NYC Comptroller’s Office Secures $500,000+ Settlement from Construction Firms for Wage Theft and Payroll Fraud
New York, NY – New York City Comptroller Brad Lander successfully reached a settlement of $516,500 with four prime contractors—D&K Construction Co., Geomatrix Services, Gridspan Corp. and Volmar Construction—implicated in cases of wage theft and payroll fraud. All public projects require contractors and subcontractors to comply with the prescribed prevailing wage rate, which defines the mandated compensation for labor on public endeavors.
The investigation originated from an accident that occurred in August 2015, when Sphinx Construction served as a subcontractor for the New York City Department of Education (DOE). During construction work at P.S. 195 in the Bronx, a worker fell from a ladder, sustaining rib injuries that required a five-day hospital stay. DOE referred this case to the Comptroller’s office upon discovering the absence of the injured worker in the submitted payroll reports.
The investigation, beginning in May 2022 and ending in April 2023, confirmed suspicions of payroll fraud and wage theft conducted by Sphinx Construction at 19 different projects at public schools around New York City between 2014 and 2016.
Despite Sphinx Construction disappearing and failing to cooperate throughout the investigation, prime contractors remain legally accountable for their subcontractors’ violations under New York labor law. Consequently, Comptroller Lander pursued legal action against D&K Construction Co., Geomatrix Services, Gridspan Corp. and Volmar Construction.
“Our city and its projects cannot allow predatory businesses to violate labor rights or deprive workers of their rightfully deserved wages,” said Comptroller Brad Lander. “With the restoration of over $516,500 in unpaid wages, New York sends a powerful message to Sphinx Construction and other companies committing wage theft that every worker must be treated with dignity.”
Under New York State law, the New York City Comptroller sets and enforces prevailing wage law for public works projects and building service work on New York City government-funded work sites. Section 220 and Section 230 of New York State Labor Law sets out how prevailing wages shall be determined.
“A lot of workers don’t know about their rights, and I think because prevailing wage can be a little bit complicated, it gives employers more opportunities to get sneaky,” said Claudia Henriquez, Director of Workers Rights. “When workers are employed on public projects, they need to be getting paid the prevailing wage, but sometimes what employers will do is pay the workers $25 an hour, which is more than minimum wage but lower than the prevailing wage.”
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