NEW YORK CITY OFFICE OF ADMINISTRATIVE TRIALS AND HEARINGS

Transcription

1 Office of the Comptroller v. Reliance General Construction, Inc. OATH Index No. 1767/15 (July 23, 2015), adopted, Comptroller s Determination and Order (Sept. 2, 2015), appended Following respondents default, petitioner established Labor Law violations by respondents failure to pay prevailing wages and supplemental benefits to 21 employees on public works contracts. Respondents are liable for underpayment plus interest and civil penalty. Debarment for five years also recommended due to willfulness of underpayment and falsification of payroll records. Comptroller adopts ALJ s recommendation except the Comptroller did not find falsification of records was proven. Comptroller still imposed five year debarment based on finding of willful violation on two or more public works projects. NEW YORK CITY OFFICE OF ADMINISTRATIVE TRIALS AND HEARINGS In the Matter of OFFICE OF THE COMPTROLLER Petitioner -against- RELIANCE GENERAL CONSTRUCTION, INC. & ANISUL ISLAM Respondents REPORT AND RECOMMENDATION TYNIA D. RICHARD, Administrative Law Judge Petitioner, the Office of the Comptroller ( Comptroller ), brought this proceeding pursuant to section 220(8) of the Labor Law and Title 44, Chapter 2 of the Rules of the City of New York ( RCNY ), alleging that respondents Reliance General Construction, Inc. ( Reliance ) and Anisul Islam ( Islam ), president of the corporation, failed to pay the prevailing rate of wages and supplemental benefits to 21 employees for work on eight public contracts with the city s Department of Education ( DOE ). The Comptroller seeks respondents debarment along with monetary relief in the amount of $401, for the underpayment plus statutory interest and civil penalties.

2 - 2 - Respondents failed to appear at a pre-trial conference scheduled for April 9, 2015, or at the trial scheduled for May 8, Along with documentary evidence, petitioner presented the testimony of Investigator Stanley Kalish who established service of the petition, notice of hearing, and notice of pre-trial conference by regular and certified mail at respondents last known business address of record, as required by statute and the Comptroller s regulations (Tr ; Pet. Exs. 1a-1c, 2a-2c). See Labor Law 220(8) (Lexis 2015); 44 RCNY 2-02(b)(1) (Lexis 2014). The corporate respondent, Reliance, was served at the address listed with the New York Secretary of State (Tr ); Islam was served at the address he provided as signatory on the DOE contract as president of Reliance (Tr. 14; Pet. Ex. 7). I found service reasonably calculated to achieve actual notice of the proceedings. 48 RCNY 1-23 (Lexis 2014). Service was thus sufficient to entitle petitioner to proceed in respondents absence. See Office of the Comptroller v. Jetstream Maintenance Corp., OATH Index No. 997/11 at 2 (Jan. 24, 2011), adopted, Comptroller s Order & Determination (Apr. 28, 2011); Office of the Comptroller v. Central Absorption, Inc., OATH Index No. 1138/96 & 1146/96 (Mar. 21, 1996), adopted in part, rejected in part, Comptroller s Order & Determination (Apr. 30, 1996). I therefore declared a default and the trial was conducted as an inquest (Tr. 21). For the reasons set forth below, the petition should be granted and respondents found liable for their failure to pay the prevailing rate of wages and benefits to 21 workers on public works projects. Because the underpayment was willful and respondents deliberately falsified payroll records, I also recommend imposition of 16% interest, a 25% civil penalty, and respondents debarment for five years. ANALYSIS Section 220 of the Labor Law requires entities that contract with the City of New York or a public benefit corporation under public works contracts to pay their employees not less than the prevailing rate of wages. Labor Law 220(3)(a) (Lexis 2015); Erie County Industrial Development Agency v. Roberts, 94 A.D.2d 532 (4th Dep t 1983), aff d, 63 N.Y.2d 810 (1984); Office of the Comptroller v. Decoma Building Corp., OATH Index No. 2154/13 (Nov. 18, 2013), adopted, Comptroller s Order & Determination (Dec. 30, 2013). The statute implements the mandate of the New York State Constitution that contractors on public works pay their workers, laborers, and mechanics no less than the rate of wages and supplements that is prevailing for the

