Maryland construction company owes the District money for trying to cheat its employees

Posted by National Alliance for Fair Contracting on

Author: Samantha Gilstrap
Updated: 8:07 PM EDT April 18, 2023

As part of the settlement, the company also agreed not to bid on or provide work under any D.C. government contracts for one year.

WASHINGTON — A construction company operating out of Washington, D.C. owes the District money after trying to cheat its employees out of sick leave and other employment benefits to which they were legally owed, according to the Attorney General’s Office.

Authorities say Maryland Applicators intentionally misclassified employees as independent contractors to avoid having to provide them with the proper sick leave and other employment benefits. Now, the company must pay $835,000 to the District.

As part of the settlement, the company also agreed not to bid on or provide work under any D.C. government contracts for one year, D.C. Attorney General Brian Schwalb said.

“Maryland Applicators denied District workers the sick leave and other employment benefits they had earned by misclassifying them as independent contractors rather than employees. This not only cheated the workers but gave Maryland Applicators an unfair advantage over their competitors who follow the law,” Schwalb said. “My office is committed to protecting District workers, ensuring they receive the wages and benefits they are legally owed, and leveling the playing field for all law-abiding District businesses.”

Maryland Applicators is a Maryland corporation that provides construction services on projects in Washington, D.C.

Authorities claim it employed dozens of misclassified workers and also secured the services of hundreds of additional misclassified workers through subcontracts with other companies.

The misclassification is as a form of wage theft that reduces costs for companies at the expense of employees, Schwalb said.

Authorities say misclassifying employees as independent contractors deprives them of rights that employees are entitled to, such as the minimum wage, overtime compensation, and paid sick leave.

Illegal misclassification also deprives the District of tax revenue, unemployment insurance premiums, and workers compensation contributions.

D.C. construction companies that misclassify workers unlawfully avoid at least 16.7% in labor costs compared to companies following the law, providing an unfair advantage over their competition.

As a result of the settlement, Maryland Applicators must:

  • Pay $835,000 divided as follows:
    • $489,000 will be paid to the District.
    • $346,000 will be paid to affected workers.
  • Change its practices to ensure that all workers hired for projects in the District are properly classified in compliance with District law and receive the wages and benefits they are legally owed.
  • Refrain from bidding on or providing work on contracts paid by the District government in the District for one year.

(See Article)

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The Aftermath: Developments from the 2022 Session of the Connecticut General Assembly Affecting Employers

Posted by National Alliance for Fair Contracting on

June 22, 2022
JD Supra

The 2022 Regular Session of the Connecticut General Assembly concluded on May 4, 2022.  While not as groundbreaking as the two last full legislative sessions, and while many far-reaching bills that emerged from committee were not passed by the legislature, important bills regarding employee free speech (i.e., the much vaunted “captive audiences” legislation) and employment protections with respect to domestic violence were enacted. …

PREVAILING WAGE ENFORCEMENT

Public Act 22-17 (“An Act Concerning Wage Theft”) authorizes (as of July 1, 2023) the Connecticut Commissioner of Labor to issue increased fines and citations (i.e., $5,000 per violation) to contractors and subcontractors who violate the state’s “prevailing wage” laws. The Act requires the Commissioner to maintain a list of contractors/subcontractors that during the three preceding years violated the prevailing wage laws or entered into a settlement with the Commissioner to resolve such claims. For each contractor/subcontractor on this list, the Commissioner shall record: 1) The nature of the violation; 2) the total amount of wages and fringe benefits making up the violation or agreed upon in any settlement; and 3) the total amount of civil penalties and fines. The Commissioner shall review the list each year for the preceding rolling three-year period and may refer for debarment any contractor/subcontractor that committed a violation during this period. The Commissioner shall refer for debarment any contractor/subcontractor that entered into one or more settlement agreements where the total of all settlements within the period exceeds $50,000 in back wages or fringe benefits or civil penalties or fines. Any such contractor/subcontractor may request a hearing before the Commissioner to contest such a finding.

