A.G. SCHNEIDERMAN AND D.O.I. COMMISSIONER PETERS ANNOUNCE ARRESTS OF NYC SCHOOL CONSTRUCTION AND HOUSING AUTHORITY CONTRACTORS AND LABOR BROKERS

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Contractors Allegedly Paid Workers Below Prevailing Wage, Labor Brokers Demanded Kickbacks On NYC School And Housing Construction Projects

FOR IMMEDIATE RELEASE: DECEMBER 4, 2014

(New York, NY) Attorney General Eric T. Schneiderman and New York City Department of Investigation Commissioner Mark G. Peters announced today the arrests and indictments of a contractor and two labor brokers overseeing New York City School Construction Authority (SCA) and Housing Authority (NYCHA) projects for allegedly underpaying construction workers. The arrests stem from a joint investigation into underpayment and kickback schemes on projects at P.S. 196K, a public school in Brooklyn, and the Pomonok Houses Project in Queens. As alleged in two indictments, several workers were deprived of several thousand dollars each from the alleged schemes. If convicted on the top counts, each defendant faces up to seven years in prison.

“Contractors who work on public projects cannot ignore New York State’s labor laws in order to line their own pockets,” said Attorney General Schneiderman. “In this case and many others, my office is taking aggressive action, including criminal prosecution when appropriate, to ensure that workers are paid the wages they’ve earned.”

“Not only does prevailing wage fraud deprive honest workers of fair pay, but it is a gateway to other schemes that endanger public safety. Exposing and putting an end to prevailing wage fraud is a cornerstone of DOI’s multi-pronged effort to combat corruption in New York City construction. I thank the Attorney General and his staff for their partnership on these important cases,” New York City Department of Investigation Commissioner Mark G. Peters said.

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Watco Terminal & Port Services to pay 261 North Dakota workers more than $300K in back wages following US Labor Department investigation

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U.S. Department of Labor
Wage and Hour Division
Release Number: 14-2069-CHI
Date: December 2, 2014

MINOT, N.D. — An investigation by the U.S. Department of Labor’s Wage and Hour Division found that load operators at three Watco Terminal & Port Services’ locations in Belfield, Stanley and Tioga were not paid for pre-shift work, as required by the federal Fair Labor Standards Act. Watco will pay 261 workers a total of $304,094 in overtime back wages.

“People must be compensated for all time on the job, including before and after a shift,” said Charles Frasier, district director for the Wage and Hour Division in Denver. “We hope other local employers take note of this case and ensure they are paying their workers properly.”

The investigation found that employees were not compensated for required attendance at pre-shift safety and turnover meetings. Another overtime violation occurred when Watco failed to compute overtime properly. The company also failed to maintain accurate records of all hours worked.

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Workers will get backpay for Windsor school construction

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By Ryan Murphy
November 25, 2014, 9:43 PM | ISLE OF WIGHT

Isle of Wight County Schools will pay backpay for hundreds of workers on a school construction job in Windsor who were shorted after the school system failed to include federal wage requirements in contract documents.

The move comes seven months after a Daily Press investigation revealed that the school system had appeared to violate federal law by failing to include the pay rate clauses. The school system used $7.5 million in federally subsidized bonds for the job, which came with strings attached, including paying workers on a pay scale based on local prevailing wages.

The Labor Department opened an investigation into the issue in May. A department spokeswoman said Wednesday that the investigation was still open.
The Isle of Wight School Board approved an order at Monday’s work session to take steps to comply with the federal law, called the Davis-Bacon Act, and to compensate construction workers for the difference between what they were paid and what federal law said they should have been paid.

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US Labor Department recovers nearly $3M in back wages for workers on federally funded construction projects in New York City

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Larino Masonry Inc. and owners debarred from bidding on federal contracts 

U.S. Department of Labor, Wage and Hour Division
Release Number: 14-2057-NEW, Date: Nov. 25, 2014

NEW YORK — The U.S. Department of Labor has secured $2,904,000 in back wages for laborers and mechanics who worked on federally funded construction projects in four New York City boroughs.

A federal administrative law judge approved a settlement requiring Larino Masonry Inc., based in Newark, New Jersey, to pay $1,945,000 in back wages to workers at projects in Manhattan and the Bronx for violating the Davis-Bacon and Related Acts and the Contract Work Hours and Safety Standards Act. In a separate, but related case, Larino also agreed to an order to pay $959,000 to workers at projects in Brooklyn and Queens.

Larino admitted that it failed to pay its workers the legally required prevailing wage, fringe benefits and overtime, and submitted falsified certified payrolls to a contracting agency. In addition to paying back wages, Larino and its company president Juan Luis Larino and vice president Maria Larino have been barred from bidding on federal contracts for the next three years.

“Taxpayers should expect that federal contractors understand their obligations and comply with the law,” said Maria Rosado, director of the Wage and Hour Division’s New York City District Office, which investigated the federally funded projects. “When Larino Masonry or any other employer violates labor laws, they cheat their employees and gain an unfair advantage over employers who obey the law. We will hold them accountable.”

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Construction boss convicted of not paying fair

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1:23 PM, NOVEMBER 20, 2014 

Attorney General Eric T. Schneiderman today announced the conviction and sentencing of Leonid Fridman for failing to pay legally required wages to his workers on a Port Authority of New York and New Jersey construction project.

Fridman pled guilty to the felony crimes of grand larceny in the second degree and violation of prevailing wage requirements of New York State Labor Law.  As a condition of the plea, Fridman agreed to pay $200,000 in restitution to underpaid workers and prohibition from working on public works projects for five years.  Fridman was sentenced to five years of probation.

