Is this the Beginning of the End of Construction Corruption?

The new and improved Wage Theft Law will improve much of what's wrong in the construction industry today. Is it the start of a long-overdue correction?

Governor Kathy Hochul signs the Wage Theft bill into law before an audience of labor and government representatives. The law allows prime contractors to be penalized when the companies they hire commit wage theft – giving teeth to a once weak law.

On Labor Day New York Governor Kathy Hochul signed State Senate bill 2766c, also known as the Wage Theft bill, into law. While this development is very positive for the working people of New York City who have been getting ripped off by greedy developers and contractors for years, is this good turn simply a one-off, or is it the beginning of a larger, long-overdue correction?

What’s the Wage Theft Law and What Does it Correct?

Unscrupulous builders have won contracts to erect large New York City buildings by offering low bids to developers. One way they lower those bids is by paying their staff below-market-value wages, or not paying them overtime, or not paying them for all the hours they work, or unilaterally deciding to cut their workers’ hourly rates.

All of these activities qualify as wage theft, which is illegal, and too many New York contractors are guilty of it. $20 million is stolen from New York City workers in this way every single week.

Why would contractors flout existing law? New York City Councilmember Francisco Moya, summarizes it bluntly, “Because they can… The laws have been weak, and the prime contractors have been insulated from penalties.”

A prime contractor is the company responsible for the day-to-day oversight of a construction site, management of vendors and trades, and the communication of information to all involved parties throughout the course of a building project. But when wage theft occurs, it’s perpetrated by a lower-level contractor that has been hired by the prime contractor. As New York law prohibited prosecution of employers for the acts of their employees, the prime contractors were sheltered from wage theft prosecution – even when they knew how their hired contractors were abusing workers to save them money.

The new law, introduced and championed by State Senator Jessica Ramos, holds those prime contractors liable to pay steep penalties when the people they hire commit wage theft.

Another way many builders got away with this crime is the fact of who they victimized. No union will put up with its members being abused in this way. So, bad-acting contractors hire non-unionized labor, many of whom are in New York as undocumented immigrants with trade skills trying to get a foothold. They feel lucky to get a paying job. The last thing they want to do is bite the hand that’s feeding them and their families, even when that hand is stealing from them.

As a result, much of the wage theft in construction goes unreported, a fact that these contractors seem to rely on.
 

When Contractors Steal Worker Wages, We All Lose

So, the bosses kept the profits. The developers got their low bids fulfilled. And the worker paid the price for all of it. And so did the rest of us.

We got buildings made by people who are less-trained and less-well-equipped than their union counterparts. Union members make it through years-long apprenticeships and must log many hours of safety and skills training every year. But we have no way of knowing who is working for a non-union shop, what their skills or experiences are. We must also assume the same about the quality of their workmanship — how can we know?

Meanwhile, everyday citizens like you and me, are left to make up the lost tax revenues and pay higher health insurance premiums because of that $20 million of legitimate wages being stolen every week from construction workers. It’s being stolen from us too.

Another ironic result of wage theft is that qualified union members lose work as projects go to less-skilled open-shops. At a time when enormous building projects are popping up all over the city, too many union tradesmen are under-employed, which has a huge financial impact on New York communities.

There Is More To Do

The Wage Theft law will hopefully take one tool away from malfeasant contractors and the prime contractors who hire them. But bad actors will no doubt fall back to other tools in their cost-cutting arsenal, like skirting safety regulations, deceiving inspectors and skimping on the quality of materials – all these actions affect the quality of the building you rent, live, or work in.

That’s why Councilmember Moya says there’s still more to do. “If we’re really serious about real reforms in the construction industry. If we really want to go after these unscrupulous contractors. Then it’s time to step up and pass Carlos’ Law.” This law is named for 22-year-old Carlos Moncayo who died on a Sky Materials Corporation construction site that had a long list of unaddressed safety violations. After being found guilty in Mr. Moncayo’s death, that construction company was fined just $10,000.

Like the Wage Theft law, Carlos’ Law would allow prosecutors to seek much higher penalties – up to $1 million – from the contractors found guilty of homicidal negligence. The law has passed the NY Assembly but has been stuck in the Senate since 2017. Councilmember Moya says, “This is the moment. Right now. It’s a winnable fight.”

Indeed, there is still more to do. Is the Wage Theft Law just the beginning? Let’s hope.

Bill 2766c, the Wage Theft Bill, passed the Assembly and reached the governor's desk amid the turmoil surrounding Governor Andrew Cuomo regarding harassment allegations. But shortly after he resigned, Governor Kathy Hochul took up the bill and signed it into law on Labor Day.

The old wage protection laws were toothless. The new law holds prime contractors liable to pay steep penalties when the people they hire commit wage theft.

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