Audit Report On The Department Of Consumer And Worker Protection’s Enforcement Of The New York City Earned Sick Time Act

Executive Summary

The New York City (City) Department of Consumer and Worker Protection (DCWP)—formerly known as the Department of Consumer Affairs (DCA)—endeavors to ensure fair and vibrant marketplaces and workplaces.   DCWP licenses and regulates nearly 80,000 businesses in 55 different industries, and enforces the Consumer Protection Law and other related business laws.  In addition, DCWP implements, administers, and enforces the Earned Sick Time Act (ESTA), also known as the Paid Sick Leave Law, which went into effect on April 1, 2014.  As part of its responsibilities, DCWP educates employees and employers about ESTA to help ensure that they know their rights and responsibilities, and, through its Office of Labor Policy and Standards (OLPS), investigates related complaints and enforces the law.  The goal of ESTA is to enable all eligible employees to use sick leave to care for themselves or for ailing family members (including spouses, children, grandchildren, grandparents, and siblings) without threatening their economic security.

ESTA is set forth in Title 20, Chapter 8, of the New York City Administrative Code and covers employees who work in the City, have been with their employer for at least 120 calendar days, and have worked more than 80 hours during a calendar year.   Employers with five or more employees who work the prescribed number of hours must provide paid sick leave, while employers with one to four employees who work that many hours must provide unpaid sick leave.  Under the law, sick leave is accrued at the rate of 1 hour for every 30 hours worked, up to a maximum of 40 hours per calendar year.  The act also includes provisions prohibiting employer retaliation for employees’ use of sick leave or for filing a DCWP complaint alleging ESTA violations.

Three units within OLPS are involved in handling ESTA complaints: an intake unit; an investigative unit; and a litigation unit.  If an employee believes that an ESTA violation has occurred, the employee can file a complaint with OLPS.  An employee can submit a complaint to OLPS via walk-in, phone call, email, or regular mail.

If OLPS determines that an employer violated the law, it first attempts to negotiate a mutually acceptable settlement with the employer.  If a settlement is reached, DCWP executes a consent order, which is a formal agreement between DCWP and the employer setting forth the findings and remedies, including the amounts of restitution owed to the employee(s) and fines owed to the City, and the dates by which the restitution and fines are to be paid.  If the negotiation does not result in a settlement, DCWP’s litigation unit files a petition for a trial on the case before an administrative law judge of the Office of Administrative Trials and Hearings (OATH) .

As recorded in a dataset DCWP provided to us, the agency received a total of 310 ESTA complaints in Fiscal Year 2017 (July 1, 2016 through June 30, 2017) that it determined were within the agency’s jurisdiction and were therefore docketed as valid complaints.  According to other DCWP datasets for the same period, 3,367 employees were reportedly awarded a total of $1,597,950 in restitution, and employers were reportedly charged a total of $475,828 in fines.

Audit Findings and Conclusions

DCWP needs to strengthen its controls to more effectively enforce ESTA.  Although DCWP, to its credit, successfully completed numerous ESTA investigations that led to orders that employers pay restitution to their employees, DCWP has no evidence to show that a significant number (38 percent) of the employees in our audit sample received the restitution payments specified in such orders.  The lack of such evidence resulted in part from DCWP’s insufficient tracking and pursuit of these payments.  In addition, DCWP generally did not impose the late fees stipulated in its consent orders when employers failed to pay the agreed-upon restitution or fines by the due dates.  Further, DCWP’s Fiscal Year 2017 Mayor’s Management Report (MMR) performance indicators on restitution were misleading and—with regard to restitution and fines—insufficiently supported.

Moreover, DCWP was often untimely in performing some of the key intake and investigative steps for the cases in our sample.  In addition, DCWP did not consistently document the reasons for significant time gaps in the investigative process and, in some instances, did not document the reasons for key decisions on a case.  Further, the case files for all of the complainant-initiated cases in our sample for which DCWP pursued investigations were missing one or more key documents needed to show that the standard intake, investigative, and litigation steps it deems necessary were actually taken.  Finally, DCWP lacked a process for obtaining periodic complainant feedback on its handling of paid sick leave complaints.

Audit Recommendations

To address these issues, the audit makes a total of 21 recommendations, including the following:

·  DCWP should enhance its tracking abilities by developing a capacity to readily generate lists of restitution amounts ordered, paid, and past-due.

· DCWP should, both in cases with consent orders and those with OATH decisions and orders, consistently take additional steps (such as sending dunning letters to employers and filing petitions with OATH) when there is evidence that fines have not been paid or that employees have not received the restitution payments to which they are entitled.

· DCWP should consider all available legal remedies, including, but not limited to, referring matters to the City Law Department for legal action in the event employers default or delay in honoring their stipulated payment obligations.  DCWP should further consider whether changes can be made to the language and form of its ESTA consent orders to provide for additional legal remedies, such as confessions of judgment, in appropriate cases.

· DCWP should develop mechanisms to more effectively review employers’ submissions of proofs of restitution payments to ensure that employers comply with their consent orders and employees receive the full restitution payments to which they are entitled.

· DCWP should enforce the stipulations in its consent orders that impose late fees on those employers who fail to pay the agreed-upon restitution and fines in a timely manner.

· DCWP should collect and maintain sufficient supporting data and documentation to fully support the performance indicator results regarding restitution and fines that it submits for inclusion in the MMR.

· DCWP should develop mechanisms to more effectively track and manage its handling of complaints to ensure that key intake and investigative steps are taken in a timely manner based on established time frames.

· DCWP should enhance its monitoring of the recording of investigative activities to ensure that significant time gaps and key investigative decisions are adequately identified and explained.

· DCWP should specify in its written procedures the documents that need to be maintained in the case files to demonstrate that all key intake, investigative, and litigation steps have been taken.

· DCWP should periodically survey a sample of employees who have made paid sick leave complaints and consider the ways in which the concerns expressed by the complainants could be addressed.

Agency Response

In its written response, DCWP generally agreed with the audit’s findings and with 18 of its 21 recommendations.  DCWP partially agreed with one recommendation (#6) by agreeing to consider the use of late fees commensurate with the size of the restitution orders in its larger cases but disagreeing with the part of the recommendation that calls for the agency to consistently include late fee provisions in its consent orders.  DCWP disagreed with one recommendation (#7) that it consider developing new performance indicators for the MMR that show the number of employees who actually received restitution and the total amount of restitution they received, and the agency did not address one recommendation (#5) that it enforce the late fees stipulated in its consent orders.