Contractors Involved in Construction Project in New York City to Pay $4.9 Million in Back Wages for Numerous Violations

Tuesday, June 10, 2014

MDG Design & Construction LLC has reached a settlement with the U.S. Department of Labor that resolves wage violations at the federally-assisted Grand Street Guild construction project in New York City's Lower East Side. MDG and other respondents will pay $3.8 million in back wages and fringe benefits to about 200 of MDG's subcontractors' construction workers. Previous, separate investigations led to the repayment of more than $1.1 million in back wages to approximately 300 laborers and mechanics who worked for MDG's subcontractors on the Lower East Side project.

MDG was the general contractor for the Grand Street Guild project, which involved the refurbishment and rehabilitation of three 26-story apartment towers. The department's Wage and Hour Division found numerous Davis-Bacon and Related Acts violations by MDG subcontractors on the project, including failure to pay required prevailing wages and submitting inaccurate or falsified payroll records to the government.

Under 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.

As part of the settlement, 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.

The apartment towers for the Grand Street Guild project are located at 410 Grand St., 460 Grand St. and 131 Broome St. MDG, formed in 1988, specializes in the moderate rehabilitation and new construction of residential apartment buildings in New York City and Long Island, according to the company's website.

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.

Previously, the Wage and Hour Division obtained debarments for a period of three years for the following MDG subcontractors that worked on the Grand Street Guild project: ACJ Construction Corp., JECA Construction Corp., Millennium Century Construction Inc. and Omega Interior Corp.

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

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