NYC comptroller sets $3.2 million fine, disbars contractor cheating immigrant workers

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New York City comptroller Scott M. Stringer has assessed $3.2 million in fines against K.S. Contracting Corporation and its owner, Paresh Shah, for cheating dozens of workers out of the prevailing wages and benefits they were owed under the New York State Labor Law.

The video: Evidence from administrative trial reveals dirty practice of contractors cheating workers out of prevailing wages.

In addition to being assessed $3.2 million in unpaid wages, interest, and civil penalties, K.S Contracting and Shah will be barred from working on NYC and state contracts for five years. K.S. Contracting was named as one of the worst wage theft violators in New York in a report by the Center for Popular Democracy in 2015.

“With President Trump taking clear aim at immigrants across the country, we need to stand up and protect the foreign-born New Yorkers who keep our city running,” Stringer said in a statement. “Every New Yorker has rights, and my office won’t back down in defending them. 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.”

K.S. Contracting was awarded more than $21 million in contracts by the NYC departments of Design and Construction, Parks and Recreation, and Sanitation between 2007 and 2010. Projects included 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.

The comptroller’s office began investigating the company after an employee filed a complaint with the office in May 2010. The multi-year investigation used subpoenas, video evidence, union records, and city agency data to uncover a kickback scheme that preyed on immigrant workers.

K.S. Contracting paysheet
K.S. Contracting paysheet (from NYC Comptroller’s office)

After a four-day administrative trial in May 2016, the comptroller found that K.S. Contracting routinely issued paychecks to just half of its workforce and then required those employees to cash the checks and surrender the money to company supervisors. The comptroller further found that those supervisors would then redistribute the cash to all of the employees on a jobsite, paying them at rates significantly below prevailing wages, and that K.S. Contracting falsely reported to the city agencies that all employees on the jobsite who received checks were paid the prevailing wage.

Between August 2008 and November 2011, the company cheated at least 36 workers out of $1.7 million in wages and benefits on seven NYC public works projects. K.S. Contracting reported that it paid its workers combined wage and benefit rates starting at $50 per hour but actually paid daily cash salaries starting at $90 per day. The majority of the workers impacted were immigrants of Latino, South Asian, or West Indian descent.

The NYC comptroller’s office enforces state and local laws which require private contractors working on NYC public works projects or those with service contracts with city agencies to pay no less than the prevailing wage or living wage rate to their employees.

When workers are underpaid, the office works to recoup the amount of the underpayment plus interest.

Since taking office in 2014, the Bureau of Labor Law has assessed more than $20 million and barred 40 contractors from state and city contracts due to prevailing wage violations, both record amounts, Stringer’s office said in the news release. The assessed violation number includes underpayment of wages and benefits with interest payable to workers, and civil penalties payable to the city treasury.