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Pay Scheme Results in $3.2M Fine

Tuesday, February 21, 2017

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A New Jersey-based contractor with ties to several New York City public projects faces $3.2 million in fines for underpaying dozens of immigrant workers, authorities have announced.

New York City Comptroller Scott Stringer assessed the fine against K.S. Contracting Corporation, of Parsippany.

The company is also barred from working on New York City and state contracts for five years, according to a news release from the comptroller’s office.

“Every New Yorker has rights, and my office won’t back down in defending them,” said Stringer. “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.”

New York City
©iStock.com / Predrag Vulcovic

Authorities say K.S. Contracting was awarded more than $20 million for work at several public projects throughout New York City.

The assessment in unpaid wages, interest and civil penalties comes out of a multi-year investigation in which the Comptroller’s Office used subpoenas, video evidence, union records and city agency data.

The investigation began after an employee filed a complaint in May 2010.

How the Scheme Worked

Between August 2008 and November 2011, the company was said to have cheated at least 36 workers out of $1.7 million in wages and benefits, claiming to pay workers rates starting at $50 an hour, but actually paying them a cash salary starting at $90 a day, authorities said.

New York City Comptroller's Office

According to authorities, K.S. Contracting would issue paychecks to half of its workers and then require those workers to cash the checks and return the monies to their supervisors. Then, those supervisors would redistribute the money to all employees, including those working under the table.

After a four-day administrative trial in May 2016, it was revealed that K.S. Contracting would issue paychecks to half of its workers and then require those workers to cash the checks and return the monies to their supervisors. Then, those supervisors would redistribute the money to all employees, including those working under the table.

The Comptroller's annoucement of the fines also included a short video of a typical cash restribution shot with a hidden camera.

Public Projects

This practice occurred on several New York City public works contracts, officials said.

The company was awarded more than $21 million for projects including 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.

K.S. Contracting did not immediately respond to a request for comment on Feb. 17.

About the Comptroller’s Office

Since 2014, Stringer’s office has assessed over $20 million and barred 40 contractors from state and city contracts due to prevailing wage violations. Both are record amounts.

Last May, the office barred Beacon Restoration for five years after that company allegedly cheated 24 immigrant workers out of wages and benefits and also doctored their pay records during the investigation.

It is the duty of the Comptroller’s Office to enforce state and local laws that require private contractors engaged in public works projects to pay the prevailing wage or living wage to their employees. The office encourages workers to search for their name on the government website if they are unsure whether they are owed money.

   

Tagged categories: Business matters; Construction; Contractors; Enforcement; Ethics; Fraud; Government; Workers

Comment from wd cameron, (2/21/2017, 10:49 AM)

Chris Wallace recently told Reince Prebius that he couldnt tell the press what to do. It seems unfortunate that businesses--the ones that provide work, and help people to survive and thrive have to be criminals to accomplish their mission.


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