Contractor must pay $5 million in back pay

| June 11, 2014

money - Better Roads

The U.S. Department of Labor (DOL) has secured nearly $5 million in back wages for about 500 workers on the federally assisted Grand Street Guild construction project in New York City’s Lower East Side, which involved the refurbishment and rehabilitation of three 26-story apartment towers

MDG Design & Construction, the general contractor on the project, reached a settlement with the DOL that resolved wage violations, requiring MDG and other respondents to pay $3.8 million in back wages and fringe benefits to nearly 200 of MDG’s contractors’ construction workers, according to the DOL. In addition to MDG, the settlement agreement includes Charis Consulting LLC, Kona Contracting LLC, as well as Michael Rooney and Nicola DeAcetis – owners of all three companies – and Neys Escobar, an owner of Kona. All of the companies are based in Huntington Station, New York.

The DOL says separate investigations led to the repayment of more than $1.1 million in back wages to nearly 300 laborers and mechanics who worked for MDG’s subcontractors on the Lower East Side project.

The DOL’s Wage and Hour Division also says there were numerous Davis-Bacon and Related Acts violations found by MDG subcontractors on the project. These violations include failure to pay required prevailing wages and submitting inaccurate or falsified payroll records to the government.

According to a written statement from the DOL, the following are also part of the settlement:

  • MDG commits to implementing and abiding by a comprehensive enhanced compliance agreement to ensure future compliance with the Davis-Bacon and Related Acts, the Fair Labor Standards Act, and applicable state and local wage laws. MDG will also take steps to require that its subcontractors comply with applicable wage and hour laws.

  • MDG will retain an independent monitor, approved by the Wage and Hour Division, for a period of three years with responsibilities for conducting regular reviews of the company and its subcontractors to confirm compliance with applicable wage and hour laws on all prevailing wage and federally-assisted projects. The monitor’s findings will be reported to the division. The monitor will also provide training to MDG staff, as well as to MDG subcontractors, and establish a hotline, staffed 24 hours a day, to collect confidential reports of wage violations and other instances of noncompliance.

  • MDG has agreed to implement substantial internal control measures at its prevailing wage and federally-assisted projects. These measures include: assigning dedicated supervisors to these projects, providing written notification of pay rates to employees and taking steps to determine whether subcontractor bids ensure the payment of prevailing wage rates.

David Weil, administrator of the DOL’s Wage and Hour Division, notes that the settlement reinforces the Labor Department’s “commitment to take strong action to ensure that workers are properly compensated for their work.”

“General contractors on federally-assisted projects have a responsibility to ensure that their subcontractors comply with prevailing wage laws and properly compensate their employees,” Weil says in a written statement from the DOL.

Carl P. Smith, northeast deputy regional administrator of DOL’s Wage and Hour Division, adds that the department will take steps to get workers their “hard-earned wages” and prevent future violations. “Failure to adhere to this agreement and obey wage laws can result in the debarment of MDG and its affiliates from seeking and obtaining future federal contracts,” Smith also notes in a written statement from the DOL.

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