New York City Comptroller William C. Thompson, Jr. today announced that over the last six and a half years his office has debarred 26 contractors who have broken the law by failing to pay workers the required wages and benefits afforded to them under State prevailing wage laws.  

“Prevailing wage laws exist to protect hard-working New Yorkers who labor on public projects, such as schools, hospitals and other government buildings and offices,” Thompson said. “Contractors who flagrantly break those laws by underpaying workers must be punished and pay the high price of being debarred from doing business with the City and State.”

“Enforcing prevailing wage laws benefits not only workers, but all New Yorkers by helping to ensure quality work on public projects. By enforcing the law, we also try to ensure that only responsible contractors work for the City of New York.”

Comptroller Thompson noted that his Bureau of Labor Law has debarred 26 contractors during his tenure. Of the 26, 15 currently are prohibited from doing business with the City and State.

Contractors and subcontractors are ineligible to submit a bid on or be awarded any public works contracts or subcontracts with any state, municipal corporation or public body for five years when two willful determinations have been rendered against that contractor or subcontractor within any consecutive six-year period, or when there is any willful determination that involves the falsification of payroll records or the kickback of wages or supplements.

The companies debarred by Thompson include the following:

• In February 2008, Start Elevator, Inc. and several related entities agreed to being debarred from doing business with the City and State for five years. Thompson also reached a settlement with Start Elevator and Prude Construction Corporation, the prime contractor in the case, to pay $257,649, which includes restitution to twenty-three underpaid workers and a civil penalty to the City. 

The case stemmed from prevailing wage violations under two contracts. The Metropolitan Transportation Authority (MTA) contracted with Prude Construction to replace elevators in the West 4th Street Subway Station in order to comply with the Americans with Disabilities Act.  Prude Construction subcontracted with Start Elevator to perform certain work. Under a separate contract, Start Elevator also provided elevator modernization work for the New York City Department of Transportation. Start Elevator willfully failed to pay prevailing wages and supplemental benefits to its workers under both contracts.

• In January 2008, Kelly’s Sheet Metal, Inc., a heating, ventilation and air conditioning contractor, was debarred for falsifying payroll records and failing to pay employees prevailing wages and benefits for their work at Bellevue Hospital. Thompson also assessed an underpayment with interest and civil penalty of $215,668.

The debarment and assessment of underpayment came after a five-day hearing at the New York City Office of Administrative Trials and Hearings. Kelly’s Sheet Metal hired three workers “off-the-books” to perform sheet metal work on air-conditioning ducts and steam fitting work on air-conditioning and fire sprinkler systems at Bellevue from November 2003 to December 2004. One worker was paid only $100 per day, and the other two workers received no payment at all. 

• In December 2007, Paradise Construction officials pleaded guilty to a Class E felony for submitting false payroll documents to the New York City Department of Parks and Recreation (DPR). The prevailing wage violations occurred in 2004 and 2005 on two playground reconstruction projects - Patterson Playground in the Bronx and Harry Maze Memorial Park in Brooklyn.

Paradise also paid $236,544 in back wages and interest to the underpaid workers and $23,654 in a civil penalty. The guilty plea was the culmination of a joint investigation conducted by the Comptroller’s Office, the Office of the Kings County District Attorney, the Inspector General’s Office for DPR, and DPR. 

According to the criminal complaint and the plea agreement, Paradise submitted certified payroll reports to DPR indicating that it had paid at least four workers prevailing wages and supplemental benefits in amounts ranging from $48 to $59 per hour. Investigators, however, found that the company had only paid the workers between $10 and $15 per hour in cash off the books.

• In February 2007, Integrity Construction & Consulting Services was debarred for failing to pay seven workers - four carpenters, two laborers and one bricklayer – nearly $300,000 in prevailing wages and benefits. The Department of Housing Preservation and Development contracted with Melcara Corporation to serve as construction manager for repairs and renovations at 536-38 West 163rd Street in Manhattan. Melcara hired Integrity Construction to act as general contractor on the project. Integrity Construction, however, failed to pay the workers the legally required wages and benefits for work they performed during October 2003 to July 2004.

An Administrative Law Judge determined that Integrity Construction falsified its certified payroll reports by understating the number of hours its employees worked and reporting payments for supplemental benefits it had not made. The two laborers received only $10 an hour in wages with no benefits, though they should have received $28.05 an hour and $15.19 an hour in supplemental benefits, and the three carpenters were paid $20 an hour with no benefits, though they should have received $38.78 an hour in wages and $26.31 in benefits.

