NY authorities: Contractor charged with 136 felony counts for failing to pay union benefits

Dive Brief:

New York state prosecutors have charged Long Island, NY, contractor Arbor Concrete Corp. and owner Kenneth Padover with 136 counts of fraud for allegedly cheating employees out of more than $250,000 in union benefits.
Authorities alleged that Padover filed false certified payroll records with the Port Authority of New York and New Jersey and the general contractor while working on a project at John F. Kennedy Airport. Authorities said the reports wrongly indicated that Arbor paid $268,055.78 in benefits required under prevailing wage laws on federally funded projects.
In 2014 Padover was previously sued by the Cement and Concrete Workers District Council Welfare Fund for allegedly bidding jobs as a union employer but then hiring non-union workers, according to Construction Equipment.

Dive Insight:

As a result of an investigation by the Port Authority Inspector General’s Office, the charges against Arbor and Padover include 136 felony counts "of offering a false instrument for filing and falsifying business records" as well as three misdemeanor counts "of failure to pay wages."

Port Authority Inspector General Michael Nestor said in a statement, "This arrest will serve notice to all contractors that the PA will not tolerate wage fraud or any other criminal misconduct on public projects." If convicted, Padover could face up to four years in prison.

In a similar case last month, the Massachusetts Attorney General’s office charged contractor I.W. Harding Construction Company and owner James E. Shalek for violating state prevailing wage laws and fined them $54,000 in restitution and penalties. The Attorney General’s office alleges that I.W. Harding did not pay required overtime and also failed to give investigators accurate certified payroll records and other requested documentation.

The issue of prevailing wage has always been a point of contention in the construction industry. Proponents say it puts all bidders on a level playing field and eliminates the risk of employees being paid lower-than average wages in order for the low bidder's numbers to "work." Critics, however, maintain that the law interferes with the free market and uses union wages as the benchmark, even in areas where that wage may be higher than the market would normally support.