3 - 3 - applicable trade or occupation in the locality where the project is located. N.Y. Const. art. I, 17. As fiscal officer for the City of New York, the Comptroller sets the prevailing wages and supplements and investigates complaints by workers. Labor Law 220(5)(e), (7) (Lexis 2015). To establish a claim under Labor Law section 220, the Comptroller must prove by a preponderance of the credible evidence that the contractor failed to pay its workers prevailing wages and supplements on the DOE contracts at issue here. See Comptroller v. Uddin USA Corp., OATH Index No. 741/07 at 2 (Mar. 19, 2007). Petitioner met that burden. This case involves eight public works contracts entered into by and between respondents and the DOE valued at $6.9 million over five years to provide a variety of work on public school facilities, including repair and replacement of ceramic tiles, plastering and painting, repair of masonry, and roofing work (Pet. Exs. 7, 8, 9, 10, 11, 12, 13, 14). Respondent Islam is listed in respondents Vendex Business Entity Questionnaire (Pet. Ex. 15 at 14) and in each of the contracts as Reliance s president. Islam signed each contract in his capacity as president. The contracts require payment of the prevailing rate of wages and supplemental benefits to workers on the project. Annexed to each contract is the Comptroller s schedule of prevailing wages and supplements. The Special Commissioner of Investigation for the New York City School District referred this matter to the Comptroller by letter dated October 24, 2008, upon receipt of a complaint made by a DOE investigator of hazardous working conditions and prevailing wage rate violations (Pet. Ex. 3; Tr. 35). This prompted an investigation by the Comptroller. No complaints were filed by workers. The Comptroller s investigator, Stanley Kalish, testified that complaint forms were sent to workers on two occasions, and none were returned (Tr. 37). In May 2010, Mr. Kalish served Reliance with a Notice to Produce & Examination scheduling an examination for June 17, 2010, and requesting the production of documents, including original and certified payroll reports, daily project sign-in sheets, cancelled paychecks and copies of pay stubs, cash disbursement books, supplemental benefits reports, and tax filings (Tr ; Pet. Ex. 4). On or about June 14, 2010, Ethan Serlin, an attorney from Serlin & Serlin, contacted Mr. Kalish on behalf of Reliance to obtain an adjournment. Mr. Serlin filed a Notice of Appearance with the Comptroller (Tr. 40; Pet. Ex. 5), whereupon petitioner served upon counsel a second Notice to Produce & Examination that scheduled an examination for September 29, 2010 (Pet. Ex. 6). Reliance did not reply to the notice nor did it appear before the

4 - 4 - Comptroller or provide any cooperation with its investigation (Tr. 44). Thus, the Comptroller s investigation consists primarily of the contracts and documents provided to it by the DOE, including the Certified Payroll Reports that respondents submitted to the DOE for payment under the contracts (Tr ). The Certified Payroll Reports reviewed by the Comptroller were certified by Anisul Islam as president of Reliance (Pet. Ex. 16). The reports submitted in evidence are for payroll from December 16, 2006, through October 27, 2008 (id.). They list each worker paid on each workday, along with their job classification, the number of hours worked, and the hourly rate of pay for wages and supplemental benefits. 1 The Comptroller s investigation found a significant amount of underpayments, including the payment of wages under Helper titles even though there are no Helper titles in the Comptroller s prevailing wage schedule (Tr. 68; Pet. Ex. 16). Notably, a Painter is paid an hourly wage and benefit that is more than twice that of a Painter s Helper (Tr. 68). City contractors may pay workers at a rate lower than those provided in the Comptroller s prevailing wage schedule only if such workers are registered under a bona fide apprenticeship program certified by the New York State Department of Labor ( DOL ) (Tr. 70). Labor Law 220(3)(a); see Nash v. NYS Dep t of Labor, 34 A.D.3d 905, 906 (3d Dep t 2006). Mr. Kalish wrote to the DOL, providing a list of nine workers paid as Helpers, to ascertain whether these workers were registered apprentices (Pet. Ex. 18). The DOL responded that none were registered apprentices (Tr. 70, 73). 2 The Comptroller s auditing division prepared an Audit Report that compared Reliance s payrolls to the Comptroller s prevailing wage schedule (Pet. Ex. 17). The Audit Report concluded that 21 employees had been underpaid in the amount of $ 196,037.40, and that respondents were liable for a total amount of $ 401,072.99, including interest and civil penalties. I find that the audit provides a reasonable measure of the amount of underpayment. Gelco Builders, Inc. v. Holtzman, 168 A.D.2d 232 (1 st Dep t 1990) ( where an employer has failed to 1 On some reports, Anisul Islam is listed as a worker paid under the contract in various rolls such as Helper, Painter, and Roofer (Pet. Ex. 16). 2 That list included Mostafak Bablu, M. Forhad Hossain, Rashid Islam, Mohammed Meah, Mohammed Rahim, Akhtaruzzamaw Raja, Abu Sayeed, Mohammed Taher, and Mohammed Yousuf (Pet. Ex. 18). Only part of the underpayment to these workers is attributable to their designation as helpers, according to the certified payroll records (Pet. Ex. 16). Some of their underpayments occurred for work in non-helper titles.

