The Big Pizza Bust

June 21st, 2007 by

Thirty two Westchester county businesses were busted today for workers comp fraud. All submitted written documentation to the state that they had no employees. The nature of the businesses indicates otherwise: the list of violators is limited to pizza parlors, delis and restaurants. While it is commendable that the state is going after companies for avoiding comp, we cannot give too much credit here: it’s kind of obvious that any pizza parlor, deli or restaurant requires more than one person to operate.
Each of the business owners is charged under state workers’ compensation law and state penal law with fraudulent practices, a Class E felony; first degree offering a false instrument for filing, a Class E felony; and failing to secure Workers’ Compensation benefits for employees, a misdemeanor. The crimes are punishable by up to four years in prison.
“Workers comp fraud is a felony in New York State,” says Fraud Inspector General John H. Burgher. “We are confident that these arrests will send a clear message that we are aggressively looking for employers who don’t abide by our workers’ compensation laws.”
The Board levied a total of $550,000 in penalties among these business, which were calculated at $250 for every 10 days the employers were out of compliance prior to April 12. Following that date, a key piece of Governor Eliot Spitzer’s workers’ compensation reform initiative became effective, raising the penalty to $1,000 for every 10 days out of compliance. The employers were assessed the higher penalty for noncompliance after April 12.
Some of the fines look pretty hefty: $33,800 for Apple’s Deli; $15,300 for Mount Vernon Pizza; and a whopping $62,500 for Roberto’s Pizza and Pasta. Any way you look at it, that’s a lot of slices. Of course, the only meaningful comparison would include the total comp premiums that these businesses avoided paying. And more important, you wonder how many employees of these companies were instructed not to report injuries, or who were fired when they got hurt. How many of these employees were undocumented and paid under the table?
This is a sorry saga, indeed, where much of the pain and suffering is well hidden. You would hope that the affluent folks in Westchester County might think twice about the cheap labor and shady business practices that help support their lifestyles. But who has time for moral niceties, when you barely have time to grab a slice with pepperoni on your way to picking up the kids at soccer practice?