New enforcement targets luxury fitness benefits while workers struggle with affordability
Mayor Zohran Mamdani’s administration is investigating whether employers are using expensive gym memberships as ersatz compensation strategy that effectively reduces take-home wages for workers. The Department of Consumer and Worker Protection and Finance Department issued guidance February 20 warning employers that providing gym memberships as mandatory or conditional benefit may violate wage and hour laws. The investigation stems from complaint that some employers count gym memberships toward minimum wage compliance, effectively paying workers below minimum wage while offsetting difference with fitness benefits workers did not request. The Mamdani administration argues this practice enables wage theft.
The Gym Membership as Wage: How Employers Circumvent Minimum Wage
New York’s minimum wage is fifteen dollars per hour as of 2022 with scheduled increases to higher amounts in subsequent years. Some employers have argued that providing non-monetary benefits toward minimum wage compliance reduces actual cash wages while maintaining stated compliance. For example, if an employer paid thirteen dollars per hour in cash and provided two dollar per hour equivalent in gym benefits, they claim compliance with fifteen dollar requirement. Workers, who did not request gym membership and cannot convert it to rent or food money, effectively earn below minimum wage.
The Consumer Protection Angle: Deceptive Practices
The DCWP investigation focuses on whether gym memberships constitute deceptive practice under city consumer protection laws. Employers who present membership as “benefit” while actually using it to reduce cash wages are arguably engaging in deception. Deceptive practices are illegal under city law, exposing violators to penalties and restitution. Mamdani’s administration is warning employers to cease this practice and threatening enforcement action against scofflaws.
Specific Industries Affected: Tech, Finance, and Service Sector
The practice is most common in technology, finance, and professional service firms where wellness programs and gym benefits are marketed as culture and retention tools. For entry-level employees in these industries, the benefit often reflects employer preference more than worker desire. Investigations have documented instances where employers required gym membership as condition of employment or as part of onboarding package, then subtracted membership cost from wages.
The Broader Pattern: Treating Perks as Compensation
The gym membership investigation is one element of Mamdani’s broader worker protection agenda. His administration is cracking down on employers who treat various non-monetary benefits (internet stipends, transit passes, meal vouchers) as substitutes for cash wages rather than genuine supplementary benefits. The distinction matters legally and practically. Genuine benefits provided without reducing cash wages create real value. Benefits that reduce wages below minimum amount are disguised wage theft.
Federal Law Intersection: What FLSA Permits
Federal Fair Labor Standards Act permits certain non-monetary compensation to count toward minimum wage in limited circumstances, but only if the benefit is genuinely valuable to employee, not imposed by employer, and employee receives benefit separate from wage reduction. Gym membership likely fails this standard for most workers. Research shows that eighty-five percent of gym memberships go unused, suggesting workers do not value the benefit.
The Enforcement Strategy: What Mamdani Is Doing
The administration is conducting undercover investigations of employers offering gym benefits in lieu of wage increases. DCWP is requesting payroll records to identify instances where benefits appeared on paychecks as deductions against minimum wage. Finance Department is cross-referencing business registrations with wellness program vendors to identify likely violators. Employers found in violation will face demands for restitution to affected workers, plus penalties. Willful violations can trigger criminal referrals. See the NYC Department of Consumer and Worker Protection wage information. Review Federal Department of Labor minimum wage requirements.