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Valley Stream contractor gets 30 days for wage theft (NY)

Posted by National Alliance for Fair Contracting on

Posted June 11, 2019
LIHERALD.COM

Valley Stream contractor Vickram Mangru and his wife Gayatri of AVM Construction Corp. were sentenced on June 10 for their roles in failing to pay more than $280,000 in wages to laborers working on a publicly funded construction project in New York City, according to a news release from the New York attorney general.

Vickram was ordered to serve 30 days in jail, followed by three years of probation by Bronx County Supreme Court Justice James McCarty for a felony charge of failure to pay prevailing wages and benefits. Gayatari was sentenced to a conditional discharge as result of misdemeanor conviction on the same charge.

Both had pleaded guilty on Feb. 11, and have paid $80,000 in restitution to three workers. The couple still owes a remaining $202,000, and are barred from bidding on or being awarded a public works contract in New York for five years.

“New Yorkers who work on publicly-funded projects deserve to be paid a prevailing wage,” New York Attorney General Letitia James said in a statement. “Employers who underpay their employees, and attempt to evade wage laws have no business in the state of New York. My office will continue to ensure that all New Yorkers – no matter their trade – are paid a fair wage.”

Between December 2012 and February 2015, Vickram, owner of Vick Construction and operator of AVM Construction Corp. had reportedly failed to pay several of his employees prevailing wages, as required by state law, for construction projects and repair work at a number of public schools in the Bronx.

Vickram had reportedly paid his workers $120 and $160 a day for 40 to 50-hour work weeks, which falls far below the prevailing wage schedules set for publicly funded projects of that nature, the release read. To hide the underpayments, he falsified certified payroll records and reports submitted to the New York City Department of Education to make it look as if he were following the required prevailing wage schedules.

The city comptroller had initially barred the couple from being awarded public contracts after discovering the under payments, but referred the case to state prosecutors when it was found that they had created a new company in an attempt to continue operating in the city.

State prosecutors picked up the case after the city comptroller had barred the couple from being awarded public contracts, and then found that they had created another company to continue doing business, and was allegedly still committing labor violations.

(See Article)

NJ Labor Department Bars Two South Jersey Contractors from Engaging in Public Work (NJ)

Posted by National Alliance for Fair Contracting on

April 11, 2019, 3:40 pm

TRENTON – The New Jersey Department of Labor and Workforce Development’s Wage and Hour Compliance Division has barred two public works contractors from doing business in the state for violations outside the state’s prevailing wage law, heralding a tough and progressive new enforcement approach against dishonest contractors.

…

“As I have often said, working on public projects is a privilege, not a right,” said Labor Commissioner Robert Asaro-Angelo. “These cases signal a new and bold effort to ensure that privilege is extended only to contractors who follow our laws, and pertinent laws in other jurisdictions.”

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New Jersey already has one of the strongest prevailing wage laws in the country. The Public Works Contractor Registration Act requires all contractors, including named subcontractors, to register with the Labor Department before submitting price proposals or engaging in public works contracts exceeding the prevailing wage threshold of $15,444 for municipalities and $2,000 for non-municipal work.

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Gary homeless project contractors cited for pay violations (IL)

Posted by National Alliance for Fair Contracting on

By Carole Carlson
February 18, 2019

The U.S. Department of Labor ordered four contractors, who built the $9.5 million Village of Hope federal housing project in Gary, to pay workers $255,474 for failing to pay prevailing wages and fringe benefits. 
The labor department announced the ruling last week.

The wage law violations impacted 53 former and current employees, according to a release from the labor department.

“Government contractors receive detailed agreements that include prevailing wage and fringe benefits rates, required to be paid by all contractors working on a federally funded project.

Prime contractors must assure that their subcontractors adhere to these rules as well,” said Wage and Hour Division District Director Patricia Lewis, in Indianapolis.The project’s prime contractor TWG Construction LLC, based in Indianapolis – has paid $82,477 to 20 employees.

TWG Construction LLC sub-contracted with a temporary staffing company, which failed to pay cleaning service crews in accordance with federal law.
The labor department’s investigation found temporary employees were misclassified and not paid the required prevailing wage rates.

Also, 8 Aces Construction Inc., Lansing, Ill., has paid $69,022 to 19 employees. Investigators found the company failed to pay finishers, painters and carpenters prevailing wage rate. The employer also failed to pay required fringe benefits to employees.

