Officials say some Sandy cleanup workers were underpaid

November 9, 2013 

State labor law governing how cleanup crews should be paid was repeatedly violated in the chaotic aftermath of superstorm Sandy, potentially depriving hundreds of workers of hundreds of thousands of dollars in wages and benefits, officials said. 

The losses occurred when some cleanup contractors and subcontractors responding to the disaster failed to pay New York State-mandated wages, required for certain types of work performed for municipalities, governmental agencies and other public entities, records show. 

111113.jpgIn addition, local governments' role in interpreting the law and the state's own conflicting signals helped foster an environment where the wage requirements were not always followed in the weeks and months after Sandy, experts and officials said.

"There's a practical consideration for us locally," said state Sen. Kemp Hannon (R-Garden City), who wrote in July to Peter Rivera, the commissioner of the New York State Department of Labor, urging speedy resolutions for workers. "If we mistreat workers this time, who will come to help us after a disaster, what do we do next time around?"

Sandy destroyed or damaged more than 50,000 Long Island homes, caused an estimated $8.4 billion in property and economic losses, and left in its wake more than 3 million cubic yards of debris. 

Removing that debris cost taxpayers more than $300 million in the 12 months since the storm, $270.8 million from the federal government.

To do the cleanup, the state, counties, towns and various local agencies hired contractors, some of whom hired subcontractors from other parts of the country.

In one example, workers hired to clear the Long Island Rail Road tracks of trees and debris were paid at barely a quarter of the hourly rate and benefits called for under state law. They were underpaid further on overtime to which they were legally entitled, according to their pay stubs and the state wage schedules. 

Four of these workers — from Texas, Philadelphia and Kansas — await a hearing before a labor department administrative law judge this week, more than a year after Sandy hit, in a bid to secure what the department has estimated they are owed: about $60,000. The four were part of a crew of around 20 working for a Topeka, Kan.-based firm, Custom Tree Care, which was hired by Looks Great Services of Huntington. Workers have two years from their last date worked to file a claim with the department.

An additional 40 workers, employed by another dozen contractors, had received more than $113,000 in back wages and benefits by late August after post-Sandy wage verification investigations on Long Island by the state labor department, according to officials and records. 

Suffolk DA investigates

Local prosecutors also continue to investigate whether workers were paid the proper prevailing wages, which are based on what is paid to union members in the locality where the work is performed, for Sandy debris removal.

In Suffolk, the district attorney's office so far has investigated "a couple of hundred" prevailing-wage cases related to Sandy — more than four times the caseload of an average year, officials said.

Several potential prosecutions have been identified but it is possible they could be settled with back wages and benefits paid to workers, said Suffolk County Assistant District Attorney Christopher Nicolino. 

The Nassau County district attorney's office has investigated 16 Sandy contractors and found violations in seven cases with about $424,000 in wages owed to workers, said Shams Tarek, a spokesman for District Attorney Kathleen Rice. 

Tarek described Sandy prevailing-wage violations as "crimes of opportunity" fueled by huge amounts of federal aid. He said the district attorney anticipated both civil restitutions to workers as well as prosecutions of contractors.

"We won't tolerate unscrupulous businesses cheating workers on Long Island," said Rice. "Whether it's after a major disaster like Sandy, or during any other time of year."

Suffolk District Attorney Thomas Spota said his office's investigations and reviews of records from five towns show state labor law is too complex and open to interpretation. 

"I don't think anybody in municipal governments really understands . . . what prevailing wages are," he said. "Because the law is so ambiguous."

Law passed back in 1894

The confusion was widespread. Newsday's examination found:

The state's prevailing-wage law, passed in 1894, covers different facets of public work with different record-keeping requirements that more than a century later do not clearly apply in the wake of a natural disaster. The law is also open to interpretation, experienced labor lawyers and municipal officials say, enabling different responses between governments.

The state Department of Labor sowed widespread confusion among governments and contractors about the meaning of prevailing-wage law during the Sandy recovery, when and if it applied, and what kinds of work it covered. In 2011 in the wake of Hurricane Irene, a labor department official told a local contractor that tree trimming and tree removal along the roads weren't covered by New York's prevailing-wage laws; in May, the same official wrote to Suffolk County that any items "deconstructed" to clear the roadways, including trees, are covered by Article 8 of state prevailing-wage law — but sand removal isn't. 

The two counties followed different paths, with Suffolk County's two largest debris cleanup contractors, Tennessee-based Phillips & Jordan and Plainview-based Grace Industries, paying workers prevailing wages, while in Nassau, officials determined tens of millions of dollars paid to its largest contractor, Looks Great Services, did not fall within prevailing-wage requirements. 