5 - 5 - maintain proper records, wage underpayments may be calculated by reference to the best evidence available, and the burden shifts to the employer to negate the reasonableness of the calculations ); Decoma Building Corp., OATH 2154/13 at 6. The following is a list of all the workers who were paid less than the prevailing rate, along with the amount of underpayment plus interest and civil penalty. Name Underpayment Interest at 16% Total Ahmed, Iftekhar $ 2, $ 1, $ 4, Amin, Mohammed 12, , , Amin, Nurul , Bablu, Mostafak 2, , , Daniesky, Henryk Islam, Rashid 3, , , Islam, Shafigul 3, , , Hoq, Md. Fozlul Hossain, M. Forhad 4, , , Karim, Mohammed 9, , , Meah, Mohammed 10, , , Midyanyy, Roland Musa, Mohammed Rahim, Mohammed 43, , , Rahman, Mohammed , Rahman, Mohammed M. 4, , , Raja, Akhtaruzzamaw 21, , , Sayeed, Abu 11, , , Shoab, Khondoker 11, , , Taher, Mohammed 36, , , Yousuf, Mohammed 13, , , Subtotal 196, , , % civil penalty 80, Total $401,072.99

6 - 6 - The sum total of the underpayment, interest and civil penalty equals $401,072.99, which is petitioner s claim amount. Petitioner is entitled to seek accrued interest from the filing of the DOE s complaint until payment is tendered. Labor Law 220(8) ( interest... from the date of the underpayment to the date of the payment ); Office of the Comptroller v. Kallo Building Construction Co., Inc., OATH Index No. 868/97 at 5 (Mar. 11, 1997). Petitioner included in its calculation 16% interest, the maximum allowed by the Labor Law. See Banking Law 14-a (Lexis 2015). The Comptroller seeks statutory interest for a three-year period from the commencement of the investigation to October 24, 2011 (Tr ). The evidence supports a finding that the underpayments are willful, under section 220(7-a) of the Labor Law. A violation of the Labor Law is deemed willful where the employer knew or should have known of the violation. Hull-Hazard, Inc. v. Roberts, 129 A.D.2d 348, 352 (3d Dep t 1987), aff d, 72 N.Y.2d 900 (1988). All that is required under the applicable standard is that respondents acted knowingly, intentionally or deliberately. Nash, 34 A.D.3d at 907; Sarco Industries v. Angello, 23 A.D.3d 715, 716 (3d Dep t 2005) (petitioners knew or should have known they were violating Labor Law by paying worker at apprentice rate when he was in fact working on his own and, as such, was entitled to be paid as journeyman); Scharf Plumbing & Heating, Inc. v. Hartnett, 175 A.D.2d 421, (3d Dep t 1991) (willfulness not shown where underpaid worker had been hired for a non-public works project and was sporadically placed on public works project for a total of only 9 ½ days over the course of four months, contractor never saw him on the public works site, and contractor properly paid all other workers on the job site). Petitioner proved that respondents knowingly failed to pay workers at the rates mandated by law. Office of the Comptroller v. A&R Paterno Construction, Inc., OATH Index No. 2248/00 at 9 (Oct. 19, 2000) ( There can be little doubt that contractor was aware or should have been aware that it was violating section 220 of the Labor Law, as all public works contractors are charged with knowledge of the prevailing rates of wages and benefits). As was established by the documentary evidence, each contract contained a copy of the Comptroller s prevailing wage schedule (Pet. Exs. 7 through 14). Respondents certainly should have known there were no Helper titles in that schedule. Section 220(8) of the Labor Law permits the imposition of a civil penalty of up to 25% of the total prevailing wage underpayments and interest. Petitioner seeks the maximum civil penalty of 25%. The factors to be considered include the size of the employer s business, the

