New York Attorney General Eric Schneiderman speaking at New York Law School, March 18, 2014. Image credit: CityLaw

A contractor and a developer are to pay $255,000 for violating the New York False Claims Act and not paying workers a prevailing wage. On February 9, 2017, New York Attorney General Eric T. Schneiderman announced a settlement agreement with a New York City-based general contractor and a developer for failing to pay a prevailing wage to workers at their public works project.

The contractor, A. Aleem Construction Inc., and the developer, West 131st Street Development Corp., were both participants in the Neighborhood Entrepreneurs Program of the Department of Housing Preservations and Development. The program was intended to enable neighborhood-based private property managers to own and manage clusters of occupied and vacant city-owned buildings. Buildings selected for the program are sold to the Neighborhood Partnership Housing Development Fund Corporation and then leased to the participants. The participants then oversee the rehabilitation and design of the buildings with general contractors. The program is partially funded with federal money.

The settlement marked the first time the prevailing wage law was enforced through the New York False Claims Act. The False Claims Act prohibits any person from making a false claim for payment. AG Schneiderman alleged that Aleem and West 131st had made “claims for payment while acting in reckless disregard of the contractual obligations to ensure compliance with the prevailing wage laws.” The contractor and developer were required to pay the federal prevailing wage because the federal government had partially funded the program.

The False Claims Act allows whistleblowers who report false claims made to the government in return for a portion of the money recovered. As a result, the Laborers’ Eastern Region Organizing Fund will receive a portion of the $255,000. The Fund plans to use its proceeds to continue its mission of worker advocacy and outreach.

By: Jonathon Sizemore (Jonathon is the CityLaw Fellow and a New York Law School Graduate, Class of 2016).