Towns in both counties took different positions, with Islip and Smithtown in Suffolk hewing to the law, while Huntington did not comply with the law because it did not require some cleanup contractors to supply certified payrolls. At least two Nassau municipalities, Hempstead and Long Beach, piggybacked on the county's Looks Great Services agreement and thus did not require prevailing wages for that contract.

Flaws highlighted by the Sandy cleanup experience need addressing, said state Sen. Phil Boyle (R-Bay Shore), who plans to propose changes when the State Legislature convenes in January. 

"I'm expecting strong bipartisan support," Boyle said. "The state's labor law, as it is currently written, is inadequate."

Hannon agrees. "If you're in an emergency situation as a municipality, there's no clear, cookie-cutter solution under labor law for the cleanup," he said. "And if, in the aftermath of such an emergency there's only criticism, municipal officials may be hesitant to act next time. So it's necessary for us to take a look at what happened after Sandy, see what didn't work, and try to set some reasonable parameters next time." 

Municipalities must instruct contractors what prevailing-wage requirements apply when a contract is competitively bid. Immediately after Sandy, while many governments on Long Island passed emergency declarations that enabled them to suspend normal competitive bidding requirements, at no time was state prevailing-wage law waived. The wage law itself does not make any allowance for emergency situations. 

Told he'd get $20 an hour

Sean Cottrell was out of work when he signed up — on the hood of a car in a Topeka parking lot — to work the Sandy cleanup on Long Island, just days before the massive storm system struck the Northeast. 

Cottrell, 45, made the three-day trip with other employees of Custom Tree Care. As they traveled, the firm's supervisor, a cellphone pinned to his ear, hustled for work. On the second day, Cottrell said he was told he'd be earning $20 an hour and would work to clear debris from Long Island Rail Road property. 

By the fourth day, he was working sunup to sundown dragging trees from railroad tracks across Long Island and sleeping on a cot at a Red Cross shelter in a Levittown high school gymnasium. He was among 20 workers hired to clear the tracks when Looks Great Services subcontracted Custom Tree Care for the work.

At week's end, his first paycheck showed he'd earned $10 an hour, with $15 an hour for overtime. 

"I thought, 'Hell, no!' " Cottrell said. "I went to the Custom Tree foreman and said, 'I can make $10 an hour, more than that even, at home.' That really hurt me."

William Moore, of Orange, Texas, worked alongside Cottrell. Also unemployed before Sandy, Moore, 41, hoped he'd earn as much as $2,000 a week. Instead, his first full week's check was for $850. 

"I lost a lot not getting paid right," Moore said this summer from Evanston, Wyo., where he moved for work after Sandy. "I'm just now getting my head back above water."

Greg Gathers, CEO of Custom Tree Care, declined to be interviewed for this story.

The two men joined Philadelphia resident Salaam Saffiy, 46, and Aaron Mathis, 34, of Topeka, in filing complaints with the state labor department in December. On Nov. 13, two weeks after Sandy struck, the men had learned through an email from Matthew J. Myers, the labor department's regional supervisor for public works, that state prevailing-wage rates applied to their work. 

Myers sent the men the appropriate pay rate in an attachment: tree trimming and line clearance on the LIRR merited $28.63 per hour with $13 an hour in supplemental benefits.

"I got messed over in New York," Moore said recently. "Honestly, if I had to do it again, I wouldn't."

Guidance was sought

In the days and weeks after Sandy, some local governments across the region sought guidance from the state labor department on the issue of prevailing wage for the cleanup and repairs. Between Nov. 1, 2012, and Jan. 1, 2013, the department's public works bureau received and processed 316 requests for wage schedules from Long Island towns, villages, counties and other public entities. By late August, the department had overseen reimbursements to 40 Sandy workers totaling $113,259.87. They ranged from a few hundred dollars per worker to $31,973 to a single worker. 

New York labor law, articles 8 and 9, requires prevailing wages for two kinds of public works contracts: construction and building service contracts.

There is a key difference between the two: Municipalities entering into construction contracts are required by law to collect, verify and sign certified payrolls from contractors. An official who knowingly disregards these duties could be guilty of official misconduct under state criminal law. This requirement assists investigators in detecting fraud. 

For building services contracts, municipalities aren't required to collect certified payrolls, but a contractor must.

Through the years, interpretations have varied over what types of work must pay prevailing wage.

In a Nov. 1, 2011, email, Myers wrote to the head of Looks Great Services, Kristian Agoglia, under the subject line, "Emergency Tree Trimming Info," that tree trimming and removal — the very same work the four Custom Tree Care employees had done for the LIRR — was not covered by state prevailing-wage laws.