7 - 7 - good faith of the employer, the gravity of the violation, the history of previous violations and the failure to comply with record keeping or other non-wage requirements. Labor Law 220(8). Most factors weigh against respondents. The eight contracts at issue total $6.9 million, a substantial amount, which is an indication of a relatively large business. Moreover, respondents have experience with public works contracts, having previously performed under another 30 public works contracts with the City of New York prior to the two-year lookback or relevant time period (Tr. 47, 59). Respondents failed to cooperate with the Comptroller s investigation or to respond to its two notices to produce, even after obtaining counsel, and did not appear for any scheduled proceeding, or at trial, factors that show a lack of good faith. See, e.g., Office of the Comptroller v. Craft Fence, Inc., OATH Index No. 494/14 at 7 (May 6, 2014), adopted, Comptroller s Order & Determination (July 29, 2014) (respondents lack of cooperation with the investigation showed an awareness of the unlawfulness of their actions); A & R Paterno Construction, Inc., OATH 2248/00 at (bad faith displayed by contractor s non-appearance combined with the intentional and serious nature of the violations weighed in favor of maximum penalty); Office of the Comptroller v. Carlin Construction and Development Corp., OATH Index Nos. 782/92 & 783/92 at 15 (July 17, 1992) (employer s non-cooperation alone justifies imposition of maximum interest and penalty). In addition, the practice of underpayment found here was widespread, as it was applied to 21 employees over the two-year relevant period. These factors indicate that a penalty of 25% is appropriate. See Office of the Comptroller v. Causeway Construction Corp., OATH Index No. 1694/02 at 6-7 (Aug. 21, 2002) (employer s failure to cooperate or finding of violations on different public work projects justifies maximum civil penalty). The record also established that both respondents should be held liable for the violations. Section 220-b provides that any officer of the contractor... who knowingly participated in the violation may be held liable for underpayment, interest, and civil penalty. Labor Law 220- b(2)(a)(2)(iii) (Lexis 2015). Mr. Islam is the 100% owner of Reliance (Tr. 64; Pet. Ex. 15 at 14). He signed the certified payroll reports as president of Reliance and, therefore, had to have known of the prevailing wage violations. See Nash, 34 A.D.3d at 907; Office of the Comptroller v. Delta Iron & Construction, Inc., OATH Index No. 1671/14 at 5 (July 10, 2014). Islam made no appearance here to deny knowledge or culpability.

8 - 8 - The record supports a finding that respondents willfully violated their obligations to pay prevailing wages for work under the public works contracts in issue here. In addition, respondents falsified certified payroll records, likely as part of a scheme to hide their failure to pay prevailing wages. Last, petitioner seeks a finding that respondents should be barred from bidding on future public works contracts within New York State for a period of five years, pursuant to Labor Law section 220-b(3)(b)(1). Under this debarment provision, a contractor, officers who knowingly participated, and certain shareholders are debarred upon the rendering of two final determinations of the willful failure to pay the prevailing rate of wages and supplements. Alternatively, the section authorizes debarment upon the first final determination of willful failure to pay prevailing rates where the determination involves the falsification of payroll records or demanded kick-backs from workers. Labor Law 220-b(3)(b)(1) (Lexis 2015); Uddin USA Corp., OATH 741/07 at 8. The evidence shows that respondents deliberately falsified the payroll records. Therefore, debarment is appropriate. 3 FINDINGS AND CONCLUSIONS 1. Respondents were properly served with the petition and notice of hearing in this matter. 2. Respondents violated Labor Law section 220 by willfully failing to pay 21 workers on public works contracts the prevailing rate of wages and supplemental benefits from December 16, 2006, to October 27, 2008, as set forth in petitioner s audit. 3. The complainants are entitled to maximum interest at the annual rate of 16%. 4. Respondents should be assessed the maximum civil penalty of 25% of the total violation. 5. For their willful failure to pay prevailing wages and supplemental benefits on public works contracts and their deliberate falsification of payroll records, respondents should be debarred from all governmental contracts within New York State for five years. 3 Petitioner asserted as an additional basis for finding debarment appropriate the fact that respondents willfully violated the law as to each of the eight contracts entered with the City (Tr. 85). I did not find sufficient basis in the record to determine that the underpayments were attributable to each of the eight contracts.

