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NY Contractor to Pay for Labor Sins

Friday, July 27, 2012

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A major NY general contractor has agreed to guarantee payment of approximately $960,000 in back wages and fringe benefits for workers employed by its subcontractors as part of a settlement with the U.S. Department of Labor.

The Labor Department filed consent findings and an order Thursday (July 26) against Lettire Construction Corp., and its president Nicholas Lettire, following federal labor violations uncovered during project-based investigations conducted by the department’s Wage and Hour Division.

Lettire Construction Corp.

A DOL investigation of general contractor Lettire Construction Corp. at Hobbs Court, a new high-rise, affordable housing project in New York City, resulted in numerous violations of federal labor laws.

Investigations at Hobbs Court and Ciena, two federally-funded affordable housing projects in East Harlem, found that Lettire Construction and 16 of its subcontractors “willfully violated wage, benefit, certified payroll and other requirements.”

Thursday’s settlement resolves the action and must be approved by the chief administrative law judge, DOL said.

Violations

Specifically, DOL said it found:

• employees working more than 60 hours per week without proper payment;

• contractors failing to pay required prevailing wages and overtime compensation;

• providing inaccurate or falsified payroll records to the government;

• failing to keep accurate records of hours employees worked;

• failing to pay for all hours employees worked; and

• improperly classifying employees who performed work on the projects, resulting in the underpayment of wages and fringe benefits.

Upon finding the violations, the DOL secured the withholding of project funds sufficient to pay the back wages owed, in order to protect the rights of workers on the two projects, DOL said.

The Hobbs Court and Ciena projects were part of the Metro North Rehabilitation and Redevelopment Program, which was funded in part by the U.S. Department of Housing and Urban Development (HUD).

(The Hobbs Court and its air-barrier and waterproofing solutions were featured in the D+D feature article, ‘Green’ Currency: Retrofit, New-Building Projects Deliver High-ROI Upside.)

Terms of the Settlement with Lettire

The settlement agreement calls for Lettire Construction and Lettire to take a number of actions, including:

• taking affirmative steps to ensure its own and its subcontractors’ future compliance,

• guaranteeing payment for some of its subcontractors’ violations as determined through administrative and court proceedings; and

• guaranteeing payment for any future violations committed by its subcontractors on federally funded local, state and federal prevailing wage projects.

“The settlement makes absolutely clear that responsibility for complying with the federal prevailing wage laws rests with Lettire Construction and Nicholas Lettire,” said Nancy J. Leppink, deputy administrator of the Wage and Hour Division. “And the agreement requires them to take those actions that any ‘high road’ contractor should be taking to ensure its compliance and the compliance of its subcontractors with federal law on federal taxpayer funded projects.”

The company agreed to pay $3,071 in back wages to four of its employees on the projects, DOL said. In addition, the division resolved matters involving 14 of Lettire Construction’s subcontractors, including the payment of $142,345 in back wages and fringe benefits to 85 mechanics and laborers.

A case against Lettire Construction subcontractors Enviro & Demo Masters Inc. and Gladiators Contracting Corp. and their principals, which seeks debarment and approximately $815,638 in additional back wages and fringe benefits for 40 mechanics and laborers, has been tried and is currently pending before an administrative law judge, DOL said.

Three of the company’s subcontractors were barred for three years: Fairmont Industries, Sant-Tec Electric and Finest Security Service.

Debarment removes a contractor's eligibility for government contractors for a fixed period of time.

Monitoring for 3 Years

Per the settlement, the Lettire Construction also agreed to hire a “monitor” approved by the Wage and Hour Division for at least three years to conduct regular compliance reviews of the company and its subcontractors.

The monitor will ensure compliance on federal Davis-Bacon Act provisions, the terms of the consent findings and order, as well as other applicable federal and state laws, DOL said.

The Davis-Bacon Act requires all contractors and subcontractors performing work on federal and certain federally funded projects to pay their laborers and mechanics the proper prevailing wage rates and fringe benefits as determined by the Secretary of Labor. The Contract Work Hours and Safety Standards Act applies to contractors and subcontractors with federal service contracts and federally funded and assisted construction contracts exceeding $100,000.

In addition, the monitor will provide training to the company’s staff and to its subcontractors, and will set up a hotline to collect confidential reports of noncompliance.

The monitor will regularly report to the Wage and Hour Division the findings of all reviews, conduct reviews at the request of the division and provide notice to the division of all complaints received from workers on the hotline. Lettire Construction will be required to make corrections in response to the monitor’s findings.

Must Investigate Prospective Subs, Install Time-Keeping System

DOL also said the company will be required to investigate prospective subcontractors and establish internal controls for timekeeping and payroll.

The company must assess subcontractors’ bids on federal prevailing wage projects to determine whether they are adequate to ensure financial compliance with the law and taking this information into consideration when selecting subcontractors, DOL said.

An electronic timekeeping system and electronic certified payrolls must be installed to ensure accuracy and timeliness of certified payroll submissions, and the company will assign dedicated supervisors to oversee compliance on prevailing wage projects, the DOL said.

In addition, the order will require the company and its subcontractors to provide employees notice of their job classifications, wage and fringe benefit rates, and the hotline number. The notice also must advise workers of their rights to file a complaint without retaliation.

Leppink added that should Lettire Construction and Lettire fail to comply with the full agreement terms, “there should be no doubt that the Wage and Hour Division will take action seeking to prohibit the company from bidding on future federal taxpayer-funded projects.

“This action will help ensure that local prevailing wages and working conditions are not undercut by contractors who violate the law, and employers who play by the rules can compete on a level playing field for government contracts.”

‘Doing the Right Thing’

Allan Bahn, Lettire’s attorney, said the company was committed to “doing the right thing,” the New York Times reports.

According to the Times, “After being informed of the problem with the subcontractors in 2010, Lettire, he said, hired an independent monitor and instituted many of the procedures now outlined in the consent decree. He said the company would be cleared to work on projects after the settlement was approved.”