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Know Your Rights
Source: New York Times
Subject: Workplace Justice
Type: Media Coverage

A Multimillion-Dollar Payday, at the Carwash

Wage-theft cases are notoriously hard to prove, and they almost never pay out. But for some of the most marginalized laborers in the city, justice was served.

Before J.V. Car Wash closed for good, it was open all the time, 24 hours a day, 365 days a year. Workers put in 12-hour shifts, sponging, drying, and waxing the cars, cleaning the wheels, and vacuuming the interiors, six or even seven days a week.

They worked in frigid and searing weather, were expected to use harsh chemical cleaners without gloves, and endured abuse if they took a few minutes to rest.

For all this, the employees were paid about $50 a day, roughly $4 an hour. Complaints about low wages were ignored. “The manager would say, ‘If you want to work, then work,’” Juan Remigio Licona said in Spanish. “‘If you don’t want to work, you can go.’”

Two workers, Marcos Díaz and Giovanni Paulino, had logged eight years between them at the carwash when they concluded they did not want to work under those conditions and sought the advice of a lawyer. Both were immigrants from the Dominican Republic who had an imperfect command of English and an imperfect understanding of their rights under U.S. labor law. But in 2011, against long odds, they filed suit against their employer, alleging violations of the Fair Labor Standards Act and state labor law.

The case against J.V. Car Wash (and its sister locations) took some unusual turns, as the carwash owner, José Vázquez, contrived a series of bizarre claims to undermine the workers’ lawsuit. But the really surprising twist to this unlikely story: the carwasheros, as they call themselves, won. By the time the last checks are disbursed this summer, almost eight years after the suit was filed, the 106 workers who eventually signed on as plaintiffs will have received a share of roughly $8.5 million — a spectacular sum for a wage theft case.

The average plaintiff award in a wage theft case is less than $6,000, according to Samuel Estreicher, a professor at New York University Law School and director of the school’s Center for Labor and Employment Law. These carwasheros won an average of more than $80,000 per worker.

Carwash workers are among the most marginal laborers in New York City’s low-wage economy. Most are foreign-born, according to Carlos Encarnacion, an organizer with New York Communities for Change — often from the Dominican Republic, Central America and West Africa — and some unknowable number are undocumented, which makes them especially vulnerable to exploitation.

Both the Attorney General’s office and the Department of Labor have investigated and recovered stolen wages in the carwash industry in recent years, and union organizers have been mobilizing carwash workers. But wage theft remains an endemic problem, and so far, only a few carwashes are unionized.

For 15 years Martín Ureña was on the night shift at J.V. Car Wash in Inwood, which was known to the carwasheros as “Broadway.” The work was grueling and sometimes hazardous. The winters were the worst. When he got home at the end of his shift, he would soak in a hot bath. “I was in pain from the cold.”

Juan Remigio Licona remembered a day at the Bronx location that he was told to clean out the underground pit where sludge and chemicals collect. “The smell was so strong, I was feeling dizzy,” Mr. Licona said through an interpreter. The manager insisted he finish the job.

“You come from a poor country, you have dreams,” said Aldo Sención, who was born in the Dominican Republic. “But you never think that this reality could hit you so hard.”

José Vázquez came to the United States from Cuba at age 12. He didn’t finish high school, but he saved his money and with his father bought a gas station in Inwood in the 1986, which became J.V. Car Wash (though it was known simply as Broadway.) Eventually he bought three more carwashes: one in Harlem, one in the Bronx and one in Elizabeth, N.J.

Mr. Vázquez did not respond to requests for an interview, but Ofelia Sanchez, his girlfriend of 30 years, said that the carwash employees were not exploited. “We are immigrants ourselves,” she said in a lengthy phone interview. “We treated them like family.” The workers’ claims that they had been underpaid, she said, were lies. He may have had “a different way of doing things,” Ms. Sanchez said, but “José Vázquez is not a crook.”

He was certainly successful. Sometimes Mr. Vázquez would drive up in his red Ferrari or his Rolls-Royce, and the workers would wash it for him. None of the workers interviewed for this article could recall him ever leaving a tip.

Mr. Vázquez’s crews were nevertheless considered tipped workers. Like bartenders and waiters, manicurists and hair stylists, dog groomers and parking valets, the carwasheros depend on the generosity of customers to make a living. All these workers toil in industries that can legally pay employees according to a subminimum “tipped wage” scale. Gratuities from customers are supposed to make up the difference, but if tips are scarce, the employer is legally obliged to top up their pay envelopes to the standard minimum.

But for some tipped workers, it doesn’t work out that way. Carwash managers frequently help themselves to a portion of the tips, according to testimony at New York Labor Department hearings last summer. One worker testified that if the giant automatic brushes damaged a windshield wiper or a mirror, his boss would reach into the tip jar to compensate the customer.

At the Vázquez carwashes, workers had no notion of what their base wage might be, and whether the tips were actually coming to them. The managers would simply collect the money from the tip boxes at the end of each shift, take it into the office, and then hand the workers their wages in cash.

“You don’t know if the customers gave more tips or less tips,” said Josué Gómez, who worked at Broadway for nearly nine years. “They gave us an envelope, and we had to take whatever is inside.”

The workers were not alone in their confusion. The tipped wage is so complicated — with several different wage scales, depending on how plentiful tips are — that even scrupulous employers may find it hard to determine what they owe. That complexity also makes it difficult to sort out if workers are getting swindled.

“I have many years of experience analyzing wage theft,” said Deborah L. Axt, co-executive director at Make the Road New York, an advocacy organization. But the payroll records for tipped workers are often bewildering. “It’s virtually impossible to detect and enforce wage theft with a system where employers are allowed to count tips toward the minimum wage,” she said.