Due to the repeat and “willful nature” of these violations, the labor department said 8 Aces Construction Inc. and owner Jose “Tony” Ochoa have been declared ineligible to bid on federal contracts for a period of three years. A 2017 investigation found 8 Aces owed back wages totaling $99,313 to 95 employees.

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Wage violations, false payrolls mean Bonney Lake firm banned from bidding on public construction projects (WA)

Posted by National Alliance for Fair Contracting on

Nov. 27, 2018

Tumwater – A Bonney Lake construction firm and its owner are permanently banned from bidding or working on public projects in Washington as the result of a recent settlement with the state Department of Labor & Industries (L&I) over wage violations and false reporting of payroll records.

I&C Northwest and owner Jim Lingnaw also agreed to pay more than $200,000 in back wages and penalties for the violations. The company did pipe insulation work on 14 schools and a warehouse across Western Washington in 2015 and 2016. The firm will repay $153,000 in wages to nine employees, each of whom worked on several of the projects.

L&I cited the company last year for the unpaid wages and for false reporting of payroll records. Under the settlement, reached recently, Lingnaw agreed to pay $1,000 a month in penalties for the next four years and is barred from being involved with his son’s companies should they work on public projects.

“The citations are based on I&C’s repeated wage violations despite L&I’s efforts to educate the company on following the prevailing wage law,” said Jim Christensen, Prevailing Wage Program manager for L&I. “We’ve been investigating the company since 2014.”

The schools I&C worked on include one high school, four middle schools, and nine elementary schools. The schools are in Bellevue, Clover Park, Mercer Island, North Thurston, Tacoma, Tahoma, Tumwater, Seattle, and Snoqualmie Valley school districts. The company also performed work on a warehouse for the Central Kitsap School District.

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New York State Reciprocal Debarment Legislation Signed into Law by Governor Cuomo

Posted by National Alliance for Fair Contracting on

PRESS RELEASE GlobeNewswire
Dec. 22, 2017, 02:09 PM

On December 18, New York Governor Andrew Cuomo signed into law new reciprocal debarment legislation to amend labor and general municipal law, as it relates to reciprocity of debarments imposed under the federal Davis-Bacon Act. The bill states that any contractor debarred by the U.S. Department of Labor for violations of the Davis-Bacon Act cannot work on New York State public works projects. The statute will take effect in March 2018.

“This is an important new State law that ensures that contractors barred on the federal level from public works projects won’t have the ability to win new projects in the State of New York,” said John Ballantyne, NRCC’s Executive Secretary-Treasurer. “We’re pleased to support a law that ensures that hardworking men and women carpenters receive good pay and benefits from reputable, law-abiding companies in the State.”

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“Unscrupulous contractors that violate workers’ rights don’t deserve to be rewarded with contracts paid for by hardworking taxpayers,” said Assemblymember Harry Bronson. “This law is a step in the right direction to help ensure that workers are protected from dishonest employers and our communities’ projects are completed by upstanding businesses that pay and treat their employees properly. Federal law, under the Davis-Bacon Act, dictates that contractors are prohibited from obtaining federal contracts if they’ve been debarred by the U.S. Department of Labor for wage payment violations. My legislation corrects a loophole in New York State law that allowed federally debarred contractors to still obtain state public works contracts. As a member of the Assembly Committee on Labor, I will continue to be an outspoken advocate for workers’ rights and continue to stand up for fair wages and vital protections.”

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LABOR COUNCIL HOPES TO MAKE CONTRACTORS PAY IN LYNN (MA)

Posted by National Alliance for Fair Contracting on

BY THOMAS GRILLO|
November 28, 2017

LYNN – If a group of union organizers gets their way, contractors who violate the state’s labor laws would be barred from doing business with the city.

Three dozen members of the North Shore Labor Council, a coalition of 50 unions representing 18,000 workers, crowded a City Hall hearing room Tuesday to urge the City Council to adopt an ordinance that would prohibit the city from hiring companies who have failed to pay their workers.

“Our goal is to protect workers from being cheated and keep them from getting these contracts while helping honest businesses,” said Kathryn Cohen, an organizer with the North Shore Labor Council.

