Contractors and Subcontractors Beware! Following a Department of Labor (DOL) investigation into payment practices on two federally funded construction projects in Manhattan: the Ciena Project on East 100th Street and the Hobbs Court Project on 102nd Street, and the institution of debarment proceedings against the general contractor, Lettire Construction Corporation (Lettire), and several of the subcontractors on the project for multiple violations of wage and hour laws, the DOL and Lettire recently entered into a settlement that imposes numerous requirements and responsibilities on Lettire going forward. Subsequent to the DOL investigation, a class action was filed against the general contractor Lettire by the employees that remains pending in the Southern District of New York.
The DOL Investigation -
The DOL examined the entire project, including project surveillance of the practices of both the contractor and the various subcontractors. Importantly the DOL found that the general contractor had failed to adequately monitor its lower-tier subcontractors to ensure that lower-tier subcontractors complied with prevailing wage and overtime requirements. DOL investigated 23 of the subcontractors performing work on the projects and concluded that 16 of them were in violation of wage and/or overtime laws. Violations included subcontractors failing to pay the prevailing wages and overtime compensation, providing inaccurate or falsified payroll records to the government, failing to keep accurate records of hours worked, failing to pay employees for all hours worked, and improperly classifying workers on the project resulting in underpayment of wages and fringe benefits. The investigation also revealed “under-bidding” by at least one second-tier subcontractor and that the general contractor failed to post required wage decisions at the work site. In total, the DOL found that 290 subcontractor employees were due $1.4 million in back wages.
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