A hotline for fast-food workers to anonymously report allegations of illegal or unjust pay practices by their bosses would be set up in New York under plans to build on a national campaign to improve conditions for American workers.

Tish James, the New York City public advocate, said on Tuesday that her office would be proposing new legislation to establish the whistleblower phone line and to give city authorities greater powers to investigate what she and union campaigners call “wage theft”.

She told a demonstration outside a McDonald’s restaurant in midtown Manhattan on Tuesday afternoon that she was supporting the measures in order to protect “workers who are being victimised by major corporations who are making billions off their hard work” both in New York and across the US.

“It’s hard enough for low-wage workers to survive in this economy,” said James. “It’s practically impossible to do so when wages are being stolen.”

James, whose office carries limited power, said that she expected the support of Mayor Bill de Blasio. “We are in conversations with the mayor,” she told the Guardian, after addressing the demonstration. “I’m confident that the mayor is going to be supporting this package of legislation”.

Lawyers last week unveiled a co-ordinated series of lawsuits in three states from workers who alleged that the fast-food giant and some of its franchise-owners were systematically stealing the wages of tens of thousands of employees.

Seven lawsuits, some requesting class-action status, were filed in California, Michigan and New York. They allege that thousands of workers had their pay pushed below the federal minimum wage of $7.25 an hour through a variety of practices.

Some workers were simply not paid for all the time they worked, the complaints alleged, while some had wages docked to pay for their uniforms and some were made to wait, unpaid, for several hours until being allowed to clock in when restaurants became busier.

A spokeswoman for McDonald’s said at the time that the firm was “committed to undertaking a comprehensive investigation of the allegations”.

Workers at Tuesday’s demonstration entered the restaurant and led chants of “shame on you” and “every nickel, every dime, we deserve our overtime.” They were joined by a man dressed as company mascot Ronald McDonald, who was paraded around in handcuffs. After police and security guards forced protesters and journalists to leave the building, the protest continued on the street outside.

One man who gave his name as Franklin and said he worked at McDonald’s told the crowd that he was frequently made to clean and perform other duties after his paid time had ended. “For months now I’ve been made to work off the clock,” he said. “It may not sound like a lot, but when you are living on the edge like me, every second counts.”

Rosa Rivera, who also said she was a McDonald’s employee, claimed that she received the minimum wage and was owed $408 from her bosses in allowances for uniform maintenance. “I came to this country for a better life,” said Rivera. “I never imagined it would be like this.”

James’s announcement came shortly after New York attorney general Eric Schneiderman announced that his office had settled a criminal action in the state over alleged wage theft by a McDonald’s franchise owner.

Richard Cisneros, the owner of seven McDonald’s outlets in Manhattan, will pay almost $500,000 to more than 1,600 current and former employees to settle the case, said Schneiderman, whose website now features a complaint form for fast-food workers to lodge gripes with their bosses.

The action alleged that low-paid workers had their wages docked to make up cash register shortfalls, and that they were made to work unpaid before and after their shifts. It also alleged that they did not receive an extra hour of pay when they worked for 10 hours consecutively, as is required under New York law, and were not given allowances for cleaning their uniforms.

“Like every other business in New York state, fast-food employers must follow our labor laws,” Schneiderman said in a statement. “Our lowest wage workers deserve the same protections of the law as everyone else.”

Lisa McComb, a spokeswoman for McDonald’s, said that the corporation was “pleased” with the decision. “We expect our franchisees to pay their employees correctly and we join with them in promoting this standard,” she said. McComb added that the Cisneros had also agreed to appoint a compliance officer and improve training for supervisors.