Dive Brief:

• New York City's Metal Lathers Local 46 and other union funds are suing a concrete contractor, its owner and an alleged "alter ego" front company claiming that the latter, New Leaf, was formed to perform work at the $25 billion Hudson Yards development in order to avoid paying union wages and benefits, according to the New York Daily News.
• The lawsuit claims that John Russo, owner of union contractor New York Concrete, created New Leaf, which is not obligated to comply with the collective bargaining agreements in place for concrete work at 50 Hudson Yards, at the urging of developer Related Cos. so that Related could save money by not having to pay higher union wages, contribute to pension funds or pay into other benefit programs. Local 46 and the other plaintiffs in the legal action allege that New Leaf is an obvious sham because the two concrete contractors have the same customers and management and are both controlled by Russo. In addition, the suit claims that New Leaf's owner of record has no concrete construction experience, making it highly unlikely that Related would hire the company for such a large project unless it knew someone like Russo was in charge.
• Related is not a party to the lawsuit, but a Related representative denied the allegations and told the Daily News that the suit is an attempt by the business manager of Local 46 to wield control over the city's construction industry and to turn the focus away from "his failure to reform corrupt practices and outdated work rules."

Dive Insight:

Related's relationship with New York City's construction trade unions is tense at best. The developer filed a lawsuit against the Greater Trades Council of New York last month claiming that the council wanted to include in a new project labor agreement the same unions that cheated the company out of $100 million during the first phase of construction at Hudson Yards. Padded work hours, high-wage workers being paid to perform menial tasks and complaints around safety are some of the issues in the Related lawsuit.

The Trades Council claims Related is reacting to the council's involvement in the pro-union #metoo movement and has also filed complaints against the developer with the National Labor Relations Board.

Nevertheless, costs of construction in New York City are high, and some have pointed to unions as part of the reason. In January, The New York Times reported that trade union deals that ran up labor costs, politically connected construction companies charging too much and consulting firms being allowed to perform more work than required have driven the city's subway construction costs higher than anywhere else in the world. One union working on the East Side Access tunnel reportedly was able to negotiate a rate of $111 per hour for wages and benefits and up to $400 per hour for overtime work on the weekends.