En Español Know Your Rights
Source: Labor Notes
Subject: Workplace Justice
Type: Media Coverage

NY Boutique Boss Arrested, Faces 4 Years in Jail for Stealing Wages

 

Wage-thieving
employers, beware: the owner of a New
York
boutique chain accused of shorting workers by
$1.5 million was taken away in handcuffs Tuesday.

State Attorney General Andrew Cuomo alleges the owner, David Cohen, not
only paid some workers less than $5 an hour and ignored overtime rules as
workers clocked 60-hour weeks—but also offered a worker $50,000 to inform on
organizing in the stores.

Cuomo
charges that Cohen underrerported salaries and the number of employees to the
state, robbing the unemployment insurance fund and leading to 38 felony counts
for filing false business records and “offering a false instrument.”

He faces up
to four years in jail and civil action to recover the wages stolen from 150
workers. The arrest follows months of organizing in the stores by the Retail
Action Project, an organizing venture sponsored by the Retail, Wholesale, and
Department Store Union (a Food and Commercial Workers affiliate).

One seed
for the campaign was planted when 22-year-old Carolina Ferreyra passed by a RAP
rally last summer on her way to work at Madness, one of Cohen’s seven budget
boutiques in SoHo.

The rally
was outside Scoop NYC, another lower Manhattan
clothing retailer accused of abysmal conditions and refusals to pay overtime.
Ferreyra hung on to the flyer she was handed for months, as she watched her
store burn through workers.

“Every day
there was somebody new, somebody getting fired,” she said. “They would use them
up and when someone complained, they were fired.”

Ferreyra
says she worked up to 65 hours a week with no overtime. Other workers, like
Sadiq Nukunu, said they were paid a flat fee of $340 despite working opening to
close, 66 hours, six days a week.

Finally,
after a confrontation with her supervisor, Ferreyra dug up the flyer and
contacted RAP. Soon she and co-workers were meeting with organizers—and then
the state’s attorneys.

Cohen
caught wind of the organizing drive after getting hold of a worker’s Facebook
message. Besides allegedly trying to bribe his way out of trouble, he began
interrogating workers and firing those he thought were involved.

Phil Andrews,
a RAP organizer, said several workers who had no contact with the campaign were
booted—and that immigrants were especially targeted as Cohen feared a raid.
Cohen’s attorney says he intends to fight the charges.

Dianne
Enriquez, coordinator of Interfaith Worker Justice’s nationwide network of 21
worker centers, says prosecutions in wage theft cases are unusual. A few city
attorneys are showing interest, though, as the recession has added to the
already blooming crop of cheating employers.

“Why don’t
employers get jail time when they steal?” she asked. “This is a great
precedent. When someone steals a TV from a house they go to jail.”

RAP staged
a march February 3 against the boutiques and other surrounding employers that
organizers say have cheated workers out of millions. The union-backed group
focuses on a small slice of lower Manhattan’s retail-rich environment because
many SoHo employers know each other—and because many workers bounce from one
store in the neighborhood to the next, suffering the same treatment at each.

“The grand
plan is to create a situation where retailers are afraid to go below the
minimum wage,” Andrews said, “and to use these examples both in the community
of workers and the public at large to show that this is a big problem—we need
to raise the floor, we need a living wage.”

The union
and its allies are moving on multiple fronts to achieve the goal.

In December
they convinced the City Council to cancel subsidies promised to a Bronx mall project, after the mayor and the developer
refused to guarantee retail workers there at least $10 an hour. Along with
Make the Road New York, a workers’ advocacy group, they’re pursuing a living-wage
campaign at a Queens mall that’s sucked down
$48 million in public subsidies and spawned 3,100 jobs paying an average of
$7.72.

And the
union is backing a bill that would mandate living wages at developments that
pull in public money. It’s also seeking tighter reviews of how money is spent
by administrative bodies that grant subsidies.

Join the
Club

Cohen’s
business is the latest in a series of retail chains in the city to face state
investigations after the union and community groups uncovered sub-minimum
wages. Several smaller grocery stores have settled hundreds of thousands of
dollars in claims with baggers after owners were accused of paying them zero
wages—they made only tips.

At Yellow
Rat Bastard, a chain of clothing stores whose anchor is in SoHo,
the owner was arrested. He settled wage and overtime claims for $1.5 million
two years ago—and gave a union neutrality pledge, too.

RWDSU
organized 150 workers Yellow Rat Bastard only to see membership plummet as the
recession and no-longer-hidden weaknesses claimed store after store.

“If your
business model is predicated on complete illegality, it forgives a lot of
disorganization in your business,” Andrews said.

But the
union won workers’ respect in SoHo long before
union cards were signed, he said, by attacking workplace problems like
favoritism in scheduling and discipline.

Union
density in retail is so low that small employers are likely to shut down and
reopen elsewhere rather than deal with the union, and large chains have almost
limitless resources to fight organizing.

“That’s the
conundrum of the whole thing—you used to be able to raise standards by
organizing a majority of plants,” Andrews said.

Now, the
union and its allies aim to remake the retail industry through a complex
campaign: discipline bottom-feeding employers, engage workers and the public,
and use legislation to ratchet up standards broadly.

“It’s
pretty obvious that retail is going to the lowest common denominator, and some
employers have figured out there are methods and communities you can exploit
easier,” Andrews said. For at least one stretch of New York, those days, it seems, are numbered.