New York Times Dec 30th 2006 - Clothing Retailer Accused of Cheating Its Workers

By Steven Greenhouse

Attorney General Eliot Spitzer yesterday accused Yellow Rat Bastard, a trendy clothier in SoHo, of living up to its name: he claimed in a lawsuit that it and 10 affiliates had cheated their workers out of more than $1 million.

Mr. Spitzer accused the stores of paying less than the state minimum wage, failing to pay overtime and retaliating against workers who complained to his office by firing or demoting them. The suit seeks more than $2 million, which includes back wages, interest and penalties.

Fearing that the stores’ owners would hide their assets, Mr. Spitzer’s office persuaded Justice Doris Ling-Cohen of State Supreme Court in Manhattan to freeze nearly $1 million in bank assets held by Alla Levy, a part owner of the stores and the wife of their founder, Henry Ishay.

In interviews, several former employees of the store and its affiliates and its sister stores complained about working conditions, saying that managers were abusive and that rats often ran around the store.

Scott Fenstermaker, a lawyer for the stores, declined to comment, while Mr. Ishay and Ms. Levy did not respond to a message left with a top aide at the flagship store.

Kino Crosby, 28, a security guard at the flagship store until last year, said he usually worked 12 to 13 hours a day — from opening to closing, seven days a week — but was never paid time and a half.

“Not in a blue moon would they pay overtime,” he said. “They talk about the symbol of the rat, but they treat people the same way.”

A top aide to Mr. Ishay denied that any employees were required to work 12 hours or more a day, saying that many of the stores were open only from 10 a.m. to 8:30 p.m.

The flagship store opened in 1994, selling apparel and shoes to a hip young clientele. Taking its name from the title of an issue of the “Sin City” comic book, it installed cages with several dozen rats in its front window to create buzz. The rats were eventually removed from the window, but many employees said the rats continued to scurry around the store and the basement storeroom.

“When you arrive early in the morning, sometimes the rats attack you,” Mr. Crosby said. “I was almost bitten.”

Amy Balloqui, a former cashier at three affiliated stores, Rubber Sole, Antique Orange and Sloppy Joe’s, said managers were often at their most abusive when customers were backed up at a cash register.

“The way the managers would talk to you was horrible,” she said. “They used to say: ‘What are you, stupid? You didn’t go to school? Can’t you go faster?’ ”
The aide said that the flagship store at 478 Broadway was by no means the only one in New York with rats, and that the rats in the basement were the landlord’s responsibility. In an affidavit, Mr. Spitzer accused Mr. Ishay and Ms. Levy of hiding assets through a web of companies and bank accounts. The two reported earnings of just $1,700 a week, while they bought a home valued at more than $3 million with monthly mortgage payments of $17,800, the affidavit said.

“They’re running an extremely successful company, and there’s absolutely no excuse for violating minimum-wage laws,” said Patricia Smith, head of the attorney general’s labor bureau and Governor-elect Spitzer’s nominee for state labor commissioner.

Citing sworn statements by 30 workers, Mr. Spitzer accused the stores of underpaying more than 1,000 workers in six years. He said many were paid $5.25 an hour, below $6.75, the state’s minimum wage since January. In October, Mr. Ishay was arrested after Mr. Spitzer accused him of failing to keep legally required payroll records.

Besides the flagship store, there are Yellow Rat Bastard stores at the Queens Mall and in Cedarhurst on Long Island. The affiliated stores include F.A.T. Jeans and Shoes at 648 Broadway and Boys and Chicks at 392 Broadway.
The company has an elaborate Web site and publishes a magazine about the urban scene that has featured Alicia Keys, Spike Lee and Busta Rhymes on its cover.

The Retail, Wholesale and Department Store Workers Union and a community group, Good Old Lower East Side, helped bring the matter to the attorney general’s office.

The store “is an indication of how bad retail working conditions can get in an area that’s known for high-end retail,” said Jeff Eichler, a top organizer for the union.

Mr. Spitzer said store managers retaliated against workers who helped his investigation by cutting their hours and pay and by demoting and firing several. He also said managers interrogated employees about their role in his investigation.

At Mr. Spitzer’s request, Justice Ling-Cohen issued an injunction prohibiting the store from retaliation and from destroying financial records.