How some minimum wage workers are robbed by their employers

Across the U.S., millions of workers in 20 states started the New Year with a raise. In nine states, the law required the minimum wage to keep up with inflation, while 11 others passed new legislation to hike up the wage floor. But not everyone entitled to a raise will actually get one.

According to a recent survey from the National Employment Law Project, one in four low-wage workers has suffered some kind of wage theft, with employers taking advantage of a series of loopholes to avoid complying with federal and state labor laws. 

In New York, employers are required to pay workers a minimum of $8.75 an hour, up from $8 in 2014. But labor campaigners say the increase won’t matter if the law isn’t actually enforced.

“A lot of times people think of sweatshops in third-world countries,” said JoAnn Lum, executive director of the Coalition for a Real Minimum Wage, a New York advocacy group. “But right here in the United States, all kinds of workers are being sweated. And one aspect of being sweated is being robbed of your wages.”

Bi Sheng Liu is a 44-year-old father and husband, who moved to New York from China with big dreams.

“I expected to see money everywhere,” he told us. “I expected this perfect world.”

In 2007, Bi Sheng  took a job as a driver with an independent taxi company based in Queens known as Yes Car. Under the terms of his employment, he earned a flat weekly salary of $500 – driving 12 hours a day, six days a week.

Do the math – and Bi Sheng was working 72 hours a week, earning $6.94 an hour, with no overtime pay.

Two years later, Yes Car owner Tony Luo announced he’d deduct another $100 from Bi Sheng’s weekly paychecks in so-called “protection fees.” He was now earning $5.55 an hour. At the time, the state minimum wage was $7.25.

The New York Labor Department has 112 investigators on staff, more than any other state besides California. But last year, an official audit from the New York State Comptroller’s Office found the department was failing in its efforts to investigate alleged wage theft, describing its work as “inadequate” and “untimely.” 

The audit found the agency had a backlog of more than 17,000 cases, and 75 percent of them had been open more than a year. It concluded that the state Labor Department’s investigation process “[fell] considerably short of the minimum requirements established by the state” to enforce the law and protect New York workers.

In its response, the state Labor Department dismissed the findings and said the majority of cases are processed in less than six months. Speaking to America Tonight, Alphonso David, New York's deputy secretary for civil rights and labor, said the only part of the process that the state controls is the investigation stage.

“One of the practical realities of litigation is that it takes time,” he said. “And unless we are collectively willing to change the law in New York or anywhere else, there is an appellate process that the state does not control.”

In 2012, Tony Luo sold Yes Car. The new owner, who would only identify himself as Wallace, said he hasn’t seen or heard from Luo in more than two years. He also wouldn’t specify what his drivers are currently making, but he did admit their classification hasn’t changed.

“We’re running taxi cabs,” he said. “There’s nobody working for us. They’re all independent contractors.”

Labor advocates say they’re unaware of any wage theft cases involving drivers who currently work for Yes Car. But the company’s new ownership could complicate the case.

“It's perfectly legal to shut down and then open up another business,” Lum said. “The law does allow the franchise to declare bankruptcy, to hide assets, to hide behind the subcontracting system and say, 'That's not my responsibility.' So the risk is very little.”