a letter from the Connecticut Department of Labor that said they could not locate her boss since the restaurant, Andy Restaurant Bar, was no longer in business and his home address was not a viable address. But Unidad Latina en Acción found out that her boss, Andrés Pastuzano, would be in court for a separate case.

“So we tell them [Department of Labor], ‘If you go to the judicial website, you’ll find that he has court in Milford, and you can go and give him the order to pay back the workers who he stole money from,'” said Lugo.

Nobody from the Department of Labor showed up, but they did get in touch with Pastuzano’s attorney, and it was agreed he would mail the checks with Segura’s owed wages to the state. A few weeks later, Segura received almost $5,000 from the Department of Labor that Pastuzano had sent them, about half of what she says she’s owed, according to correspondence and checks reviewed by The Connecticut Mirror. The Department of Labor is currently evaluating whether Pastuzano owes any civil penalties.

The entire process took 13 months, from the moment she says she submitted her complaint in February 2023 to receiving some relief in March 2024.

Andy Restaurant Bar in New Haven shuttered in 2023.
Andy Restaurant Bar in New Haven shuttered in 2023.

Why a city ordinance?

ULA has long advocated for more worker protections and harsher punishments against businesses that steal wages, as far back as the early 2000s. In 2005, it advocated for ideas that would involve the city’s police department, and in 2013, it sent New Haven officials an idea that is identical to what is being proposed now, but no progress was made at the time.

And during those years, the number of wage complaints submitted to the state has risen while the number of staffers that investigates those claims has decreased. State investigations can lead to fines, civil penalties and possible jail time.

“The problem is that the labor department doesn’t have enough resources to make the investigations,” said Lugo in Spanish. “If they see you stealing at Walgreens, they’re going to detain you, and they’re calling the police. But if I work for a company fixing up a roof and after a week of work my boss doesn’t pay me and I go to the police, they’ll say, ‘You have to go to the Department of Labor.’”

The department currently has about 1,000 cases that are yet to be assigned to an investigator, creating months-long waits for workers to have their cases heard. A bill to increase investigative staff failed in last year’s state legislative session, and this year the bill’s future is uncertain, given tight budget constraints. People can also submit complaints at the federal labor department, but it’s also experiencing backlogs, and for workers who opt to sue their boss, the process can be lengthy. Thousands of small claims cases are pending in court.

With this backlog, Lugo is even more compelled to get this city ordinance to the finish line.

Restaurants across the state were ordered to pay back more than $3 million to almost 2,000 employees since 2012 after federal law violations, according to a review of federal wage claim data by The Connecticut Mirror last year. That doesn’t include state labor violations or court cases. At the national level, food and drink service workers make up a quarter of all workers suffering minimum wage violations, the largest share of any industry, according to ananalysis of survey data by the Economic Policy Institute in 2017.

The president and chief executive officer of the Connecticut Restaurant Association, Scott Dolch, thinks it should be up to state legislators to find a solution.

"Penalties already exist to penalize those who violate labor and wage laws. Any policy changes in this arena should be addressed by the state legislature," said Dolch.

A senior policy associate from the Connecticut Business Industry Association, Ashley Zane, said a proposal like this would raise concerns if it would give the city additional health and labor enforcement capabilities.

"We have a Department of Labor and Department of Public Health. They really are the subject matter experts in those areas. Asking another department to take on that level of expertise, being required to stay up to date on what the law is, what precedents, what's going on with certain cases, that's asking a lot from that department's staff, who most likely is already overworked," said Zane.

Zane thinks the solution should lie with the state Department of Labor, particularly by increasing staff at the agency and making funding a priority. A bill currently being considered in the state legislature would increase the number of wage and hour inspectors.

Ana María Rivera-Forastieri and John Lugo address rally in 2018.
Ana María Rivera-Forastieri and John Lugo address rally in 2018.

Why involve the city's health department?

The Yale team suggests giving the city’s health department the authority to revoke licenses because they say wage theft is a public health issue and one of the many social determinants of health, which are non-medical factors that influence health outcomes as defined by the World Health Organization and by the U.S. Center for Disease Control and Prevention.

“Employment and income will also affect your health," said Coburn, adding that having one's wages stolen can lead to homelessness, hunger and lack of access to medical care and transportation. “That public health lens is what is underneath this proposal.”

But according to a letter sent by the city’s legal department to New Haven alders, it’s not legal to give the health department that authority. Coburn and his colleagues now have to fine-tune the idea so that it complies with current laws.

“While the City sympathizes with the victims of wage theft and other labor law violations, the City is constrained in providing relief through the requested ordinance because the City and the Health Department’s authority to perform certain functions are limited by state law,” reads a legal opinion written by the city’s corporation counsel Patricia King and sent to the board last July.

King notes that Connecticut laws allow “municipalities to exercise power over areas such as finances and appropriation, public services, property, public works, public utilities, traffic, and public safety. Nowhere in this statute does the General Assembly grant municipalities the authority to regulate labor and employment violations.”