Of the 14 firms prevented from doing work for the state or municipalities for public construction or public works projects by the Attorney General Maura Healey’s office over the last two years, one is from Lynn. Since 2015, there have been 26,767 wage complaints and citations issued statewide, 69 to Lynn companies.

At issue is the failure of some employers to pay their employees for work performed. While the state prohibits employers who have violated labor laws from seeking government contracts, some are able to sign deals because no one is checking, Cohen said.

“We know some debarred contractors are still getting work and we need to strengthen enforcement,” she said.

Under the proposed ordinance, a volunteer Wage Theft Advisory Council would be appointed by the mayor and City Council. The six-member panel would review lists of companies who violate labor laws from the Attorney General’s office and sign off on the company seeking work from the city.

The Massachusetts Budget and Policy Center reports $700 million worth of wages go unpaid annually to about 350,000 Massachusetts workers. Of that number, $5.2 million in wages is recovered by the Attorney General’s Fair Labor Division.

Ward 6 City Councilor Peter Capano said the ordinance is crucial because without it, honest employers are at a disadvantage.

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Comptroller Stringer Debars Contractor that Cheated Immigrant Workers out of $1.7 million in Prevailing Wages and Benefits

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K.S. Contracting Corporation employed a kickback scheme that preyed on at least 36 immigrant workers

 

Newsroom / Press Releases & Statements
FEBRUARY 13, 2017

(New York, NY) – New York City Comptroller Scott M. Stringer today assessed $3.2 million in fines against K.S. Contracting Corporation and its owner, Paresh Shah, for cheating dozens of workers out of the prevailing wages and benefits they were owed under the New York State Labor Law. In addition to being assessed $3.2 million in unpaid wages, interest, and civil penalties, K.S Contracting and Mr. Shah will be barred from working on New York City and State contracts for five years. K.S. Contracting was named as one of the worst wage theft violators in New York in a report by the Center for Popular Democracy in 2015.

“With President Trump taking clear aim at immigrants across the country, we need to stand up and protect the foreign-born New Yorkers who keep our City running. Every New Yorker has rights, and my office won’t back down in defending them,” New York City Comptroller Scott M. Stringer said. “Contractors might think they can take advantage of immigrants, but today we’re sending a strong message: my office will fight for every worker in New York City. This is about basic fairness and accountability.”

K.S. Contracting was awarded more than $21 million in contracts by the City Departments of Design and Construction, Parks and Recreation, and Sanitation between 2007 and 2010. Projects included the Morrisania Health Center in the Bronx, the 122 Community Center in Manhattan, the Barbara S. Kleinman Men’s Residence in Brooklyn, the North Infirmary Command Building on Rikers Island, Bronx River Park, the District 15 Sanitation Garage in Brooklyn, and various City sidewalks in Queens.

The Comptroller’s Office began investigating the company after an employee filed a complaint with the office in May 2010. The multi-year investigation used subpoenas, video evidence, union records, and City agency data to uncover a kickback scheme that preyed on immigrant workers.

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Historic Occasion:City Council Passes Wage Theft Ordinance in 11-0 Vote

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By Seth Daniel
April 29, 2016
It was an historic occasion on Monday night when the Chelsea City Council voted unanimously to enact a Wage Theft Ordinance – the first Council in the state to do so.

The City’s wage theft ordinance, brought to the floor by nine councillors earlier this month, would seek to make a statement about the prevalence of wage theft from employees, but in particular from vulnerable immigrant communities in the city. Practically speaking, the ordinance states that no contractor (or any subcontractor) or vendor hired by the City can have a federal or state criminal or civil judgment, administrative citation, final administrative determination, order or debarment resulting from a violation of the Fair Labor Standards Act or any other federal or state laws regulating the payment of wages within three year prior to the date of any contract with the City. It also calls for any violation of the above laws during a contract period be reported to the City within five days.

It also includes a provision that allows the License Commission to deny any permit or license if violations of the law have been made within three years of any application. If any violation of the above law occurs during a licensed period, the Commission can also take action on a license for the violations.

Wage theft is defined roughly as not paying minimum wage, not paying overtime, withholding pay and sometimes not paying at all.

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