LABOR DEPARTMENT INVESTIGATION OF NEW YORK'S CAR WASH INDUSTRY UNCOVERS NEARLY $6.6 MILLION IN UNPAID WAGES
Investigation Marks New Proactive and Systematic Approach to Rooting Out Violations
Albany, NY (August 15, 2008) - At a press conference in New York City, State Labor Commissioner M. Patricia Smith announced the results of a Department of Labor (DOL) investigation of New York state’s car wash industry. The Labor Department conducted unannounced inspections of 84 car washes statewide, interviewing 431 employees over a two-week period earlier this year. The investigations revealed widespread violations of minimum wage, overtime, meal break and other basic labor laws, with over $6.5 million in estimated underpayments.
In New York City, over 78 percent of car washes inspected were in violation of minimum wage and overtime laws. Statewide, nearly half were in violation.
“Every so often, an investigation comes along that blows the lid off a particular industry’s treatment of workers – this is such an investigation,” said Commissioner Smith. “No matter what industry norms have been until now, car washes need to clean up their act and stop paying sweatshop wages. The Labor Department will take every step necessary to halt the illegal treatment of workers in the car wash industry.”
The car wash inspections are the first of several statewide proactive industry investigations planned by the Division of Labor Standards, which enforces minimum wage, overtime, child labor and other basic labor laws. Instead of operating solely based on complaints, the Division now conducts proactive investigations of low-wage employers even in the absence of a formal complaint, with the goal of changing longstanding and widespread practices in a targeted neighborhood or industry.
The car wash investigations also mark the first time the Division of Labor Standards has used a systematic and analytical methodology to ascertain the level of compliance in an industry as a whole. The Labor Department’s Division of Research and Statistics formulated a random sample of car washes statewide to be investigated, with the geographic distribution of the sample proportional to the distribution of car washes throughout the state. The sample size of 84 car washes represents over 13 percent of the approximately 640 car washes statewide. This sample size is large enough to enable the department to draw reasonably reliable conclusions about the industry as a whole.
The downstate region had significantly higher rates of violation than upstate, and the 28 car washes based in New York City had the worst records. The breakdown of violations found is as follows:
In 2007, total car wash employment in the state of New York was 6,580, with annual average wages of $16,570. Many workers in the car wash industry rely heavily on tips to supplement their wages. Under state labor law, employees must be paid $7.15 per hour; however, car wash employers may count a “tip allowance” of up to $1.75 per hour toward the $7.15 standard, as long as the worker receives sufficient tips each week to satisfy minimum wage and overtime requirements.
At one car wash on Long Island, four employees stated that they were being paid $4.00 per hour for a 54-hour workweek with no overtime, which amounts to $216 in wages per week. The minimum wage and overtime laws require payment of at least $436.15 for a 54-hour week. Many attendants work schedules of 66 – 72 hours per week, often for wages in the $4.00 - $5.00 per hour range. The Labor Department is currently negotiating with companies on behalf of workers to recover the underpaid wages.
In coming months, the Labor Department will continue efforts in the car wash industry. To educate employers about their legal obligations, the Labor Department has sent letters to 640 car washes statewide, inviting them to attend one of twenty seminars held in various locations. Dates and addresses for these seminars can be found on the Labor Department’s web site. The Division of Labor Standards will be conducting additional inspections of car washes not included in the initial sample, and will be revisiting some of the car washes found in violation.
“This announcement is only the beginning,” continued Commissioner Smith. “We are determined to change the culture in the car wash industry. If we go back to a car wash and find that it is still flouting the law, we will be referring cases for criminal enforcement.”
New York State ’s minimum wage is $7.15 per hour, and employers are required to pay overtime for weekly hours past forty at 1½ times the employee’s regular pay rate. The Labor Department encourages employers and workers to contact the department about wage and hour issues. Investigators will answer any questions regarding compliance with New York’s labor laws. Information is also available on the department’s web site – www.labor.ny.gov; or by phone at