As Housing Booms, Subcontractors Questioned About Failure to Pay Workers

Carrol Turner was the first "affected worker" to speak before a joint hearing Tuesday of the New York City Council's Contracts Committee and Committee on Housing and Buildings. For 13 years he worked at companies affiliated with one family that builds affordable housing in New York City. He raised his right hand and swore to have been robbed of his wages—nearly $8,000 in one year alone—mistreated and subjected to verbal and racist abuse, a claim echoed by two other striking workers sitting beside him.

"But what I'm here mainly about," he said, "is that the [Department of Housing Preservation and Development] people or affiliates always give this family-owned company subsidies off our own taxpayer's money to cheat us."

When the construction company he worked for got in trouble for labor issues in the past, Turner said, the name would change and the company would resurface.

In June 2013, plaintiffs in Brooklyn, the Bronx and Queens representing 50 workers (a number that has now risen to 70, according to testimony) filed class action lawsuit in the U.S. District Court of the Eastern District of New York against eight companies and their officers for a range of labor violations: forcing workers to pay kickbacks on prevailing wage jobs and willful miscalculation of hours through a network of firms acting as one.

"The family name doesn't change, only the company name," Turner said.

The de Blasio administration has promised that building or rehabilitating 200,000 units of   affordable housing over the next decade will create almost as many jobs—194,000 to be exact—and that they will be good ones.

But now that the system of vetting the vendors who have already begun building that vision is coming under greater scrutiny, it appears to have some serious holes.

When HPD sells land for development or provides a subsidy to a developer, it makes a deal with the owner, which it calls the “sponsor.” That sponsor often hires a general contractor to work on the site. The general contractor, in turn, can farm-out work to one or more subcontractors.

Developers who go to HPD for subsidies are put through a review process that includes background checks of not only the applicant, but also its affiliates and principals. Code violations, financial issues and criminal investigations are reviewed, according to the agency.

Contractors may be put on an “enhanced review” list for having failed to comply with safety or labor standards in the past, but it is left up to the sponsors to report that they are using contractors from that list.          `

Doing so triggers third-party monitoring for labor violations at a contractor’s own expense and increased oversight by HPD’s Labor Monitoring Unit, as well as a review of subcontractor contracts for prevailing wage language.

Contractors and a small percentage of subcontractors that are supposed to pay a prevailing wage must report payroll information to HPD. There is also a hotline for worker complaints and the agency makes site visits, according to HPD. 

But except for the small percentage of sites with prevailing wage jobs that are monitored for compliance, HPD does not so much as keep a list of subcontractors on HPD-financed projects. And it is from subcontractors, according to the testimony of HPD Commissioner Vicki Been, that many labor complaints stem.

The agency takes responsibility only for the owner. “...The contractors working on these city assisted projects are not selected by HPD and they have no direct legal or contractual relationship with HPD,” Been explained at the hearing Tuesday. They are not city vendors and they are not subject to the city’s procurement rules,” She later tacked on “subcontractors” to a similar statement.

Developers face no punitive action for the bad behavior of the workers they hire. And each one of the players, from owner to contractor and subcontractor, can easily rebrand if legal or publicity trouble arises. 

Take a company called Mountco Construction and Development, which was featured back in 2014 in a Daily News story about 11 companies building city financed affordable housing despite owing workers wages. The company was placed on the city's “enhanced review” list for owing hundreds of thousands of dollars in back pay. It is still on the list—which says it also covers any guilty party's principals and related companies. 

But Webster Avenue Affordable LLC, registered in July 2014 by Mountco, is not. The third largest amount HPD has spent so far this fiscal year to finance projects was $17.36 million, which went to Webster Avenue Affordable LLC for housing construction in the Bronx.

A review of companies listed by Turner, the worker who testified before the committee, showed that there are at least five different corporations or LLCs currently associated with the family who employs him.

Thomas Auringer, who runs one of those companies called New York Hoist, did not return multiple calls and an email to explain the company structure and allegations made against it at Tuesday's hearing.

HPD confirmed that nine active HPD projects, most of which are affordable housing deals, involve work contracted to four companies associated with the Auringer family. The agency would not confirm or deny any of the allegations against the contractor when asked by City Limits.

“We require contractors to obey all labor laws, have instituted strong measures to deal with noncompliance, and use every tool available at our disposal to help ensure that workers are protected. Our Enhanced Review procedure identifies contractors who have had past issues and subjects them to a number of measures to ensure they fulfill their legal obligations,” said HPD spokesman Eric Bederman in a statement.

The three non-union workers who testified Tuesday are all on strike, but have yet to file formal complaints with HPD. They said the reason they have delayed in filing is because they felt HPD officials were “not being straight” with them. HPD claims there have been no labor complaints from the nine active sites with connections to the Auringer family.

Councilwoman Helen Rosenthal, chair of the contracts committee, said she and Housing and Buildings Chair Jumaane Williams plan to keep an eye on the HPD and the sites in question. As the city embarks on an ambitious building spree, they are exploring legislation to insert some more transparency and accountability into the process.

"They're stepping back from the responsibility of it," Rosenthal said of the city in an interview. "Meanwhile these companies are getting tax breaks." 

CORRECTION: An earlier version of this post said it was written by Jarrett Murphy. In fact, the story was written by Kate Pastor.