To make a city law like this feasible, it would require state legislators at the Capitol to pass a law that gives cities that power, King wrote. Right now, only the state Department of Labor has the authority to enforce wage and hour violations.

“As such, it would be worthwhile to encourage and support our state legislative delegation in enacting appropriate statutory changes,” wrote King.

Senate President Pro Tem Martin M. Looney, D-New Haven, said he'd consider such a law but would need more details about implementation.

"It's certainly something that we would evaluate. I'm always supportive of protecting the rights of labor and to do anything that will help provide stronger enforcement of wage and employment laws and worker protections," said Looney. "One of the questions would be, would the municipal health department be doing an investigation itself? It would require a lot more resources and be more difficult to do and would be quite a burden on the town to fund."

Last year, after hearing concerns from ULA, Rep. Roland Lemar, D-New Haven, introduced a bill that would have increased the number of wage and hour inspectors at the state Department of Labor, but it failed to move past the Appropriations Committee.

Lemar could not be reached for comment.

Finding other ways

In the face of the city's limited capacity, King suggested other ways to crack down on wage theft in the city.

One idea she mentioned is to enact a city law requiring any business renewing or applying for a license to verify that they are following state and federal employment laws, an approach that is already underway in cities such as Jersey City, New Jersey, and Somerville and Northampton in Massachusetts, according to King. This doesn't require giving the city's health department any authority, so it knocks down the initial legal roadblock.

A second alternative is to assign an officer from the New Haven Police Department to act as a liaison with the state Department of Labor to streamline labor complaints, which King notes would make use of city resources, but it is unknown if it would be useful in alleviating the backlog of cases.

There are other cities and counties across the country that have implemented their own programs to deter wage theft.

“Localities nationally are increasingly playing an important role in protecting and advancing workers' rights in a number of ways,” said Terri Gerstein, a workers’ rights lawyer of more than 20 years who served in leadership roles within labor departments in New York, was a researcher at Harvard Law School and the Economic Policy Institute and now heads the NYU Wagner Labor Initiative.

Her research finds that cities nationwide have passed laws regarding municipal minimum wages and required paid sick leave, among other actions that provide worker protections. Gerstein notes that a handful of cities are specifically targeting the permitting and licensing process, much like the idea proposed to New Haven alders.

“It's a perfectly reasonable expectation that, if you're going to operate a business and get a permit from the state, that a business should have to follow the laws,” Gerstein told the CT Mirror. “Having a permit suspended is real economic harm. It is reputational harm. There may be perishables in the restaurant. So it is really a very significant thing to think about, being closed for five days or more, having the permit suspended.”

Among the towns targeting licensing and permitting requirements are Philadelphia, Jersey City, Toledo and Seattle, among others, according to Gerstein’s research.

One program using an approach that is similar to the one proposed in New Haven has been underway in Santa Clara County in California since 2019. The Office of Labor Standards and Enforcement uses the county’s power to suspend the food permits of businesses found not having paid owed wages after an investigation. In the 2023 fiscal year, the program is said to have collected over $140,000 in wages for workers. Along with collecting wages, the office heading the program also conducts trainings, handles a legal advice line and offers community legal services.

Gerstein lays out some challenges in her research regarding programs that target the licensing and permitting process, including the need for increased staff and resources, outreach to employers and possibly leaving workers out of jobs if a business is forced to stop operations. As for the last point, she said the programs can be set up to ensure that businesses have enough time to reach compliance or to negotiate a settlement.

Next steps

Coburn and the rest of the Yale team, including law student Cat Gassiot and the director of the partnership, James Bhandary-Alexander, are evaluating the feedback from the city’s legal department and are working it into the draft of the potential ordinance.

Coburn notes that the draft is being prepared such that it doesn't inconvenience businesses.

“These sorts of ordinances seek to enforce the existing laws. It's not seeking to impose additional burdens on responsible employers who are already in compliance with the law."

While the Yale team handles the legalese, New Haven alders are still adjusting to their new terms before taking any major steps.

“I think we're pretty far from passing an ordinance,” said New Haven Alder Sarah Miller, who represents the city’s 14th Ward in the eastern part of town and who has been in discussions regarding the proposed idea. “I think we're not to the place of putting it forward formally. It's really just to inform conversation.”

Without providing a specific timeline, Miller said their first step is focusing on organizing the committees at City Hall, given that there is a new term along with new alders. In the meantime, city officials are also considering ways to facilitate the process of making state wage claims with public education and outreach and a potential task force to study the topic in more depth.

“For me it's a priority, just because so many of the people in the neighborhood that I represent are impacted by this. Fair Haven is our immigrant neighborhood. And so, we have a lot of restaurants that employ folks that are undocumented, and we just want to come up with some improvements to the system,” said Miller.

Whatever way New Haven decides to do it, she said it’ll take some time.

“These things often take way longer than they should or we want them to, but the important thing is to just keep them moving forward and to get them done in the end."

This story was originally published by The Connecticut Mirror on March 31, 2024.

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