Obama Labor Dept. acts against wage and benefit theft

The Department of Labor took action this week to recover almost $1 million in back wages for construction workers in New York and forced a Georgia company to pay restitution for improper investment of union pension funds.

“The department will not hesitate to pursue legal action, including debarment, to ensure employees are properly paid under the law,” Secretary of Labor Hilda Solis said Dec. 13 after her department announced its legal action in New York.

An investigation by department’s Wage and Hour Division District Office in New York City revealed that subcontractors that employed 32 workers at public housing projects funded by the federal government violated wage and benefit requirements of the Davis-Bacon Act and the Contract Work Hours and Safety Standards Act.

The investigation found that two construction demolition companies in Brooklyn and Queens – Enviro & Demo Masters Inc. and Gladiators Contracting – had failed to pay prevailing wage rates and fringe benefits to 32 demolition workers employed by them. The companies also failed to pay the workers time-and-one-half their basic rate of pay for hours worked over 40 in a week, and submitted inaccurate certified payroll and time records.

The Department of Labor is seeking not only full restitution of all back wages due to the employees but also the debarment of Enviro & Demo Masters Inc., Gladiators Contracting Services and the owner and president of both companies, Jover Naranjo and Luperio Naranjo, preventing them from working on future federally-funded contracts for a period of up to three years,

The Davis-Bacon Act requires all contractors and subcontractors performing work on federal projects to pay their employees the proper prevailing wage rates and fringe benefits as determined by the secretary of labor. The Contract Work Hours and Safety Standards Act requires contractors to pay employees one and one-half times their basic rate of pay for all hours worked over 40 in a week.

“Wage theft is a national epidemic that robs millions of workers of billions of dollars they’ve worked for but never see,” said Kim Bobo, executive director of Interfaith Workers Justice, which ran a National Day of Action Against Wage Theft last month.

As part of the National Day, workers in Houston drove a “justice bus,” stopping at workplaces where employers engage in wage theft.

Also on that day the city of Grand Rapids, Mich., set up a new task force against wage theft, and workers in many other locations around the country filed lawsuits.

In New York State alone, employers steal more than $18.45 million a week, almost $1 billion each year, from their workers by cheating them out of minimum wages and overtime pay, according to a recent study by the National Employment Law Center. Both the New York State Assembly and the State Senate have passed the Wage Theft Prevention Act, which increases penalties for violations of state laws on wage theft. In July, Illinois enacted a similar law.

Showing it is determined to protect more than just the wages workers have coming to them, the Department of Labor also moved this week to force restoration of a pension fund that it said had been endangered by a Georgia investment company.

The department announced it had secured a court order against the Georgia firm and its owner to restore more than $1 million to a plumbers’ pension plan.

C.S. Capital Management Inc. of Atlanta, Ga., and its owner, Paul Saylor, were ordered to restore $1,090,000 to the Plumbers and Pipefitters National Pension Plan as restitution for improperly investing $25 million in risky private placement bonds. The company was also ordered to pay the same amount in fines to the federal government.

“We have adamantly denied that we have done anything that is wrong,” said Saylor, in a phone interview. “And we continue to deny that we have done anything wrong. All we were doing is managing an investment everyone knew about. This whole thing is outrageous and the only reason we are paying this money is that it is better to do that than have to fight the U.S. government.”

Photo: www.iwj.org, Interfaith Worker Justice