"Tree Trimming and Tree Removal along the roadways & byways related to Hurricane Irene is NOT COVERED," he wrote.

But in another email to Suffolk County officials, subject-lined "Coverage on Sandy," dated May 8, 2013, Myers took a different stand: "Any items that must be 'deconstructed' to clear the roadways and byways ARE covered by Article # 8 (i.e., tree(s), housing, etc)." In this email he said sand removal was not covered. Snow removal also is not covered.

Interviews with a number of regional officials show Myers' first email fanned ambiguity as to whether tree removal after Sandy required payment of prevailing wages. That ambiguity made it harder for prosecutors in both counties to bring a larger number of cases, sources said. 

Nassau relied on email

Nassau County relied on the 2011 email as justification that Looks Great's work for the county after Sandy was not covered by prevailing-wage laws, according to a legal opinion written in April and provided to Newsday by county Attorney John Ciampoli.

The labor department declined to allow Myers to be interviewed for this story. Agoglia declined requests to be interviewed. Looks Great Services has repeatedly stated its view that its agreement for cleanup work with Nassau County was not subject to prevailing wage based on the November 2011 Myers email.

The department acknowledged that the law as written does not have the scope to cover all facets of work necessary in a storm cleanup. For example, asked to explain how the law applies to road-clearing after a storm, the department's spokeswoman, Jennifer Krinsky, said contracts to clear storm debris from public roads are not subject to prevailing-wage requirements. She cited an exception: "where the task is incidental to a contract that is subject to prevailing wage."

She said the department's position on tree trimming and removal didn't change between Myers' email of November 2011 and the aftermath of Sandy. "It has been and remains that tree trimming and tree removal contracts are subject to Article 8," Krinsky said. However, "incidental" tree trimming performed under a storm debris removal contract is not subject to prevailing-wage law, she said.

The DOL routinely conducts investigations after referrals from agencies or complaints from workers and provides information and educational outreach to public entities, contractors, labor organizations, workers and other interested parties, Krinsky said.

Few should be surprised that state labor law is "messy" on prevailing wage because interpretations of the law can be framed by politics, Ciampoli said.

"Labor law in general is one of the most political, if you will, areas of law," he said. "There are constant changes of direction and policy depending on what administration is running the show." 

Saul Zabell, a Bohemia attorney who specializes in labor law, said that prevailing-wage matters are influenced by politics — particularly trade union support. 

"Unions can only be competitive if the Department of Labor is taking a hard line," Zabell said, noting prevailing-wage rates mirror construction union pay scales.

The purpose of prevailing-wage laws is to encourage municipalities to use a better-trained local workforce to ensure that public works projects are built properly and a community's standard of living is protected, experts say.

"These laws were originally promulgated to protect against local job loss to out-of-state contractors," Spota said. "We have a higher standard of living here on Long Island, and in general in New York State, that can be used against us when you have out-of-state contractors coming in who pay their workers lower wages, who are less trained, who don't do the same quality work, and all that government money is going out of state." 

Changes after subpoenas

A number of local governments that did not follow prevailing-wage laws abruptly changed course when subpoenas were issued by the district attorneys' offices last spring. In addition, Spota in May summoned five Suffolk town supervisors and their attorneys to his office to underscore municipalities' obligations under the law.

Some governments and public entities that piggybacked on the Nassau Looks Great Services agreement, including Huntington, Hempstead and the LIRR, then suspended millions of dollars in payments to the company. The firm has filed suits demanding payment from several entities. Officials confirmed the Department of Labor ordered the LIRR to withhold payment. Barry L. Kluger, MTA's inspector general, said, "We can confirm that there is an ongoing investigation between the MTA Office of Inspector General and the district attorneys in both Nassau and Suffolk counties.'' 

Pushed by the subpoenas, post-Sandy reforms are underway in two towns, Huntington and Brookhaven, that acknowledge they did not meet obligations under prevailing-wage law.

"I do believe that the town was proceeding along the lines . . . that prevailing wage didn't apply," said Huntington Town Attorney Cindy Elan-Mangano, who took office in January. 

In an about-face, Huntington officials last spring required nine of the town's more than 50 Sandy cleanup vendors to supply certified payrolls, Elan-Mangano said. Deputy Town Attorney Jacob Turner, hired in April, said: "Cindy is going over what we did in Sandy and making sure we're in full compliance going forward." 

The town sought payroll from the nine because they were the only vendors as of late April to which it still owed money, said spokesman A.J. Carter. As of Oct. 15, only one vendor had complied and the town is still withholding payment from the remaining eight, including $781,697.91 from Looks Great Services.

