Payment Part of $3 Million Settlement AG, Comptroller Reached with Landlords For Underpaying Workers and Fraudulently Obtaining Tax Breaks
(New York, NY) – Attorney General Letitia James, New York City Comptroller Scott Stringer, and 32BJ SEIU President Kyle Bragg today distributed more than $400,000 in back wage plus interest to 11 building service employees who were cheated out of their prevailing wages for work at a luxury apartment building in Downtown Brooklyn. In November 2019, Attorney General James and Comptroller Stringer announced a historic $2.9 million settlement with the developers and landlords of 180 Nassau Street, Brooklyn Warehouse 180 LLC and Mica Gabe Brooklyn LLC, for willfully violating prevailing wage requirements under the New York State Section 421-a tax exemption program by underpaying building service employees and withholding supplemental benefits. The workers at the building were represented by a whistleblower 32BJ SEIU, who notified the Attorney General’s Office and the City Comptroller’s Office about the violations.
The settlement, which provided recompense for the building service employees, was approved by the New York City Department of Housing Preservation and Development (HPD), which administers the tax exemption program in the City of New York. The 11 workers received various amounts based upon their hours worked and date of hire, ranging from $5,500 to $80,000.
“There is zero tolerance for cheating workers out of their hard-earned pay,” said Attorney General James. “As a result of our investigation, we were able to secure hundreds of thousands of dollars for these workers — payment that they should have received long ago. I thank Comptroller Stringer and 32BJ for their partnership in holding these bad actors accountable and ensuring that our workers get the pay they deserve.”
“In New York City, the dignity of work matters and we will never stand idle when hard-working New Yorkers are exploited or underpaid,” said Comptroller Stringer. “Today, these 32BJ SEIU members received the wages they earned and the justice they deserve — and we’re sending a clear message to unscrupulous developers, contractors and landlords that they better follow the rules when they get millions of dollars in property tax breaks. I am proud of the collaborative effort between my office, the Attorney General’s Office, HPD and 32 BJ SEIU, which allowed us to recover these wages and put them back where they belong — in the hands of working New Yorkers to provide for their families, just in time for the holidays.”
A joint investigation conducted by the Office of the New York Attorney General and the Office of the New York City Comptroller revealed that, in 2014, defendant Mica Gabe fraudulently induced the New York City Department of Housing Preservation and Development (HPD) to issue a Section 421-a partial tax exemption for the Brooklyn property, based on Mica Gabe’s false assurance that building service employees would be paid prevailing wages, but the two defendants failed to pay the applicable wages to employees between August 2014 and March 2016. In fact, less than two weeks after certifying to HPD that they would pay the building service employees prevailing wages, Mica Gabe began hiring doormen, porters, and a superintendent for the 180 Nassau Street property and paying them wages lower than required by law.
32BJ SEIU President Kyle Bragg said: “Attorney General James, Comptroller Stringer, we thank you for upholding the law on behalf of working New Yorkers. This is a huge victory, not only for the hardworking men and women who have kept Brooklyn Warehouse clean, safe and functioning for tenants, but also for the families and communities that rely on them. The back wages will help Brooklyn Warehouse’s concierge, superintendent, doormen, porters and other building service workers get back on their feet after being grossly underpaid. This also sends a clear message to employers across the city that workers’ wages and benefits must be paid properly. It’s not an option to break the law at the expense of working people in our state.”
New York City Department of Housing Preservation and Development Commissioner Louise Carroll said: “Today, these workers who were not given their due were made whole thanks to the City and State’s joint enforcement efforts. I commend the Office of the Attorney General and the Comptroller for their work to do right by this city’s workers and ensure that property owners across New York know that if they violate the law there will be consequences.”
Section 421-a of the New York Real Property Tax Law grants tax breaks on certain new multi-unit residential buildings. To qualify, Section 421-a requires that any project receiving the tax exemption be subject to local rent stabilization laws and — where projects contain at least 30 units — requires developers to either pay prevailing wages to building service workers or set aside a number of affordable housing units.
For their violations of Section 421-a and the New York False Claims Act, the two defendants paid the full back wages to workers, along with 16-percent interest, in addition to over $2.5 million in damages to the city and state. Union 32BJ SEIU, the whistleblower that came forward to report the fraud, also received a percentage of the damages to be paid.
In connection with the November 2019 settlement, the defendants admitted to violating the New York False Claims Act, as well as a willful violation of the Section 421-a prevailing wage regulations. In addition, Brooklyn Warehouse is required to ensure that the prevailing wage regulations are followed in the future by providing the Office of the Attorney General with annual wage reports, and must show that any subsequent purchaser has agreed to comply with the prevailing wage requirements of Section 421-a.
The 10-story luxury apartment building at 180 Nassau Street in Downtown Brooklyn includes 103 luxury rental units with a 24-hour concierge-attended lobby, as well as a superintendent, doormen, porters, and other building service employees who service and maintain the property.
The Comptroller was first provided with the authority to enforce the prevailing wage requirement under Section 421-a in 2015. In 2019, the Comptroller’s Office has recovered more than $2 million in unpaid prevailing wages and benefits, plus interest, to more than 70 building service employees at a dozen tax-exempt properties. Several of those settlements stem from City-wide inspections conducted by Labor Law investigators; others were referred by 32BJ SEIU.
The Comptroller’s Office publishes a list of buildings covered by prevailing wage requirements under Section 421-a, as well as the prevailing wage and benefit rates for building service employees, on its website at www.comptroller.nyc.gov/wages. If workers believe they have been cheated out of prevailing wages, they should call the Comptroller’s confidential Labor Law Hotline at 212-669-4443 or email email@example.com.
To read more about how the Comptroller’s Office sets and enforces prevailing wage and benefit rates, please click here (https://comptroller.nyc.gov/services/for-the-public/nyc-wage-standards/wage-schedules/).