NYC Association Challenges Car Wash Accountability Law
By William Y. Crowell, III
New York City Local Law 62, “The Car Wash Accountability Law,” has been challenged in an action filed in the Southern District federal court by the Association of Car Wash Owners, Zoom Car Spa LLC, and Five Star Hand Wash LLC vs. City of New York. The plaintiffs are represented by Michael Cardozo, Esq., a former New York City Corporation Counsel.
This lawsuit focuses on the requirement in Local Law 62 that non-unionized carwashes post a surety bond five times higher than the amount required to be posted by unionized carwashes, $150,000 versus $30,000.
The complaint filed by the plaintiff sets forth the following grounds to invalidate Local Law 62:
- The surety bond requirement interferes with the collective bargaining process in the carwash industry by placing an additional burden on non-union employers, which is alleged to be preempted by the National Labor Relations Act.
- Local Law 62 regulates wages which are subject to comprehensive regulation by the New York State Labor Department under the Labor Law, and is alleged to result in state law preemption.
- Union and non-union carwashes are similarly situated with no rational basis for a two-tiered bond requirement, creating an alleged violation of the equal protection clause of the 14th Amendment to the U.S. Constitution.
- The amount of the surety bond for non-union carwashes is out of line with other surety bond licensing requirements of New York City and the purpose of the bond is to penalize non-union carwashes, resulting in an alleged violation of the due process clause of the 14th Amendment of the U.S. Constitution.
- A deprivation of rights under color of law is also alleged.
The action brought by the plaintiffs has clearly delineated the legal issues that focus on the $150,000 bond requirement. It is argued that the additional bond amount provides unions with leverage to pressure carwashes to unionize. The question for the court is – does this bonding differential constitute a rational basis on which to differentiate between carwashes? The New York State Car Wash Association (NYSCWA) will follow this litigation and keep its members informed as it progresses through the courts.
Schiavone v. ARB Enterprises, Inc.
A recent decision by the Appellate Term of the Second Department – Schiavone v. ARB Enterprises, Inc. – merits discussion. ARB Enterprises, Inc. (“ARB”) is a carwash that appealed a determination by a justice court in a small claims action, which awarded $278.98 to the plaintiff based on damages to the driver’s side mirror by an employee of ARB while preparing the vehicle to enter the carwash. The Appellate Term upheld the judgment of the justice court, finding the judgment awarded provided substantial justice according to the rules and principles of substantive law. The court rejected the defendant carwash’s position that it had a sign stating that it was not responsible for damaged mirrors. The court found that the carwash did not establish that the sign was posted in a conspicuous manner so that the plaintiff had notice of its terms, or that the plaintiff had agreed to the disclaimer. The plaintiff was not found by the court to be bound to the terms of the disclaimer.
Worker Exploitation Task Force
Governor Cuomo appointed a statewide task force in July 2015 to combat worker exploitation to identify and stop illegal practices. The task force consists of 10 state agencies, including the Department of Labor and an advisory committee appointed by the Governor. The target industries included carwashes, with the focus on industries with the highest rates of employer non-compliance. Recently, the task force reportedly opened investigations into 30 employers, including carwashes, among other employers.
Any carwash operator who has not brought their business into compliance with all appropriate wage and other labor laws should seek assistance to make sure their business is in compliance with all applicable laws. If your Association can provide any assistance, please don’t hesitate to contact us. This enforcement effort underlines the continued scrutiny of pay and employment practices of carwashes. Please make sure that your carwash operation is in compliance – you will avoid significant problems by exercising additional caution.
William Y. Crowell, III, is a partner with the Albany-based law firm of Whitman Osterman & Hanna LLC. You can reach him at 518/487-7677.