City Has Financial Ties to Carwashes Under Investigation, Report Says

Yana Paskova for The New York Times Workers protested outside the Sixth Avenue Car Wash in February.

The owners of a string of carwashes with a history of labor law violations and who are under investigation by the state attorney general’s office are paid by the city to clean city-owned cars, according to a new report.

Using publicly available documents, the report shows that the city has paid more than $400,000 to businesses operated by the carwash owners, John Lage and Fernando Magalhaes, since 2007. That amount includes money to wash Police Department vehicles.

In 2005, the federal Department of Labor sued a company owned by Mr. Lage, Lage Management Corporation, accusing the company of violating labor law by failing to pay minimum wage and overtime. The corporation eventually agreed to pay $4.7 million in back wages and damages to more than 1,300 employees.

In March 2012, the state attorney general’s office announced that it had started a separate investigation into labor law violations at 23 carwashes in the New York City area owned or operated by Mr. Lage and Mr. Magalhaes. The investigation is continuing.

Carwash workers across the country have long complained about unlawful abuse, including nonpayment, underpayment, insufficient safety training and unsafe conditions. In March 2012, city carwash workers began a campaign to unionize the approximately 200 carwashes in the five boroughs. Since then, employees at five carwashes have voted to unionize.

Three groups have led the unionization campaign and produced the report: Make the Road New York; New York Communities for Change; and the Retail, Wholesale and Department Store Union. The report has not been publicly released.

Christine C. Quinn, the City Council speaker and a Democratic candidate for mayor, said that the city should “immediately take action and reconsider doing business with them.”

Dennis Lalli, a lawyer for Mr. Lage, defended his client’s practices, noting that Mr. Lage recently raised workers’ wages, and “now pays well in excess of the state minimum wage for tipped employees,” which is $5.50 an hour.

“The city does business with Mr. Lage’s carwashes because he does a good job,” said Mr. Lalli, who also represents Mr. Magalhaes. “Those who say that the city should stop doing business with Mr. Lage do not have evidence of labor law violations. They aren’t out to advance the workers’ interests. Rather, they are a front for a labor union that seeks to advance its own interest in collecting dues from the employees’ hard-earned pay.”

Other agencies that have paid for services from businesses owned by Mr. Lage and Mr. Magalhaes include the Department of Housing, Preservation and Development; the Department of Sanitation; the Department of Homeless Services; and the Department of Transportation. The information is available on checkbooknyc.com, a city Web site that lists some, but not all, transactions that the city makes with outside vendors.

Hector Gomez, 24, began working at the Sixth Avenue Car Wash in Greenwich Village, which was owned by Mr. Lage and Mr. Magalhaes, five years ago. He was paid $5.50 an hour, never received safety training and was never offered protections like gloves or masks, he said. “We washed 50 or 40 police cars each day,” he said. “The white ones, the black ones, every kind. Of course it didn’t feel good, the cars come in, many cars, and we’re not even earning minimum wage.” After workers at his carwash voted to form a union, his salary was raised to $6.03 an hour.

When the Sixth Avenue Car Wash shut down earlier this year, he was transferred to another carwash in Queens. “All I want is for them to pay us the minimum wage,” he said, “for them to give us regular days to rest.”