9 - 9 - RECOMMENDATION I recommend the petition be granted. July 23, 2015 SUBMITTED TO: SCOTT M. STRINGER Comptroller APPEARANCES: CAROLINE FRIEDMAN, ESQ. MICHAEL TURILLI, ESQ. Attorneys for the Petitioner No appearances by or for Respondents Tynia D. Richard Administrative Law Judge

10 CITY OF NEW YORK OFFICE OF THE COMPTROLLER In the matter of the Complaint -against- OATH Index No. 1767/15 RELIANCE GENERAL CONSTRUCTION INC. and ANISUL ISLAM For Violations of Labor Law 220 DETERMINATION AND ORDER Proceedings The Comptroller's Bureau of Labor Law brought proceedings pursuant to New York Labor Law 220(8) to determine whether Reliance General Construction, Inc. ("Reliance") and Anisul Islam ("Respondents") paid the prevailing rate of wages and benefits to 21 employees who worked for Reliance on eight separate contracts with the New York City Department of Education. Honorable Tynia D. Richard, Administrative Law Judge ("ALJ") of the Office of Administrative Trials and Hearings ("OATH"), conducted a hearing on May 8, The ALJ found that Respondents had actual notice of the hearing and voluntarily defaulted. As a result, the Comptroller's Bureau of Labor Law proceeded in Respondents' absence. Following the hearing, the ALJ issued a Report and Recommendation dated July 23, Determination and Order I have reviewed the ALJ's Report and Recommendation, the relevant portions of the record and the exhibits. Under the powers and duties vested in me by the Comptroller, I adopt the ALJ's Report and Recommendation as the Comptroller's Determination and Order. The ALJ's Report and Recommendation is attached as Appendix A. The amount owed to each employee, including interest of 16% per annum through October 24, 2011, is listed in the "Summary of Underpayment." Oath Hr'g Pet'r Ex. 19, a copy of

11 which is attached as Appendix B. Interest on the entire award will continue to accrue at a rate of 16% per annum from the date of this Determination and Order until the date of payment. Although I adopt the ALJ' s finding that Respondents should be barred from future public works contracts, I find it necessary to supplement the ALJ's findings on this issue. Upon further review of the record, I do not find any evidence that Respondents falsified payroll records. However, the record supports a finding that Respondents willfully violated prevailing wage law on two or more public works projects. Therefore, pursuant to Labor Law 220-b, Respondents are ineligible to bid on or be awarded any public work contract for five years from the date of this Determination and Order. Additionally, pursuant to Labor Law 220(8), respondents are directed to pay the maximum civil penalty of 25% of the total violation. SO DETERMINED AND ORDERED: By: Kathryn E. Diaz General Counsel Office of the Comptroller of the City of New York Dated: Sept. 2, 2015

12 Appendix B SUMMARY OF UNDERPAYMENT RELIANCE GENERAL CONSTRUCTION, INC. CASE# NAME UNDERPAYMENT INTEREST@16% UNDERPAYMENT TO 10/24/11 WITH INTEREST AHMED, IFTEKHAR $ 2, $ 1, $ 4, AMIN, MOHAMMED $ 12, $ 8, $ 20, AMIN, NURUL $ $ $ 1, BABLU, MOSTAFAK $ 2, $ 2, $ 5, DANIESKY, HENRYK $ $ $ 1, HOSSAIN, M.FORHAD $ 4, $ 2, $ 6, ISLAM, RASHID $ 3, $ 2, $ 6, ISLAM, SHAFIGUL $ 3, $ 2, $ 6, KARIM, MOHAMMED $ 9, $ 5, $ 14, MD. FOZLUL HOQ $ $ $ MEAH, MOHAMMED $ 10, $ 6, $ 16, MIDYANYY, ROLAND $ $ $ MUSA, MOHAMMED $ $ $ RAHIM, MOHAMMED $ 43, $ 28, $ 72, RAHMAN, MOHAMMED $ $ $ 1, RAHMAN, MOHAMMED M $ 4, $ 2, $ 7, RAJA, AKHTARUZZAMAW $ 21, $ 14, $ 35, SAYEED,ABU $ 11, $ 7, $ 19, SHOAB, KHONDOKER $ 11, $ 7, $ 18, TAHER, MOHAMMED $ 36, $ 22, $ 58, YOUSUF, MOHAMMED $ 13, $ 9, $ 22, $ 196, $ 124, $ 320, CIVIL PENALTY 25% $ 80, $ 401,072.99