• In October 2007, the Comptroller’s Office entered into a settlement with Severn Trent Environmental Services, which had misclassified employees performing work on a contract involving the reconstruction of eight tanks at the 26th Ward Water Pollution Control Plant in Brooklyn. The company misclassified millwrights as laborers and paid them at the lower laborer wage rate, with a difference of approximately $20 per hour. As part of the settlement, Severn Trent was debarred and also paid $136,000 in back wages, interest and a civil penalty.

• In February 2006, the Comptroller’s Office settled with Cappry Contracting Management Corporation for failing to pay prevailing wages to laborers and pointers who worked on two school construction projects in Queens. The company also failed to comply with requests for information made by the Comptroller’s Office, refusing to submit payroll records and other documentation. Administrative Law Judge Kevin Casey found that the contractor willfully failed to comply with the Comptroller’s requests and appear at the hearing, and that the Comptroller had established that the contactor had falsified payroll records and failed to pay prevailing wages and supplemental benefits to 19 workers.  Cappry also was assessed nearly $600,000 including interest and a civil penalty.

• In August 2005, Florence XVI Century Marble, Inc. was debarred as a result of pleading guilty to a Class E felony for falsely reporting that it had paid prevailing wages and benefits. The company conceded that it filed false certified payroll reports between 2001 and 2004 with the New York City Transit Authority in order to conceal nearly $800,000 in unpaid prevailing wages and supplemental benefits to twenty-six workers on five subway projects. The MTA Inspector General’s Office discovered the deception during a routine audit and brought it to the attention of the Comptroller’s Office and the Kings County District Attorney’s Office. 

• In June 2005, Olympia Mechanical Piping & Heating entered into a plea agreement with the Manhattan District Attorney’s Office. Company officials pleaded guilty to paying less than prevailing wages to some of their laborers who installed water meters for the New York City Department of Environmental Protection from 1997 to 2002. The Class E felony convictions constituted an automatic debarment under the Labor Law and the plea agreement included an underpayment and civil penalty of $425,000.

Other contractors currently debarred by Comptroller Thompson from doing business with the City and State are: ACC Construction Corporation; Ace Drywall Systems Inc.; Foundation Construction Consultants, Inc.; JRC Electric Control Service, Inc.; Masgon Patrol Services, Inc.; Schwartz Electric Contractors, Inc.; Uddin USA Corporation; and, Viva Victoria Enterprises, Ltd.

Thompson also has reached significant settlements with other contractors, setting important legal precedents and recovering unprecedented amounts. Those settlements include:

• In February 2006, Comptroller Thompson announced that his office had reached a settlement in which Netexit, Inc. paid nearly $1.5 million to 16 employees who installed and repaired telephone and data cables and performed other electrical work at 49 Human Resources Administration (HRA) offices in the five boroughs for more than two years. In addition, Nu-Vision, a firm affiliated with Netexit, agreed to pay a civil penalty of nearly $150,000 to avoid litigation and accepted a willful violation.

In 2001, HRA awarded a $22.5 million contract to Netexit’s predecessor company to perform construction services. From June 2001 to August 2003, Netexit paid the 16 workers the technician’s rate - $12-18 per hour - with little or no overtime or benefits. Netexit filed for bankruptcy in 2004 but a court ruled that Thompson was still empowered to collect the back wages due to the workers despite the bankruptcy, establishing an important legal precedent.   

The $1.5 million represents the largest prevailing wage settlement reached by Thompson during his tenure.

• A stipulation finalized by the Comptroller’s Office in July 2006 found that 20 workers hired by Quedan Construction Services for work at the Information Technology High School (Info-Tech) had been underpaid $922,791 in wages. The Comptroller also assessed $184,750 in interest for a total of more than $1.1 million due to the workers.  

This case set a new legal precedent with respect to projects that are considered “public work” and covered by the prevailing wage laws. Office of Administrative Trials and Hearings Judge Faye Lewis issued a decision on September 14, 2005, concluding that the work at Info-Tech was a public work under Labor Law §220. Judge Lewis separately held that the Info-Tech lease was a contract “entered into directly or indirectly” by the School Construction Authority, and therefore subject to the prevailing wage laws.  

• In January 2007, Thompson announced that his office had reached a settlement with John C. Mandel Security to pay $754,307 in unpaid benefits and interest to 720 security guards that Mandel had shortchanged for their work at HRA sites across the city. From January to December 2004, Mandel Security paid the security guards the hourly wage required by the prevailing wage laws, but failed to pay the security guards the supplemental benefit of $1.50 per hour that also was required. Mandel also was assessed a civil penalty of $75,430.

The 720 workers represent the most recipients in a prevailing wage case resolved by the Comptroller’s Office. The settlement also is the largest case prosecuted under New York State Labor Law 230, which includes building services contracts.

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