Future storms will be handled differently. The town board in September voted to authorize 10 emergency debris removal contracts that specify prevailing-wage rates. Looks Great Services won three of them, Carter said.

"I think there have been a lot of lessons learned . . . we have learned now how best to handle it," Elan-Mangano said. 

Brookhaven officials say the administration was unaware that prevailing wage applied when Sandy hit. The town board passed legislation in June that requires private operators of heavy equipment hired by its highway department to pay rates in line with prevailing wages in future storms. The town had engaged some private vendors who were paid rates too low for some of the Sandy cleanup work, officials said. 

"We all like to pay lower price, but the law is the law and needs to be respected by the Town of Brookhaven," said Supervisor Edward P. Romaine, who took office a month after the storm. "I'm committed to honoring our state prevailing wages — it's the right thing to do. It's expensive to live and work here and we need to pay wages that make sure people can continue to do that." 

Sought to leave no doubt

In contrast, Islip Deputy Town Attorney Mike Walsh was clear right after the storm: all cleanup work paid for by the town would be covered by state prevailing-wage law requirements.

"I was there in the town emergency operations center as we were trying to get the cleanup operation up and running and departments were asking, 'Do we pay prevailing wage?' And I made it clear — 'You bet we do.' " 

Walsh, who formerly worked in the Suffolk district attorney's office, said he told anyone giving him pushback: "My job is to keep the DA out of our town. It's absolutely covered by state prevailing-wage law." 

The two counties also are a picture of contrast in how they enforced the law.

In Suffolk, Sandy cost the county about $21.8 million, $17.5 million of which went to two debris-removal firms, Phillips & Jordan of Tennessee, and Grace Industries from Plainview, officials said.

Suffolk's two contractors "played by the rules" regarding state prevailing-wage laws, Comptroller Joseph Sawicki said.

However, around $55,000 in additional wages was later paid to five employees of one subcontractor who were mistakenly paid according to the federal prevailing-wage rate, instead of the higher New York State rates, Sawicki's audit staff said. 

The county's Department of Public Works did "an excellent job" of ensuring certified payrolls were supplied by all Sandy cleanup vendors, Sawicki said.

Even so, the county's department of audit and control will recommend standardized language in the contracting process with future debris removal vendors so that obligations under prevailing-wage law are clearly stated, Sawicki said.

While Suffolk determined almost all its debris cleanup was covered by prevailing-wage law, Nassau ruled the work of its largest debris removal contractor — Looks Great — was not because it contends prevailing-wage law does not apply to the firm's contract.

Asked why some workers were paid as little as $10 an hour to clear debris in his county, Ciampoli said: "It is not a question of whether it is acceptable to us, it's a question of whether or not it's legal." 

He added: "I assume it met the minimum wage requirement, then it would be legal." Still, Ciampoli said, "the ultimate determination of whether prevailing wage applies, in the criminal setting, is the matter appropriately before the DA."

LI group sought assurance

Marc Herbst, the executive director of the Long Island Contractors Association, reached out to state officials on Nov. 8, 10 days after Sandy struck, to seek clarity that prevailing-wage laws would be followed. If they weren't, he feared, the economic impact on his members, their employees and their families would be profound as local contractors were undercut.

"Most informal responses from various government officials to the question whether prevailing-wage rates will be honored have been 'I think so.' Obviously, we need something more concrete," he wrote in a Nov. 8 email.

Herbst received an unequivocal response from the Office of the State Comptroller. "Prevailing-wage rates will be honored based upon local law and NYS law. If the local government is required to pay prevailing wage then prevailing-wages rates will be reimbursed," came the same-day response from Kathleen McCormack, assistant comptroller of labor affairs in Albany.

"Without a doubt, Sandy magnified the issue of prevailing-wage enforcement for us in the local construction industry," Herbst said, adding that his members depend on a level playing field for wages.

"As it stands, the municipalities all have a different process — there's no oversight nor consistency applied to enforcement — and that's the problem," he said.

Overhaul sought

State labor law was last reformed by the legislature in 2008, and those who know it well and how it played out on Long Island after Sandy say it must be overhauled.

Thomas Walsh, an attorney with 27 years' experience in labor and employment law, said municipalities' sometimes laissez-faire approach to prevailing-wage obligations can end up hurting the contractor that wins the work. 

"The problem is, if the municipality is not crystal clear on telling contractors with which it is bidding that a job is, or is not, prevailing wage, the law puts all the penalty on the contractors for making the wrong decision," Walsh said. "The municipalities should be completely upfront about prevailing-wage requirements."

