Employers Who Steal From Workers Could Be Forced to Shut Down Under New Bills

An aggressive effort to stop rampant wage theft emerges in New York.

New York lawmakers have introduced three bills that would make it almost impossible for businesses to operate in the state if they steal workers’ wages. If they become law, any employer that steals over $1,000 from workers could be forced to shut down.

The legislation reflects a growing effort by state and local lawmakers to crack down on pervasive wage theft that is collectively costing workers tens of billions of dollars each year—far more than the total estimated amount lost annually to shoplifting, despite the media’s outsized coverage of retail theft.

The New York bills would empower state agencies to strip violators of critical business licenses and issue stop-work orders against them. 

One bill in the package (S8451) would let the State Liquor Authority suspend liquor licenses for bars and restaurants found to owe their workers more than $1,000. According to Documented and ProPublica, more than $52 million has been stolen from people working in restaurants in New York, “more than in any other industry and accounting for more than 25% of all reported wage theft in the state.” 

The second bill (S8452) would let New York’s Department of Labor “place a stop work order on any business that has a wage theft claim of at least $1,000.”

The third bill (S8453) allows “the Tax Department to suspend a business’s Certificate of Authority — which allows it to collect sales tax and conduct business — in cases where wage theft exceeds $1,000.”

Altogether, this set of reforms — dubbed the “Wage Theft Deterrence Package” and sponsored by state Senate Labor Chair Jessica Ramos and state Assemblymembers Kenny Burgos, Harvey Epstein, and Linda Rosenthal — constitutes a powerful toolkit to halt the rampant wage theft that plagues workers in New York. 

Other state and local lawmakers are advancing new measures to combat wage theft. California passed a law last year allowing local governments to prosecute violations of the labor code if no action is taken by the state’s under-resourced Department of Labor. Last week, Fresno’s city council voted unanimously to allow its city attorneys to bring criminal and civil charges against wage theft violators.

In Maryland, Gov. Wes Moore last month established a new “Joint Enforcement Task Force on Workplace Fraud” to coordinate wage theft enforcement across state agencies. A 2023 Rhode Island law made wage theft a felony. Newly introduced legislation in Colorado takes aim at widespread wage theft in the construction industry by making primary contractors liable if their subcontractors fail to pay workers what they’re owed.

The Economic Policy Institute estimated in 2014 that $50 billion is stolen from Americans annually in wages they earned but weren’t paid. The estimated $15 billion taken each year from just one form of wage theft—paying workers less than the minimum wage—is equivalent to the value of all merchandise lost to shoplifting nationwide ($14.7 billion), the think-tank Demos calculated in 2017.

And while shoplifting more than $2,500 in merchandise can be prosecuted as a felony in all 50 states, penalties for wage theft are typically minimal. “The greatest civil federal penalty for wage theft is repaying the amount in stolen wages and an equal amount in liquidated damages,” Demos found. “Even for repeat or willful violations, the maximum penalty is $1,100.”

While the financial and human costs of wage theft dwarf those of retail theft, traditional media outlets have overwhelmingly prioritized coverage of the latter. In 2021, the media watchdog FAIR documented 309 news stories about a person at a San Francisco Walgreens who had allegedly filled a garbage bag with items and left the store. In comparison, FAIR found just a single story about a lawsuit that Walgreens had settled with its California employees for $4.5 million months earlier over wage theft and other labor violations.

New York’s legislation marks a victory for a journalism outlet that bucked this trend. The nonprofit news site Documented, which is “devoted solely to covering New York City’s immigrants and the policies that affect their lives,” has made wage theft reporting one of its top priorities. It published a series of investigative features with ProPublica about the impact of wage theft and created a “wage theft monitor” to document businesses found guilty of stealing from workers.

“We did not have the data to understand the scale of the issue in New York State until the ProPublica and Documented series came out last year,” Sen. Ramos told the outlet after introducing the new wage theft legislation. “Having this reporting as a tool set us up to put this package together and focused our attention on the Department’s capacity.”

For more, see our coverage of a mass wage theft scandal at one of America’s largest employers: