Tech Firms Cited For Labor Law Violations

Attorney General Spitzer today announced that his office has reached an agreement with two Internet firms requiring them to pay 52 employees more than $250,000 in back wages. At the request of the companies’ principals, the employees had agreed to defer their salaries, while the companies sought additional investors in the company. Instead of a deferral, the employer failed to pay any wages.

After complaints were filed with the Attorney General’s Labor Bureau, an investigation showed that TSI Broadband, Inc. and Aptegra Services, Inc. committed numerous violations of the State’s labor laws. The companies, located at 229 West 36th Street, in Manhattan, sold and serviced computer hardware and broadband networks, along with communications links.

The employees’ complaints were filed after the two companies fired their employees and went out of business in January of 2001 without paying their workers wages they were owed. In all, 52 employees were not paid wages they deferred between December 18, 2000 and January 15, 2001. The principals had asked the employees to forego their salaries for a month while they attempted to raise money to continue operations and assured them that additional investment capital would be in place in early 2001. In January of 2001 employees were informed that the companies were going out of business and that they would not be paid at all, which is a violation of the law.

"These firms shortchanged their employees even while assuring them that new investors would be found to continue operations. The employees tried to help the companies by deferring their wages only to lose their jobs and four week of wages," Spitzer said. "My office will continue to investigate complaints to ensure that the state’s Labor Laws are enforced and that workers receive the wages they are owed."

The agreement with the companies resulted in the payment of the past due wages, commissions and vacation pay. As of February 20, 2002, the Attorney General’s office secured payment to 52 employees of back wages totaling $226,517.81, with five employees receiving commissions of $9,963.09, and 30 employees receiving vacation compensation of $21,700.42.

In an separate case, officials of AFE.NET, Inc. (American Floral Exchange, Inc), a New York-based online florist wholesale web site, agreed to pay more than $12,000 in wages, vacation pay, and un-reimbursed expenses to four of its former employees. The employees of this Manhattan-based company, were all performing their jobs from Colorado and Ohio using the Internet. They were all terminated from their jobs late last year and were not paid.

"This case affirms our commitment to holding New York’s employers responsible for their obligations under the labor laws even in non-traditional work arrangements. The internet economy has given employers more flexibility in workplace arrangements but not the ability to avoid wage obligations." Spitzer said.

The case was handled by Assistant Attorney General Richard Balletta of the Labor Bureau.