K.S. Contracting Corporation employed a kickback scheme that preyed on at least 36 immigrant workers
New York City Comptroller Scott M. Stringer today assessed $3.2 million in fines against K.S. Contracting Corporation and its owner, Paresh Shah, for cheating dozens of workers out of the prevailing wages and benefits they were owed under the New York State Labor Law. In addition to being assessed $3.2 million in unpaid wages, interest, and civil penalties, K.S Contracting and Mr. Shah will be barred from working on New York City and State contracts for five years. K.S. Contracting was named as one of the worst wage theft violators in New York in a report by the Center for Popular Democracy in 2015.
“With President Trump taking clear aim at immigrants across the country, we need to stand up and protect the foreign-born New Yorkers who keep our City running. Every New Yorker has rights, and my office won’t back down in defending them,” New York City Comptroller Scott M. Stringer said. “Contractors might think they can take advantage of immigrants, but today we’re sending a strong message: my office will fight for every worker in New York City. This is about basic fairness and accountability.”
K.S. Contracting was awarded more than $21 million in contracts by the City Departments of Design and Construction, Parks and Recreation, and Sanitation between 2007 and 2010. Projects included the Morrisania Health Center in the Bronx, the 122 Community Center in Manhattan, the Barbara S. Kleinman Men’s Residence in Brooklyn, the North Infirmary Command Building on Rikers Island, Bronx River Park, the District 15 Sanitation Garage in Brooklyn, and various City sidewalks in Queens.
The Comptroller’s Office began investigating the company after an employee filed a complaint with the office in May 2010. The multi-year investigation used subpoenas, video evidence, union records, and City agency data to uncover a kickback scheme that preyed on immigrant workers.
After a four-day administrative trial in May 2016, the Comptroller found that K.S. Contracting routinely issued paychecks to just half of its workforce and then required those employees to cash the checks and surrender the money to company supervisors. The Comptroller further found that those supervisors would then redistribute the cash to all of the employees on a jobsite, paying them at rates significantly below prevailing wages, and that K.S. Contracting falsely reported to the City agencies that all employees on the jobsite who received checks were paid the prevailing wage.
Between August 2008 and November 2011, the company cheated at least 36 workers out of $1.7 million in wages and benefits on seven New York City public works projects. K.S. Contracting reported that it paid its workers combined wage and benefit rates starting at $50 per hour but actually paid daily cash salaries starting at $90 per day. The majority of the workers impacted were immigrants of Latino, South Asian, or West Indian descent.
Examples of Paysheets Used by K.S. Contracting
The New York City Comptroller’s office enforces state and local laws which require private contractors working on New York City public works projects or those with service contracts with City agencies to pay no less than the prevailing wage or living wage rate to their employees.
When workers are underpaid, the New York City Comptroller’s office works to recoup the amount of the underpayment plus interest.
Since taking office in 2014, Comptroller Scott M. Stringer’s Bureau of Labor Law has assessed over $20 million and barred 40 contractors from state and City contracts due to prevailing wage violations, both record amounts. The assessed violation number includes underpayment of wages and benefits with interest payable to workers, and civil penalties payable to the City treasury/To read more about how the Comptroller’s Office sets and enforces prevailing wage and benefit rates on New York City public works projects, please click here.
