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Andrew M. Cuomo, Governor Peter M. Rivera, Commissioner

Labor Department Announces Enforcement Actions Against More Than Half of the Subcontractors on 'The Province' at RIT Project

Enforcement actions part of statewide crackdown on employers who misclassify workers as independent contractors or pay them "off the books"

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Albany, NY (June 08, 2010) -

State Labor Commissioner Colleen Gardner announced today the results of two enforcement sweeps at the ‘The Province' at RIT (Rochester Institute of Technology) construction project. Widespread violations of State labor laws were found, including nonpayment of overtime, off-the-books employment, failure to carry workers' compensation insurance, and misclassification of employees as independent contractors by more than half (12 of 21) of the subcontractors interviewed by DoL on the site.  

The sweeps were carried out by the New York State Joint Enforcement Task Force on Employee Misclassification on January 26 and February 9 of 2010.  The Task Force is an interagency strike force formed in 2007 to address the problem of employers who improperly classify employees as independent contractors or who pay workers "off the books."  The strike force that visited ‘The Province' work site included investigators from the NYS Department of Labor and the Workers' Compensation Board.

"In each of these cases, employers brought in crews of out-of-state workers who were typically paid off-the-books," said Commissioner Colleen Gardner of the New York State Department of Labor.  "Our announcement today is a victory for workers and taxpayers.  We were able to recover these workers' hard-earned wages from out-of-state contractors within a few months."

Gardner added, "The problem of employers misclassifying workers as independent contractors or paying them "off-the-books" is happening statewide.  My message to those employers, whether you are from New York or another state, is: ‘You are cheating your workers and the taxpayers, and undercutting honest businesses.  We are looking for you - and the chances that you will get caught have never been better.' "

Chair Robert Beloten of the New York State Workers' Compensation Board said, "A business that doesn't carry insurance threatens its workers' well-being and gains an unfair advantage over its law-abiding competitors.  Our stop-work order program is an essential tool in dealing with employers who refuse to follow the law and provide workers' compensation coverage for their employees."

Four subcontractors were found to owe a total of $42,835.32 in unpaid overtime wages and liquidated damages.  An additional $22,500 in penalties was assessed by the Department of Labor's Division of Labor Standards.  The department has already collected $33,728.13 for the labor law violations from three subcontractors, and a fourth subcontractor has agreed to pay a balance due of $31,607.19.

The Department of Labor's Division of Unemployment Insurance found that 12 of the 21 contractors on the site had misclassified 211 workers and owe the Unemployment Insurance Trust Fund more than $80,000 in unemployment insurance taxes.

Three subcontractors were also issued stop-work orders by the Workers' Compensation Board for not carrying workers' compensation insurance.

‘The Province' is privately-owned student housing being built by the Edwards Communities Construction Company on land adjacent to RIT.

Here are details on the labor standards violations of the four subcontractors:

  1. Certified Electric, Inc. of Brighton, Michigan, electrical subcontractor.
  • Dates: 10/31/09 through 1/23/10.
  • Core employees paid $15 to $18 per hour, plus proper overtime.
  • Additional crew of up to 17 "off-the-books" employees were paid daily rates of $100 and no premium for Saturday work: about $12.50 per hour. Worked 48 hours per week.
  • 17 workers were owed overtime of $3,650, plus liquidated damages of $912.50. A civil penalty of $5,000 was assessed. Total: $9562.50.
  • All current workers are now on payroll.
  • Company paid $9562.50 to the New York State Department of Labor on May 10, 2010.

 

  1. Solomon Plumbing Co. of New Hudson, Michigan, plumbing subcontractor.
  • Dates: 11/7/09 through 1/23/10.
  • Core employees paid $15 to $18 per hour, plus proper overtime.
  • Additional crew of up to 14 "off-the-books" workers were paid daily rates of $100.00 and no premium for Saturday work: about $12.50 per hour. Worked 48 hours per week.
  • 14 workers were owed overtime of $3,150.00, plus liquidated damages of $787.50. A civil penalty of $5,000.00 was assessed. Total: $8,937.50.
  • All current workers are now on payroll.
  • Company paid $8,937.50 to the New York State Department of Labor on May 11, 2010.

 

  1. Premier Paint Service, LLC of Ypsilanti, Michigan, the painting subcontractor.
  • Dates: 11/14/09 through 1/23/10.
  • All employees - as many as 55 - were treated as independent contractors. They were paid $10.00 per hour with no overtime premium for Saturday work. Worked 49 - 51 hours per week.
  • 55 employees were owed overtime of $8,182.50, plus liquidated damages of $2,045.63. A civil penalty of $5,000.00 was assessed. Total: $15,228.13.
  • Company left the job after the second sweep.
  • Company paid $15,228.13 to the New York State Department of Labor on May 10, 2010.

 

  1. TMC Management Group, Inc. of Waterford, Michigan, the rough carpentry and roofing subcontractor.
  • Dates: 10/24/09 through 1/23/10.
  • 3 to 5 core employees were paid $15 to $20 per hour, plus proper overtime. Other employees were either off the books or classified as independent contractors. They were paid $10.00 per hour with no overtime premium for Saturday work, and worked 49 - 51 hours per week.
  • 54 employees were owed wages of $19,285.75, plus liquidated damages of $4,891.43. A civil penalty of $7,500.00 was assessed. Total: $31,607.19.
  • The company has agreed to pay $31,607.19 to the NYS Department of Labor.

 

Stop-work orders were issued by the Workers' Compensation Board to:

  • Cole Mechanical LLC of Johnstown, Ohio. Served on 1/26/10 and coverage was obtained on 1/28/10. Order was ended on 1/28/10.
  • Oscar Santiago dba Santiago Construction of Closter, NJ. Served on 2/9/2010; coverage obtained 2/11/2010. Order terminated 2/11/1010.
  • Leticia Pena Palacios dba Alondra's Painting of Detroit, Michigan. Served 2/9/10. Believed to have ceased operations and left the site.

Employee misclassification occurs when a worker is improperly denied the benefits and protections provided to an "employee" as that term is defined by State and Federal law.  Misclassification hurts workers, deprives the government of tax revenue, and undercuts legitimate employers who classify their workers correctly.

Most Joint Task Force sweeps start as tips received from individuals or businesses, or through observations by task force members.  Anyone who knows about or suspects possible violations of New York State labor laws is encouraged to contact the task force in the Department of Labor's Employer Fraud Unit at 1-866-435-1499, 24 hours per day, 7 days a week.  All tips are taken seriously, and you can remain anonymous.  For more information, see the Department of Labor's web site at www.labor.ny.gov/agencyinfo/MisclassificationofWorkers.shtm.

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