$189,000 in Unpaid Wages and Overtime to be Paid to Employees of Federally Funded Project

Tuesday, May 31, 2016

The U.S. Department of Labor has recovered $189,000 in unpaid wages and overtime for 28 carpenters and laborers who worked on the federally funded West 131st St. Cluster Project in Harlem between April 2009 and April 2010. This was the result of a joint enforcement effort with the office of New York Attorney General Eric Schneiderman in which the two agencies shared information and worked collaboratively on behalf of workers in New York. The attorney general’s investigation continues.

An investigation by the department’s Wage and Hour Division found that SJ Insulation Corp., a second-tier subcontractor hired to perform all carpentry work on the gut rehabilitation of a five-story apartment building, failed to pay its workers the prevailing wages, overtime, and fringe benefits required by law. In addition, SJ Insulation submitted falsified certified payroll records to the government and failed to maintain accurate and complete payroll records.

Specifically, the division found that SJ Insulation submitted numerous certified payrolls to the government falsely claiming that it employed only two unskilled laborers and a single carpenter at the five-story building, and that these workers were paid the legally required prevailing wages of $33.59 per hour and $40.25 per hour, respectively, plus fringe benefits. In fact, SJ Insulation employed at least 28 workers over the course of the project. The division determined that SJ typically paid these workers only about $10 per hour, and failed to pay any fringe benefits. In addition, the employer paid 13 of these employees straight time for overtime hours worked. It also determined that SJ Insulation and its owner committed these acts willfully. After SJ failed to defend itself in court, an administrative law judge ordered that the company be debarred from working on federally financed projects for a period of three years. 

The division also found that the project’s general contractor, A. Aleem Construction Inc., and its prime contractor, West 131st Street Development Corp., were responsible for the payment of back wages. West 131 did not contest these findings. Under the Davis-Bacon and Related Acts, prime contractors are responsible for ensuring that their subcontractors comply with the acts’ requirements.

The department has secured a consent findings and order with its Office of Administrative Law Judges under which Aleem Construction agrees to release $189,000 in withheld funds to the Wage and Hour Division, which will distribute the monies to the 28 affected workers. The order became final on March 1, 2016.

The Davis-Bacon and Related Acts and the Contract Work Hours and Safety Standards Act require that employees on federally funded construction projects receive the locally prevailing wages and fringe benefits for the jobs they perform and that they also receive overtime when they work more than 40 hours per workweek.

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