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NYS Comptroller

THOMAS P. DiNAPOLI

Press Releases

October 29, 2014, Contact: Press Office (518) 474-4015

DiNapoli: State Contractor Failed to Pay Prevailing Wages

A state Office of Mental Health (OMH) contractor hired to provide janitorial services failed to pay its workers prevailing wage rates and tried to hide its non-compliance with state law by misrepresenting hours worked and rates paid in certified payrolls it submitted to OMH, according to an audit released today by New York State Comptroller Thomas P. DiNapoli. 

“New York state law requires contractors working for the state to pay the prevailing wage rates and fringe benefits set for the locality where the work is performed, but my auditors found numerous violations committed by the Shorefront Mental Health Board,” DiNapoli said. “This contractor unconscionably cheated disabled employees out of thousands of dollars. OMH needs to take immediate action to make sure contractors follow the law to protect all workers.”

Shorefront Mental Health Board provides support for treatment and transition programs of the South Beach Psychiatric Center in Staten Island. It contracts with OMH to provide janitorial services at various South Beach outpatient facilities through an entity it created, Brooklyn Brite.

DiNapoli’s auditors estimate Shorefront underpaid 26 janitorial workers by at least $123,224 during 2013. That amount may be higher because the workers did not receive supplemental and other benefits to which they may have been entitled. Based on the nature of the findings, auditors believe Shorefront has likely underpaid its janitorial workers since November 1, 2011, when its contract started and may have underpaid janitorial workers on other prior and current contracts.

Shorefront officials told auditors the company did not pay the prevailing wage rates because workers would lose other government benefits because their incomes would be too high, and that they were not professional cleaners.

After DiNapoli’s auditors met with Shorefront officials in January 2014, the officials said they took corrective action to comply with the contract terms and conditions and started paying their janitorial workers at prevailing wage rates. However, further investigation found the contractor was also paying employees for fewer hours than they actually worked and told employees to submit blank time sheets to be completed by management. Auditors believe that employees may have been paid for fewer hours than they actually worked January 20, to March 14 this year, when auditors began visiting the outpatient facilities.

One worker who disregarded this directive posted a total of 72 hours to time sheets for January 20, 2014 through February 14, 2014 and he faxed the time sheets to the COO. However, paystubs and payroll vendor records show this worker was paid for only 22 hours at the prevailing wage rate and 12 hours at the supplemental benefits rate. The employee was paid $600.34, but should have been paid $2,201.04. Other paystubs and payroll vendor information auditors reviewed reflected similar discrepancies.

DiNapoli recommended OMH develop and implement procedures to ensure all its contractors comply with the prevailing wage law, including:

  • Enforce the requirement that contractors submit certified payrolls and make sure that they are accurate;
  • Ensure that payments to workers are correct; and
  • Promptly address non-compliance with contract requirements and other regulations and document the actions taken.

DiNapoli referred his findings to the Department of Labor (DOL) for further review and recommended OMH work with DOL to determine the amount of back wages and benefits due to workers from Shorefront for the periods that they were underpaid.

OMH officials generally agreed with the audit findings and have begun taking steps to correct the problems. OMH noted that its contracts with Shorefront were terminated in July. 

For a copy of the report visit: http://osc.state.ny.us/audits/allaudits/093015/13s62.pdf

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