Car wash chains to pay $3.9M in settlements with N.Y. AG

NEW YORK (Legal Newsline) - New York Attorney General announced $3.9 million in settlements on Thursday with two interrelated car wash chains to resolve allegations of widespread labor law violations.

The car wash chains, which were owned and operated by John Lage, Michael Lage and Fernando Megalhaes, allegedly engaged in multiple labor law violations, including underreporting of employees on state unemployment insurance returns, underpayments and failure to carry required workers' compensation insurance for all employees.

Between Nov. 29, 2006 and Sept. 30, 2012, some of the car washes allegedly failed to pay all of their employees overtime and deducted pay for breaks that workers did not get. In some instances, managers allegedly engaged in improper tip sharing of workers tips.

Under the terms of the settlement, the workers will receive a total of $2,223,124 in restitution for the alleged underpayments.

"When workers like these stand up for their rights, they need to know that state and city leaders will stand behind them," Schneiderman said. "Today, we are doing just that, sending a strong message to all hardworking New Yorkers that we've got your back. These agreements will ensure that the car washes clean up their acts to comply with the law. And they ensure that New York businesses who play by the rules can do so on a level playing field."

Under the terms of the agreement, the Lages and Megalhaeses must pay more than $513,000 to the New York State Department of Labor's Unemployment Insurance Division and close to $1.2 million to the New York State Workers' Compensation Board. The Lages and Megalhaeses must also pay for independent monitoring of their labor practices for up to three years with unannounced on-site inspections and payroll audits. All results must be reported to Schneiderman's office.