Attorney General Eric T. Schneiderman has announced the guilty pleas and convictions of three Queens-based construction companies for misclassifying over 150 workers—including carpenters and painters—as independent contractors to avoid paying them overtime.
Lotus-C Corporation, Johnco Contracting, Inc., and RCM Painting Inc., operating out of Jackson Heights, Bayside, and Maspeth respectively, each pled guilty to felony counts of Grand Larceny in the Fourth Degree and Falsifying Business Records in the First Degree.
The plea agreements mandated that the defendant corporations pay a total of $371,447.01 for unpaid wages and $359,747.86 in unpaid unemployment contributions to the New York State Department of Labor (NYSDOL). The Queens County Supreme Court on Feb. 7 sentenced each defendant corporation to a conditional discharge, as full payment of the restitution was paid to the Attorney General’s office.
A news release from Schneiderman’s office asserted he has recovered more than $30 million in stolen wages for more than 21,000 workers, including over $7 million for construction workers.
“Led by pure greed, the defendants in this case attempted to sidestep the law — misclassifying their employees as a way to stiff them on the overtime pay they rightfully earned,” said Schneiderman said in the statement. “My office will continue to crack down on those who seek to steal from their workers in order to line their own pockets.”
“Under Governor Andrew Cuomo, New York State is committed to exposing bad actors who steal wages from hard working men and women,” said State Labor Commissioner Roberta Reardon.
“Employee misclassification and records falsification are just some of the ways employers skirt their responsibilities to their workers and to the state. I thank the dedicated Department of Labor investigators and our partners in law enforcement who work every day to ensure that this misconduct doesn’t go unpunished. I urge any worker who feels they’ve been cheated out of their rightful pay to contact the Department of Labor for assistance.”
The Attorney General’s investigation revealed that between 2012 and 2017, the defendant corporations repeatedly failed to pay proper overtime wages to more than 150 employees working across the three corporations. Many of these employees, who were laborers, worked well over 40 hours in one week but were only paid a standard time hourly wage, instead of the required time-and-one-half rate for hours worked over 40 hours in one week.
In furtherance of their scheme, each corporation had the employees sign a form stating that they were independent contractors, even though the workers were employees as defined by the New York State labor law. Moreover, the companies underreported the number of employees working at these corporations during this period to NYSDOL, and instead falsified their New York State Quarterly Combined Withholding, Wage Reporting and Unemployment Insurance Return forms—resulting in significant underpayment of unemployment contributions to the NYSDOL.
As part of the plea agreements, the defendant corporations will dissolve the businesses, and the principals of the corporations, Cesar Agudelo of Lotus-C Corp., and John Massino of RCM Painting Inc. and Johnco Contracting, Inc., will be barred for five years from bidding on public works contracts in New York State.