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Targeted Labor Department Investigation finds Ithaca Restaurant Workers Victimized by Wage Theft

Ithaca, NY (December 10, 2009) - Can't See the video? Click Here to Get Adobe Flash Player. State Department of Labor Commissioner M. Patricia Smith today announced the findings of a targeted Labor Department investigation of 22 Ithaca restaurants, mostly located at the Ithaca Commons. On May 12 of this year, investigators from the Department’s Divisions of Labor Standards and Unemployment Insurance found that five of the restaurants - 23 percent - were in full compliance with labor laws. However, the other seventeen restaurants - 77 percent of those visited - were found to have violated New York State Labor Laws.

Governor David A. Paterson said, "In this economy, at a time when every dollar counts, all workers in New York State deserve to be paid fairly. Restaurant workers in Ithaca and across the state work long hours and contribute greatly to our economy. We cannot afford to leave any of them behind. Laws are in place to be followed, and my Administration is committed to making certain that both businesses and workers know their rights under state labor law."

Commissioner Smith said, "I’m encouraged by the fact that almost one-quarter of the restaurants we checked were in full compliance with labor laws. To them I say thank you - thank you for treating your workers fairly and thank you for playing by the rules. Ultimately, a level playing field helps all New Yorkers - workers and businesses alike."

“However, three-quarters of these restaurants were found to have violated the law. Some of these violations were simple recordkeeping or math errors that were corrected on the spot. But several of them resulted in workers being cheated out of wages earned, and the State not receiving monies needed to pay Unemployment Insurance benefits to unemployed workers. Especially in these difficult economic times, that amounts to theft from workers and taxpayers.”

The May 12 investigation arose out of a previous Labor Department investigation of two other Ithaca Restaurants – Taste of Thai and Tamarind – that found 36 workers underpaid more than $28,000. During the course of that investigation, Department investigators were repeatedly told that these two restaurants “were not doing anything different than any others here in Ithaca.”

As a result of the most recent sweep, investigators from the Department’s Division of Labor Standards found that $87,925 is owed to 93 employees at 6 restaurants for violations such as failure to pay minimum wage and illegal deductions from workers’ paychecks. Other violations included lack of working papers for child labor and recordkeeping and meal period violations.

To date, $13,880 of the nearly $88,000 owed workers has been collected. The remainder is currently in active negotiation with employers, or is being repaid through a payment plan.

Investigators from the Department’s Division of Unemployment Insurance investigated seven restaurants for violations of unemployment insurance law. Six of these investigations have been completed, finding that $20,634 in unemployment insurance taxes are due the State. Violations included off-the-books payroll, “misclassified workers” (employees erroneously classified as independent contractors), failure to report tips and meals, and mathematical errors in reporting.

“The Tompkins County Workers’ Center responds to over 200 complaints a year from community members who feel they are being treated unfairly at work,” said Pete Meyers, the Workers’ Center’s Executive Director.  “Our experience shows us that all too many of these cases come from workers in the restaurant industry. We are especially pleased that our working relationship, as a community organization, with the NYS Dept of Labor has helped to bring this measure of justice to some of the workers in an industry in which there are pervasive violations of workers’ rights.”

The Ithaca investigation is another example of the Department of Labor’s proactive approach to enforcement. Instead of working only from complaints, Department investigators now target entire neighborhoods or industries for enforcement “sweeps.” These sweeps not only protect workers, many of whom are afraid to complain because they are concerned about retaliation from their employer, but also law-abiding businesses, who can find themselves at a competitive disadvantage with businesses who cut costs by breaking the law. Prior sweeps have occurred in recent years in such diverse locales as Brooklyn, Buffalo, Latham, and Queens, among other places. 

The State Department of Labor encourages employers and workers to contact the Department with any questions about labor and/or unemployment insurance laws. Information is also available on the Department’s web site at, or by phone at 1-888-52-LABOR.

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