Deny city permits to restaurants that steal from workers

Less than a year after the owners of Bukhara Indian bistro in Jamaica Plain were accused of stealing nearly $200,000 from their employees, allegedly making them work weeks without pay, city officials approved the restaurant’s upgrade to a coveted full liquor license.

Stealing wages from workers is rampant in the restaurant industry, according to federal investigations — and so is escaping any real consequences. One World Cuisine, the company that operates Bukhara as well as Diva in Somerville and Dosa Factory in Cambridge, settled with its workers, and now the restaurant in the heart of one of Boston’s ostensibly most progressive neighborhoods is humming again.

Stealing from workers — by, for example, withholding tips, failing to pay overtime, or doctoring timecards — has devastating consequences for employees whose financial lives are disrupted; even if back wages are eventually paid, workers may miss rent payments or struggle to feed their families in the meantime. Enforcement efforts by the attorney general’s office and federal agencies, with their limited resources, clearly have fallen short.

But city officials have powerful leverage: They can make the treatment of workers a much more central part of the permitting process for restaurants. Some municipalities in Greater Boston are moving in that direction. But the real test will be whether they put real resources into policing an industry that has proven adept at skirting other labor protections.

Inspired by the One World case, Somerville — with the backing of Mayor Joe Curtatone — passed an ordinance last year that allows the city to deny permits or revoke existing ones for operators found to owe back pay. Boston Mayor Martin Walsh followed suit this fall, issuing an executive order that says vendors will have to certify compliance with state and federal wage laws in order to receive city contracts and — most importantly for restaurants — instructs the licensing board to take wage theft violations into consideration before issuing, renewing, or rescinding city licenses.

Walsh’s executive order, which goes into effect on Jan. 1, is one of the first in the country to require a so-called wage bond, meaning companies must also show they have adequate funds to pay workers fully for the duration of their city contract. The mayor’s staff worked closely with unions and other worker advocates to craft the executive order, and soliciting that input likely strengthened it.

While the Somerville and Boston laws both apply to all types of businesses, their reach could have an outsized impact on behalf of those who work in food service. While hardly the only sector guilty of wage violations, restaurants are among the worst offenders. The US Department of Labor recently released a survey of workforce data from New York and California that found minimum-wage violations — which, across all industries, amounted to more than $20 million estimated in lost income in each state per week — were most common in restaurants and hotels. A separate study previously suggested 43 percent of restaurant workers report not being paid overtime that they were owed under the law.

But the efforts of Boston and Somerville will not help a single worker if the mandates aren’t funded or enforced.

In Somerville, as of November, no businesses had lost permits thanks to the wage theft ordinance, which passed in the summer of 2013. Officials there seem to have no means to root out violators — they note that the attorney general’s office is in the process of creating a database of citations. No launch date is set.

Boston also has no mechanisms set up yet to enforce its law, such as surprise inspections at job sites, financial audits, or periodic payroll reviews. There has been no funding so far earmarked for compliance work, no additional hires announced, and, pressed for details on how enforcement will be done, city officials say that while the mayor is committed to battling wage theft, no final decisions have been made for even what part of City Hall will oversee the effort.

Other labor rules in Boston show that very little will improve until the city starts paying attention. The city law that requires 50 percent of total work hours be performed by Boston residents, 25 percent minorities, and 10 percent women on publicly funded construction projects and large private projects went largely unheeded under the Menino administration until about four years ago, when city councilors Ayanna Pressley and Mike Ross began to press the issue.

Data about building sites across Boston is now available online and regularly updated. And since 2009, minority participation is up nearly 20 percent, and the portion for women has nearly doubled, according to Susan Moir, director of the Labor Resource Center at UMass Boston. “Transparency means developers can’t make excuses. Their competitors are meeting the goals. Why aren’t they?” Moir said. “But it takes political will first.”

The upside for workers, if these latest wage laws are enforced, is tangible: In one case alone this year, a federal judge determined that Ward’s Cleaning Service, Inc., which serves some 85 restaurants and hotels in the greater Boston area, owed more than $1 million in back pay and damages to 149 low-wage employees working as dishwashers, janitors, and housekeepers. Investigators discovered that the company’s management avoided overtime payments by directing workers to falsify timecards or use multiple timecards with different names. Ward’s also allegedly paid employees with checks made out to fake names or in cash to avoid labor laws. (The firm noted this week that the violations cited were identified and halted in early 2012, saying three quarterly independent audits since the judgment last spring have found the company is in full compliance with wage laws.)

Even more troubling: This was not the Peabody-based firm’s first offense. It was cited for similar violations in 1993. Technically, under both Boston and Somerville’s wage theft laws, that could have disqualified it for permits or city contracts. If its president, David Ward, had believed that stiffing workers could have significant financial consequences for his business, would the company have been so cavalier to flout the rules again and again?

Walsh and Curtatone should make sure their laws are strong, funded, and enforced, to guarantee the answer is no. At the very least restaurant workers are owed that.