“Mr. Fridman is being held accountable for stealing wages from workers who renovated parts of JFK,” Attorney General Schneiderman said. “My office will continue to take strong action, including filing criminal charges, against employers who violate New York’s labor laws, steal taxpayer dollars and violate the public trust.”

Based upon court filings and statements in court, Fridman, 60, owned and operated Millennium Commercial Corp., a Brooklyn-based company that performed tile work.

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Labor Department Sharpening Focus on Misclassification

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Wednesday, November 19, 2014
By K. W. Mitchell

In combating employee misclassification, the Labor Department is taking strategic misclassification enforcement to the next level by placing greater priority on measures that are tactical and swift, a department official said.

“To carry out our job, we must be prudent and strategic in our enforcement actions,” said David Weil, administrator of the Labor Department’s Wage and Hour Division.

“We need to create ripple effects that impact compliance far beyond the workplaces where we physically conduct investigations, or the organizations to which we provide outreach directly,” Weil said Oct. 31 in a blog post.

Additionally, the division needs to be persistent in discovering ways to “make our investigation of one employer resonate throughout that particular sector and influence the behaviors of employers across that entire industry, to promote compliance across networks of business organizations,” Weil said.

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Feds join N.H. worker misclassification efforts

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BY BOB SANDERS
Published: November 17, 2014

The federal government is getting involved in helping New Hampshire in its enforcement efforts against misclassification of independent contractors, especially when it relates to workers’ compensation.

New Hampshire last week became the 15th state to join the federal Labor Department’s misclassification initiative; Massachusetts followed suit on Monday.

“Misclassification of workers steals benefits and protections from employees and allows unfair advantages to businesses that do it,” said New Hampshire Labor Commissioner James W. Craig. “This agreement will help us grow our state and regional economy by leveling the playing field for honest and law-abiding employers.”

New Hampshire has grappled with the murky world of independent contractor classification for decades. Definitions change depending on the law involved, and enforcement is uneven.

The state Department of Employment Security, for instance, has found misclassification in nearly a quarter of the audits it conducts. But the state Department of Labor only has fined a fraction of those fined by the Employment Security and has drastically reduced most of the fines imposed.

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New Misclassification Study Shows Impact in California

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By Jim Kollaer on Wed, 10/15/2014 – 10:30am 

In a September 2014 study entitled Sinking Underground: The Growing Informal Economy in California Construction, misclassification of more than 39,800 construction workers is a key reason that the underground economy in construction is contributing to the low wages, difficulty in recruiting qualified craft workers and loss of wages and taxes in the State of California.

According to the study, released by the Economic Roundtable, a non profit research organization based in Los Angeles, in 2011 more than 143,900 construction jobs in the state were “informal” – code for off the books, misclassified as independent contractors or unreported by employers.

The study looked at wages and construction jobs from 1972 to 2012 and found that the number of construction workers that were unreported or misclassified increased by 400% during that period.

The study cites that, “Specialty trades, such as drywall, have the highest level of informality with over 25% employed informally in 2012.  Building Construction was next, with 20% estimated to be informal.”The major impact on the industry is that those construction companies in California who are “doing it right” have costs that are 30% higher that the “off the books and misclass” contractors.  Imagine what that disparity does to the bidding process.  The report cites several personal stories to illustrate its points.

ICR seeks $3.62 million from VVWRA

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SHEA JOHNSON – STAFF WRITER 
Posted Nov. 13, 2014 @ 6:42 pm 

VICTORVILLE – The staffing agency co-owned by San Bernardino County 1st District Supervisor Robert Lovingood sought $3.62 million in damages from Victor Valley Wastewater Reclamation Authority this year, according to a claim obtained Thursday by the Daily Press.

In the claim dated Aug. 22, ICR Staffing Services alleged that VVWRA failed to pay prevailing wage to ICR’s contract workers between 2011 and 2013 and solicited ICR’s temporary employees to jump ship to a competing staffing agency. The claim was served Sept. 11.

“We obviously had a discussion with the claimants prior to the filing of the claim and responded,” VVWRA General Manager Logan Olds said Thursday. “The board took a look at it and the direction was to deny the claim.”

In a numbered format, the claim lists a series of alleged wrong-doings by VVWRA, which had utilized ICR workers between 2011 and 2013 for the Upper Narrows Pipeline project, but in May chose lower-bidding Hesperia-based iLink Business Management for future contract services.

In 2011, a two-year contract services agreement provided ICR employees a gross figure of roughly $260,000 per year. But since the project was subject to reimbursement from the Federal Emergency Management Agency, the contract should have been let as prevailing wage and “generated a gross annual billing in excess of $1.5 million,” the claim states.

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L.A. City Attorney sues city contractors over alleged wage theft

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POSTED BY JOHN SCHREIBER ON 
NOVEMBER 13, 2014 

City Attorney Mike Feuer filed a lawsuit Thursday accusing city contractors involved in building a South Los Angeles animal care facility of shorting about 50 employees out of a quarter-million dollars in wages and attempting to hide their tracks.

The $9.6 million construction contract for the 68,000-square-foot South Los Angeles Animal Care Center project near Western Avenue and 60th Street was awarded in 2009 to Mackone Development Inc., which then delegated some of the work to five subcontractors.

The lawsuit seeks to have Mackone and its subcontractors pay their employees what they are allegedly owed, and also pursues penalties of $2,500 for each violation. City attorneys also want to bar the companies from seeking future city contracts.

“Stealing wages from hardworking men and women is reprehensible and it must end,” Feuer said. “No one – especially city contractors paid with taxpayer dollars – should fail to pay workers what they are rightly owed.”

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