NYC Comptroller Files $40M Suit Against Developer For Construction Wage Violations
Developer and landlord BLDG Management underpaid construction workers by tens of millions of dollars, according to a new lawsuit filed by New York City Comptroller Brad Lander.
Lander’s office is seeking a total of $40M from BLDG, according to the suit filed fith the NYC Office of Administrative Trials and Hearings.
Lander's office is asking for $8M in penalties, in addition to $32M that it alleges the developer should have paid workers at its apartment project at 212 E. 44th St.
BLDG completed construction in 2019 on the 429-unit rental building known as The Summit, a block East of the Chrysler Building. The property reaches 42 stories high and reserved roughly 20% of its units as income-restricted under the 421-a tax abatement, Commercial Observer reported.
The 421-a tax break also requires construction workers to be paid a minimum average wage of around $60 per hour. But when the comptroller’s Bureau of Labor Law inspected BLDG’s payroll records in May 2022, a standard process for developers and owners hoping to receive the 421-a tax break, it claims it found that the average hourly wage paid to workers was $31.88 an hour.
“As part of receiving an as-of-right tax benefit, developers must pay the minimum average hourly wage to their construction workers — or face penalties,” Claudia Henriquez, Bureau of Labor Law director of workers’ rights, said in a statement. “If you want to build under 421-a, then adhering to its labor rules is non-negotiable. Our office will continue to ensure developers prioritize fair labor practices.”
BLDG didn't immediately respond to Bisnow’s request for comment.
BLDG’s East 44th Street project has received tax exemptions amounting to $23.1M to date, the comptroller’s suit says. The building’s 35-year tax break is due to expire in 2054.
Under the 2017 version of 421-a, developers working on properties with 300 or more residential units have to guarantee the minimum average hourly wage of $60 in Manhattan and appoint an independent monitor to certify the payroll report submitted to the city.
“Every New Yorker deserves a fair wage and an equitable work environment, especially those that lay the foundation for affordable housing across NYC,” NYC Housing Preservation and Development Commissioner Adolfo Carrión Jr. said in a statement. “HPD believes in accountability and agrees with the Comptroller that adhering to the 421-a program’s labor rules is non-negotiable.”
