Comptroller Lander, Attorney General James, and 32BJ Recover $3 Million from Real Estate Developer for Underpaying Workers
Heatherwood Underpaid Workers at Buildings in Brooklyn and Queens Despite Receiving 421-a Tax Credits.
Workers Will Receive More Than $723,000 in Unpaid Wages and Benefits.
NEW YORK – New York City Comptroller Brad Lander, New York Attorney General Letitia James, and 32BJ SEIU recovered $3 million from a luxury residential property developer for denying workers prevailing wages and benefits. Heatherwood Communities LLC (Heatherwood) received tax exemptions on two of its New York City rental properties located in Queens and Brooklyn under the city’s 421-a program but failed to pay prevailing wages and benefits to building service employees, as required under the tax credit program. As a result of today’s agreement, Heatherwood will return $723,324, the full amount owed plus interest, to 24 workers and pay a penalty to New York City and New York state for violating the conditions of the tax credit program.
“Workers are the backbone of New York, and they deserve fair pay and benefits for their hard work,” said Attorney General Letitia James. “These individuals worked day and night to make ends meet but were denied their hard-earned money. Paying workers fair wages and benefits is not a luxury, it’s the law and Heatherwood cheated these workers and taxpayers. Today, two dozen workers will get back wages they earned but were unjustly denied. I thank Comptroller Lander and 32BJ for their collaboration on this effort to hold bad actors accountable and protect everyday New Yorkers.”
“Together with Attorney General James and 32BJ SEIU, we are sending a strong message today: New Yorkers have zero tolerance for developers who cheat New York and its workers out of their hard-earned wages. Not only did Heatherwood reap tax benefits under false pretenses, they denied hard working New Yorkers the compensation they were due for their labor. I’m grateful to the staff of our Bureau of Labor Law for their diligent work to ensure that these workers will get the money they are owed, to 32BJ SEIU for sounding the alarm on Heatherwood’s violation of our prevailing wage standards, and for the partnership of Attorney General James to ensure this wrong was righted,” said Comptroller Brad Lander.
“This $3 million settlement’s importance goes beyond the dollar amount,” said Kyle Bragg, President, 32BJ SEIU. “We are sending a clear message to owners and developers like Heatherwood that they cannot enjoy the benefits of our city’s tax exemptions if they can’t meet their basic responsibilities to their workers. 32BJ SEIU thanks Attorney General James and NYC Comptroller Brad Lander for their partnership in this crucial fight. Together, we have won a crucial victory for not only our members but working people across the state.”
“I am a working person, and I expect my employer to pay me what was promised,” said Francisco Giuliano, a worker at a Heatherwood building. “Underpaying workers is not just wrong. It throws lives into chaos. The money I am receiving will provide me with financial stability and justice. I want to thank AG James, NYC Comptroller Brad Lander, and 32BJ SEIU for ensuring that companies like Heatherwood can’t act like they are above the law.”
“This settlement means so much to me and my fellow workers!” said Elizabeth Hernandez, a worker at a Heatherwood building. “All we were demanding was the pay Heatherwood owed. As important as this money is to me and others, it’s about more than that. We stood up against Heatherwood because what they were doing was wrong. All workers deserve dignity and respect. I want to thank God, 32BJ SEIU, Attorney General James, and NYC Comptroller Brad Lander for standing with us in this fight!”
“I have two children and am single,” said Katherine Bustamante, a worker at a Heatherwood building. “By underpaying workers and denying us benefits, Heatherwood made it harder for us to provide for our families. I want to thank God, Attorney General James, NYC Comptroller Lander, and 32BJ SEIU for fighting for working parents like me. Thanks to this money, I will be able to support my kids.”
An investigation led by the Office of the Attorney General (OAG) found that over the course of two years, Heatherwood failed to pay building service workers prevailing wages and benefits at one building in Queens and one in Brooklyn. The buildings – 27 on 27th in Long Island City and 568 Union in Williamsburg – boast yoga areas, furnished rooftop terraces, fitness centers, children’s playrooms, and even a movie theater in one building.
Heatherwood applied for partial tax exemptions under New York’s 421-a tax incentive program administered by the New York City Department of Housing Preservation and Development (HPD). Under the 421-a tax credit program, developers are granted tax breaks, with certain conditions, on new multi-unit residential buildings. To qualify, any project receiving the tax exemption must be subject to local rent stabilization laws, and for buildings with at least 30 units, developers are required to either set aside a number of affordable housing units or pay prevailing wages to building service workers. Developers are required to comply with prevailing wage rules, which determine the wage and benefits payable to building service workers according to schedules issued by the New York City Comptroller.
As part of its applications for the tax exemptions, Heatherwood told HPD that it would pay its building service employees prevailing wages. At the time, the prevailing wages plus benefits amounted to a range, depending on seniority and title, of roughly $22 to $26. Heatherwood paid janitorial and concierge workers at 568 Union Avenue only between $9 and $14 per hour without benefits, and paid workers at 27-03 42nd Road only between $8.50 and $15, also without benefits. These amounts were roughly 41 percent of what workers should have received.
As a result of today’s agreement, Heatherwood will return $723,324.33, which includes 16 percent interest, to 24 workers, and pay the city $1,146,196 and the state $686,527 in penalties. Heatherwood is also required to continue paying building service employees the prevailing wage.
The Comptroller’s Bureau of Labor Law conducted the prevailing wage part of the investigation and will notify workers of this agreement and issue their checks.
This case was brought pursuant to the New York False Claims Act (NYFCA), by a whistleblower suing on behalf of New York state. As the whistleblower who alerted OAG to this situation, 32BJ SEIU will receive a percentage of the proceeds paid as part of the settlement.
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