New York City Comptroller William C. Thompson, Jr. announces a settlement of nearly $1.5 million to 16 workers on City projects at a news conference on Thursday, February 16, 2006.

View Bankruptcy Court Decision
View Labor Law Rights Flyer
Ver el comunicado de prensa en Español (View release in Spanish)

Comptroller William C. Thompson, Jr. today announced that his office has reached a settlement in which Netexit, Inc. has paid nearly $1.5 million to 16 employees who were underpaid for work at Human Resources Administration sites throughout the City.

The workers ran, installed and repaired telephone and data cables at 49 Human Resources Administration (HRA) offices in the five boroughs for more than two years. Thompson maintained that the workers were paid significantly less than the City's prevailing wage.

The Comptroller enforces New York State laws that require private sector contractors engaged in City public work projects to pay no less than the prevailing wage to their employees.

Thompson was joined by labor leaders, contractor representatives, and several of the affected workers at a news conference to announce the settlement. The company recently paid the City the nearly $1.5 million, which is now being distributed to the 16 workers.

"Most contractors are honest and law-abiding, but there are those who knowingly fail to pay workers prevailing wages, money these workers have earned and rightly deserve," Comptroller Thompson said. "There is a reason that prevailing laws are in place: to ensure that people are paid fairly and equitably. In this case, Netexit willfully took advantage of its workers and clearly violated the law."

"The labor movement applauds Comptroller Thompson for his vigorous enforcement of our city's prevailing wage laws and his courage to continually stand up for working people against seedy business interests," said Brian McLaughlin, President of the New York City Central Labor Council, a chartered body of the AFL-CIO representing more than 1.5 million workers and encompassing nearly 400 local unions from every trade and occupation in the public and private sectors of the New York economy.

McLaughlin continued: "These 16 skilled electricians deserved a fair wage for a fair days work.  When a contractor such as Netexit undermines wage and labor standards, everyone suffers. The underpaid worker suffers.  The skilled and trained workers of legitimate contractors suffer. The legitimate contractors suffer. And the taxpayer suffers.  Paying the prevailing wage means developing and maintaining economic empowerment and job opportunities for working families.  These laws, which were hard fought for, keep our city's economy strong, construction quality high, and create good jobs that working families can live on."

"Quality construction depends on well-trained workers. Contractors who pay prevailing wages ensure that their employees are highly skilled and know how to work safely and productively," said Edward J. Malloy, President of the Building and Construction Trades Council of Greater New York, an association of more than 50 local construction unions in the City representing 100,000 members. " Comptroller Thompson has demonstrated that workers' voices will be heard when it comes to prevailing wages, and we commend the Comptroller's Office for pursuing this case."

"Comptroller Thompson is to be commended for his vigorous enforcement of a law designed both to protect the rights of workers and the taxpayers of New York City," said Louis J. Coletti, President and Chief Executive Officer of the Building Trades Employers Association, which represents 1,500 union contractors in the City and employs 25,000 project management personnel as well as the 100,000 members of the building trades. "This enforcement is a message to contractors that the hard-earned tax dollars spent on construction projects will be spent in a way that fosters competition and provides the public with the quality projects they deserve."

The case stems from work performed by Netexit, Inc., formerly known as Expanets, Inc., of Berkeley Heights , New Jersey . In 2001, HRA awarded a $22.5 million contract with Expanets to perform telecommunications maintenance and support services. From June 2001 to August 2003, Netexit paid the 16 workers an unauthorized "technician's rate" - $12-18 per hour - with little or no overtime or benefits.

In December 2002 , International Brotherhood of Electrical Workers Union Local 3's Business Representative Raymond West notified the Comptroller's Office that Netexit was underpaying workers. The Comptroller's Office enforces State laws on prevailing wage rates.

The Comptroller determined that according to the current prevailing wage schedule, the workers performed the duties of an "electrician," which required payments of up to $41 per hour in wages plus benefits.

However, Netexit filed for bankruptcy in United States Bankruptcy Court for the District of Delaware in May 2004, arguing that the Comptroller could no longer pursue an investigation against it regarding the prevailing wage issue. Thompson countered that his office was still empowered to pursue the money . In May 2005, the court ruled in favor of the Comptroller.

As a result of that decision, Netexit subsequently agreed to pay the full underpayment of $1,485,475. The Bankruptcy Court approved that settlement in December 2005, and soon after, Netexit fully deposited the money into the Comptroller's trust and agency account.

Additionally, Nu-Vision, a firm with several of the same principals as Eagle Expanets, the original contractor on the underlying HRA contract, agreed to pay the civil penalty fine of $148,547. In paying the civil penalty fine, Nu-Vision avoided litigation that may have tied it to the violation.

"We commend Comptroller William C. Thompson, Jr. for his patience and diligence in pursuing this case and for correcting this blatant injustice," said Thomas Van Arsdale, Business Manager for International Brotherhood of Electrical Workers Local Union No. 3. "We would also like to remind each and every state and city agency that awards jobs that they, too, have a responsibility to ensure that the prevailing wage laws are complied with on their jobs. It is our hope that this settlement will deter others from exploiting the hardworking men and women of New York ."

"The action that the New York City Comptroller took by aggressively pursuing this case on behalf of the workers delivers a strong and important message to contractors who would otherwise cheat workers out of wages that they duly deserve," said Edwin Lopez, Executive Secretary of the New York Association of Electrical Contractors. "This case's conclusion should remind contractors that if they do not adhere to prevailing wage rates, they will be tracked down and forced to pay. We commend Comptroller Thompson and his Bureau of Labor Law for ensuring that Netexit paid no less than the prevailing wage to these workers, who are finally getting their due."

The $1.5 million represents the largest prevailing wage settlement reached by the Comptroller's Office during Thompson's tenure in office. Over the past four years, Thompson's Bureau of Labor Law has successfully resolved 611 prevailing wage cases, previously collecting more than $4.4 million in underpayments and more than $370,000 in penalty fines.

You can view the court decision and stipulation of settlement at the Comptroller's web site: www.comptroller.nyc.gov . Please contact Marla S. Maritzer at (212) 669-2597 or mmaritz@comptroller.nyc.gov for photographs of the sites and news conference.