Lawsuit Filed by Carwash Owners Due to Unionization Rules

Perceived benefits for unionized car washes initiate conversation for employees in New York

A group of carwash owners across New York filed a lawsuit with the city, arguing that the current structure of Union rules illegally favors the Unions and doesn't protect the low wage workers the way it is supposed to.

The suit was filed by the Association of Carwash Owners, an organization representing approximately 90 washing operations across New York City. The complaint was filed recently in the Federal District Court in Manhattan. The focus of the lawsuit is on new regulations that mandate non-unionized carwashes to post a surety bond of $150,000 before they are eligible to obtain a license.

Unionized operations, however, only have to pay $30,000. The attorney representing the carwash owners argued that this two-tier system of payment is illegal and that it violates previous decisions handed down by the United States Supreme Court. Those past decisions relate to a local government's ability to discourage or favor collective bargaining. By making it less expensive for individuals with collective bargaining to obtain a license, the lawsuit argues that New York City gave these individuals an unfair competitive advantage.

 This is the first legal challenge as a result of New York City Council's attempt to overhaul the carwash industry to support low-wage workers working within it. The new regulation was passed this summer after several years of legal challenges. In addition to the new requirements about the surety bond, it also prohibits employers from using background checks on employees before making an official job offer. The purpose of the surety bonds is to ensure that payouts are made if an employer is determined to be guilty of under paying employees on their register.

 One of the biggest reasons for this lawsuit to be filed is that very few of the 200 carwash operations across New York City have actually moved forward with unionizing. The law would certainly alter that if the surety bond is mandated. Individuals making statements on behalf of New York City Council defend the law as essential to protect employees at carwashes. The carwash industry has come under fire in recent years as a result of allegations of unfair or discriminating practices that leave low wage workers at risk. The primary basis of many of the claims against the carwash industry have to do with labor violations and wage theft.            

Do you know a car wash employee who has been impacted by wage theft? Contact our knowledgeable New York employment lawyers at the offices of Hepworth, Gershbaum & Roth PLLC today at 212-545-1199 or contact us online for a free, confidential consultation.

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