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New York State
Department of Labor

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

Labor Department Announces Enforcement Actions Against Subcontractor on Orange County Regional Medical Center 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 09, 2010) -

State Labor Commissioner Colleen Gardner announced today the results of a June 30, 2009 enforcement sweep at the construction site for the Orange County Regional Medical Center. Violations of state labor laws were found, including nonpayment of overtime, off-the books employment, and illegal deductions from workers' paychecks.

The sweep was carried out by the New York State Joint Enforcement Task Force on Employee Misclassification. 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 violations occurred between March and August of 2009.

"Our investigation found that the carpentry subcontractor on the project brought in crews of out-of-state workers who were paid off-the-books," said Commissioner Colleen Gardner of the New York State Department of Labor. "This problem of employers in the construction industry paying employees "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.' "

 According to Orders to Comply issued by the Labor Department, a total of $118,274.76 is owed workers for unpaid overtime and illegal deductions, plus interest. Another $129,589.92 in penalties was assessed by the Department's Division of Labor Standards.  In addition, the Department has already collected $17,343.17 for the non-payment of wages to 15 workers. The total of wages and interest owed workers, plus penalties, plus wages owed already collected, is $265,207.85.

HBE, a large healthcare construction company headquartered in St. Louis, Missouri, is the prime contractor on the project. HBE is not named in the citations.

New York Professional Drywall (NYPD) of Orange County, Inc. is the carpentry subcontractor for the project. The Labor Department found that all of the 143 carpentry workers on the job site were employees of NYPD and that NYPD is liable for the wage underpayments. Two companies that provided employees to NYPD, Management Construction Services, Inc. (MCS) of Lawrenceville, Georgia and D&V Construction Services, Inc. of Lilburn, Georgia are cited along with NYPD for the overtime violations and illegal deductions from workers' paychecks.

The following is a description of the violations by company:

  • NYPD: NYPD workers worked part of the week on the NYPD payroll and part on the payroll of Orange County Sheet Metal, a company formed by the foreman for NYPD prior to the start of the hospital project. Working conditions and supervision were the same for the workers regardless of which payroll they were listed on for a given day. NYPD was cited for overtime violations of $26,110.68 for 67 employees, plus another $4,238.78 in interest due the workers. The Labor Department also assessed $52,221.36 in penalties. Total: $82,570.82.
  • Management Construction Services (MCS): MCS provided 16 workers to NYPD, who worked alongside NYPD's workers and were supervised by NYPD. They worked 53 hours per week and did not receive overtime pay for hours worked over 40. MCS also illegally deducted money from workers' paychecks for housing at local hotels. The workers were brought in from out of state, put up in hotels and then charged for the rooms. NYPD and MCS are cited as joint employers of these workers, who are owed $37,640 in underpayments plus interest of $5,015.96. The Labor Department also assessed penalties of $37,640, for a total of $80,295.96. MCS workers left the construction site in August 2009. In September 2009, the Department of Labor obtained $17,343.17 in wages from NYPD for 15 workers provided by MCS who had not been paid at all for a portion of their work on the project.
  • D&V Construction Services: D&V provided 60 workers to NYPD who worked alongside NYPD's workers and were supervised by NYPD. These workers had $95 per week deducted from their paychecks for housing, and were not paid overtime for hours worked over 40 per week. NYPD and D&V are cited as joint employers of these workers, who are owed underpayments of $39,728.56 plus interest of $5,540.78. The Labor Department assessed penalties totaling $39,728.56, for a total of $84,997.90. D&V workers left the construction site shortly after the enforcement sweep occurred.

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 hurts legitimate employers who classify their workers correctly. Yesterday, the Labor Department announced the results of another enforcement case at "The Province" at Rochester Institute of Technology. Widespread misclassification of workers, as well as labor law violations, was found there also.

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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