For years, the carwasheros took their pay envelopes with little complaint, and payment practices at the carwashes escaped scrutiny.

Without an army of government investigators deployed in every workplace, enforcement of wage laws depends to some extent on employees to report violations. But immigrant workers are both more likely to be cheated and also less likely to come forward with their grievances. They may fear retaliation from a boss, they may hesitate to contact a government agency and they may not know how to find a private lawyer who would take an interest in their troubles.

Steven Arenson, a lawyer with Arenson, Dittmar & Karban, takes an interest in workers’ troubles. Mr. Arenson taught constitutional law at Yale College, and now represents employees who believe they have been underpaid, discriminated against, or harassed on the job. In musing about his career path, Mr. Arenson, who wears glasses and a yarmulke, quoted a medieval Talmudic scholar on the Torah’s prohibition against cheating a hired laborer. He is a familiar figure in certain Latino immigrant circles, and that is how, in late 2010, Marcos Díaz and Giovanni Paulino arrived at his Madison Avenue office with their tale of stolen wages.

The minimum wage in New York City at the time was $7.25 an hour. Working 72 hours a week, they should have been paid $638, including time and a half for every hour after 40 hours. But the carwasheros received around $300 each week.

Colleagues advised him not to get involved. “They told me it was a quixotic fool’s errand,” he recalled, and that he’d never recover enough from a small operation like a carwash to make it worth his time.

But Mr. Arenson listened as they talked about working outdoors all day in the cold, with wet hands and feet, making sweatshop wages. “The exploitation was so extreme,” Mr. Arenson recalled. “I thought it was outrageous.” He agreed to take the case.

And so began a seven-year battle that turned out to be anything but a routine wage-and-hour case. After Mr. Vázquez learned about the suit, he fired all the plaintiffs who were still employed at his carwashes. He then declared in court conferences that none of the men had ever worked for him. He said they were “squatters,” “delinquents,” and “agents of drug lords,” who had usurped his businesses and kept the money for themselves. He accused them of criminal witness tampering.

Mr. Vázquez refused to testify, failed to show up for depositions, fired his lawyers on the eve of a rescheduled deposition, asked to have the case dismissed and then, two years on, half an hour before he was once again scheduled to be deposed, he filed for bankruptcy protection.

It looked as though Mr. Arenson’s colleagues had been right; it seemed the carwasheros would never collect their stolen wages. “The hope is that they are going to wear you down,” Mr. Arenson said. “You’ll accept some very small offer of a settlement and go away. And often it works.”

That’s not what happened. Indeed, the Chapter 11 filing was a grievous tactical error. Ordinarily bankruptcy protection halts all litigation, but Mr. Arenson persuaded the bankruptcy judge that his clients deserved their day in court, and the case was allowed to proceed. Worse yet for Mr. Vázquez’s prospects, when he failed to comply with the bankruptcy court’s instructions, the judge appointed two trustees, Donald Biase and Donald Conway, to manage his business and personal affairs.

As Mr. Biase sorted through the carwashes’ finances, he discovered that the accounts for the all-cash operations were “essentially nonexistent.” The payroll tax records listed just four employees for four carwashes: Mr. Vázquez himself, his girlfriend, his brother, and his octogenarian father. “Obviously,” Mr. Biase concluded, “these payroll tax returns were works of fiction.”

The trustees also discovered, hidden in a safe in Mr. Vázquez’s basement, a stash of nearly $1.3 million in cash that he had not disclosed. “I can say this,” Mr. Arenson said. “José Vázquez never failed to surprise us.”

The trustees concluded that there was no defense Mr. Vázquez could make at trial, and in December 2014 the lawsuit was settled. The men who had labored the longest at the carwashes received close to $200,000 each. Together, the 18 workers received $1.65 million.

But that was not the end of it. For months Mr. Arenson had been turning away employees of Mr. Vázquez’s businesses who had hoped to join the suit; the court’s deadline for submitting claims had long since expired. But Mr. Biase had been operating the carwashes (and paying a legal wage), and he understood that there were dozens more workers who might also have valid claims. He asked the court to allow more plaintiffs.

In the next few months, 88 more workers signed on. This is where a lot of cases would fold: with so many claims, some going back a decade or more, it seemed likely there would be no money to share. But it turned out that Mr. Vázquez owned not just the carwash businesses but also three of the four plots of land beneath them, including one property in a rapidly gentrifying corner of Harlem. Together the three parcels were sold for more than $30 million. A seven-story condominium is being built on the lot where the Harlem carwash once stood.

In December, five days before Christmas, the second group of plaintiffs received their settlement checks, ranging from a few thousand dollars to more than $90,000. Once the final payments are released this summer, the total settlement for all 106 workers, in both groups — including their attorney fees and expenses, which the judge ordered would be paid by Mr. Vázquez — will be roughly $8.5 million.

On a day when he suddenly had money for more than the bare necessities, Manuel Mercado talked about his old job as a car washer. “One of the managers, I never will forget, we had an argument, and he said, ‘You’re a nobody, you don’t even have papers.’” Mr. Mercado now owns a small restaurant in Brooklyn and plans to put some of his settlement money into his new business. But his big dream, he said, “is to be able to go to college and get a degree in this country.”

Martín Ureña’s first luxury would be buying Christmas presents for his wife and daughters. In the spring, the family will move back to the Dominican Republic. Josué Gómez would like to buy a house outside the city, to save for his daughters, and to send something to his family in the Dominican Republic. Juan Remigio Licona wants to help his children in Mexico, and simply “to live better than I did before.”

But when explaining why they sued their employer, the workers didn’t talk about the money. They wanted to be treated fairly, Henry Paulino said. They did it “to make justice.”