Car Wash Owners to pay $3.9 Million to Settle Labor Violations

Known as the “kingpins” of the New York City carwash industry, John Lage, Michael Lage and Fernando Magalhaes have agreed to pay millions of dollars in a settlement reached earlier in March 2014 for labor law violations and employee rights violations.

The trio, who together own and operate 21 car washes in New York City, agreed to the settlement after the New York State Attorney General’s investigation into their labor practices. Investigators examined business records from 2006 to 2012 and discovered that the owners had failed to pay overtime wages and would deduct pay for breaks that workers didn’t get. Additionally, employees claimed that managers improperly confiscated a share of workers’ tips and failed to pay washers who showed up to work on days of inclement weather but were sent home because business was slow. The owners were also accused of failing to properly report worker income to state authorities as well as failing to carry required workers compensation insurance for all employees.

The settlement requires the car wash owners to pay more than $2.2 million to an estimated 1,000 employees, as well as more than $513,000 to the New York State Department of Labor’s Unemployment Insurance Division and nearly $1.2 million to the New York State Workers’ Compensation Board. In addition, the settlements require the owners to pay for independent monitoring of their labor practices for up to three years, with unannounced on-site inspections and payroll audits.

The heavy fines and strong public criticism of the owner’s actions illustrates just how seriously New York State considers employer mistreatment and labor law violations. “When workers like these stand up for their rights, they need to know that state and city leaders will stand behind them,” New York State Attorney General Schneiderman said.

If you or a loved one have experienced mistreatment in the workplace or if your employer is violating labor laws, contact an employment law attorney today. A skilled attorney will provide the representation you deserve and ensure your legal rights are protected.

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