Experienced contractors who regularly do big public projects are well aware of their responsibilities, but problems occur when work — such as storm cleanup — "is not on its face plainly public work meriting prevailing wage," he said.

"Cleaning sand off Long Beach streets, picking up downed trees off roads immediately after Sandy, a contractor may not be sure on those gray areas," said Walsh. "The municipality had a responsibility when they put the bid out ... to seek guidance from the DOL." In the absence of that, contractors would be wise to seek department guidance themselves, he added.

As for what happened during Sandy, Spota, the Suffolk district attorney, said: "There's no question some municipalities aren't fulfilling their obligations under the law. And that's not necessarily because they're deliberately flouting the law. In a lot of cases, it's ignorance." 

Asked about mixed messages emanating from the state Department of Labor, Spota said he had an appreciation of the pressure the department was under. "We understand the tension between the DOL trying to enforce the law and at the same time help municipalities work through an emergency situation," he said. 

"They are trying to walk that middle ground. The ambiguity occurs when you're trying to serve two different objectives — following the law and getting a storm cleanup done quickly." 

No penalties for officials

Earlier proponents of toughening the law wanted to include criminal penalties within the law itself for municipal officials who shirk their requirements to receive and review payrolls. The provision was eliminated by the State Assembly Codes Committee.

Yet without a specific penalty in labor law for municipal officials who fail to fulfill their role, prosecutors say it's difficult to bring criminal charges against government officials because they must show the official knew of the requirement and intentionally ignored it.

Another reform effort is in the works with changes Boyle hopes to introduce early next year. Among them: increasing penalties for violators, including municipal officials, and requiring contractors to file certified payrolls with the municipalities regardless of the type of public work performed. Boyle said this would give investigators greater access to company records and help them in bringing prosecutions.

"The law in my view still enables unscrupulous businesses to take advantage of some workers," he said. "The Sandy cleanup, with its vast amount of public work out to contract and millions of dollars of public money, seemed to expose the law's shortcomings. The fact that it was public money misused in this way is particularly egregious." 

For Cottrell, who learned last month he could be owed more than $11,000 in underpaid wages and benefits for helping clear the LIRR tracks, money alone is not the issue.

"The money's important, but so is the principle," Cottrell said. "People who don't follow the law should be held accountable. Workers like us who traveled across the country shouldn't be taken advantage of, is what it comes down to."

With Randi Marshall.

Prevailing wage and Long Island towns

What towns on Long Island did in regard to prevailing-wage law. The five East End towns are not included. 

BABYLON: All contracts for Sandy cleanup work included the requirement that vendors follow prevailing-wage laws, town spokesman Kevin Bonner said, adding that the town consulted the state Department of Labor. After the Suffolk DA issued subpoenas in the spring, the town asked nine vendors that conducted its cleanup to submit their certified payrolls so those records could be passed on to the DA.

BROOKHAVEN: Officials said it did not meet its obligations.

HEMPSTEAD: In the months after Sandy, officials moved to ensure remaining cleanup work would be done by contractors paying prevailing-wage rates, town records show. Initially, Looks Great Services, one of the six contractors the town used, didn't pay prevailing wages. The town stopped paying Looks Great in June after being subpoenaed by the Nassau DA, said Mike Deery, town spokesman. The firm has yet to supply the town with certified payrolls. 

HUNTINGTON: Officials acknowledge they failed to collect certified payrolls.

ISLIP: It complied with prevailing-wage law.

SMITHTOWN: Followed prevailing-wage law. Town workers collected certified payrolls and the town notified all contractors prevailing wage was required. Currently the town requires certified payrolls from all public work contractors.

NORTH HEMPSTEAD: The town paid prevailing wage on most of its debris removal work and contractors supplied certified payrolls, records show. But on some payrolls no worker job titles were listed; on others, no payrolls were included.

OYSTER BAY: Town Deputy Supervisor Leonard Genova said Sandy work was in compliance. Deputy Town Attorney Frederick E. Mei said he consulted with the labor department and was told hauling and yard waste removal contracts didn't require prevailing wage.

GLEN COVE: The city used a handful of outside contractors to assist with its Sandy cleanup. City officials said some repair work did not specify prevailing wage. But, they said, they still expected that the contractors would pay it.

LONG BEACH: Officials declined to answer specific questions about prevailing wages for its estimated $36 million cleanup. "The city has requested an opinion from the Department of Labor and we decline to comment at this time as we await the opinion," spokesman Gordon Tepper wrote in an email, though he added in a later email that the city "requires its vendors to follow Department of Labor standards."

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