N.Y. Labor Law § 235: Investigation and hearing

§ 235. Investigation and hearing. 1. Whenever the fiscal officer has

reason to believe that a service employee has been paid less than the

wages stipulated in the contract, or if such contract has no wage

schedule attached thereto and the fiscal officer has reason to believe

that a service employee has been paid less than the wages prevailing for

his craft, trade or occupation, the fiscal officer may, and upon receipt

of a written complaint from an employee employed thereon, shall conduct

a special investigation to determine the facts relating thereto.

2. a. At the start of such investigation the fiscal officer may notify

the financial officer of the public agency interested who shall, at the

direction of the fiscal officer, forthwith withhold from any payment due

to the contractor executing the contract sufficient money to safeguard

the rights of the service employees and to cover the civil penalty that

may be assessed as provided herein, or, if there are insufficient moneys

still due or earned to the contractor or subcontractor to safeguard the

rights of the service employees and to cover the civil penalty that may

be assessed as provided herein, the financial officer of another civil

division which has entered or subsequently enters into a building

service work contract with the contractor or subcontractor, who shall

withhold from any payment due the contractor or subcontractor executing

any building service work, sufficient moneys to safeguard the rights of

the service employees and to cover the civil penalty that may be

assessed as provided herein.

b. If there are still insufficient moneys still due or earned to the

contractor or subcontractor to safeguard the rights of the service

employees and to cover the civil penalty that may be assessed as

provided herein, the financial officer shall immediately so notify the

fiscal officer, who may issue a notice of withholding to any of the

following: any substantially-owned affiliated entity or successor or

subsidiary of the contractor or subcontractor; an officer of the

contractor or subcontractor who knowingly participated in the violation

of this article, any of the partners, if the contractor or subcontractor

is a partnership, or any of the five largest shareholders of the

contractor or subcontractor, as determined by the fiscal officer.

c. The notice of withholding shall provide that the fiscal officer

intends to instruct the financial officer, not less than ten days

following service of the notice by mail, to withhold sufficient moneys

to safeguard the rights of the service employees and to cover the civil

penalty that may be assessed as provided herein, from any payment due

the notified party under any building service work contract pending

final determination. The notice of withholding shall provide that within

thirty days following the date of the notice of withholding the notified

party may, contest the withholding on the basis that the notified party

is not a partner or one of the five largest shareholders of the

subcontractor or contractor, an officer of the contractor or

subcontractor who knowingly participated in the violation of this

article, a substantially-owned affiliated entity or successor. If the

notified party fails to contest the notice of withholding, or if the

fiscal officer, after reviewing the information provided by the notified

party in such contest, determines that the notified party is a partner

or one of the five largest shareholders, a substantially-owned

affiliated entity, an officer of the contractor or subcontractor who

knowingly participated in the violation of this article, or a successor,

the fiscal officer may instruct the financial officer to immediately

withhold sufficient moneys to safeguard the rights of the service

employees and to cover the civil penalty that may be assessed as

provided herein from any payment due the notified party under any

building service work contract pending the final determination.

d. The financial officer shall immediately implement the notice of

withholding and confirm in writing to the fiscal officer the amount of

money withheld.

e. If the notified party contests the withholding after a withholding

has been effected, and if the fiscal officer determines that the

notified party is not a partner or one of the five largest shareholders,

a substantially-owned affiliated entity or successor, an officer of the

contractor or subcontractor who knowingly participated in the violation

of this article the fiscal officer shall immediately notify the

financial officer to release all payments being withheld from the

notified party.

f. The money shall be held in trust pending completion of the

investigation.

3. If, despite the requirements of law, the contract for the service

work has been awarded without the annexation thereto of the schedule of

wages provided for in this article, the fiscal officer shall determine

in the proceeding before him the wages prevailing at the time the work

was performed for the crafts, trades or occupations of the employees

involved.

4. In an investigation conducted under the provisions of this section,

the inquiry of the fiscal officer shall not extend to work performed

more than two years prior to: (a) the filing of the complaint, or (b)

the commencement of the investigation upon the fiscal officer's own

volition, whichever is earlier in point of time.

5. a. The investigation and hearing shall be expeditiously conducted

and upon the completion thereof the fiscal officer shall determine the

issues raised and shall make and file an order in his office stating

such determination and forthwith serve personally or by mail a copy of

such order and determination together with a notice of filing upon all

parties to the proceeding and upon the financial officer of the public

agency involved.

b. In addition to directing payment of wages found to be due, such

order of the fiscal officer may direct payment of a further sum as a

civil penalty in an amount not exceeding twenty-five percent of the

total amount found to be due. In assessing the amount of the penalty,

due consideration shall be given to the size of the employer's business,

the good faith of the employer, the gravity of the violation, the

history of previous violations of the employer, successor or

substantially-owned affiliated entity or any successor of the contractor

or subcontractor, any officer of the contractor or subcontractor who

knowingly participated in the violation of this article, and any of the

partners if the contractor or subcontractor is a partnership or any of

the five largest shareholders of the contractor or subcontractor, as

determined by the fiscal officer, of such underpayment of wages or

supplements, and any officer of the contractor or subcontractor who

knowingly participated in the violation of this article, and the failure

to comply with recordkeeping or other non-wage requirements. Where the

fiscal officer is the commissioner, the penalty shall be paid to the

commissioner for deposit in the state treasury. Where the fiscal officer

is a city comptroller or other analogous officer, the penalty shall be

paid to said officer for deposit in the city treasury.

c. If the order directs the payment to specified employees of wages

found to be due and unpaid, including interest at a rate not less than

six per centum per year and not more than the rate of interest then in

effect as prescribed by the superintendent of financial services

pursuant to section fourteen-a of the banking law per annum from the

time such wages should have been paid, the financial officer of such

public agency shall, upon the service to him of such order, pay to such

employees from the trust money withheld the amounts specified in such

order and shall pay the civil penalty as provided herein, provided no

review proceeding pursuant to the provisions of article seventy-eight of

the civil practice law and rules is commenced within thirty days of the

date said order was filed in the office of the fiscal officer. If such

review is timely commenced, the money withheld shall remain in trust

pending final disposition of the review proceeding. In determining the

rate of interest to be imposed the fiscal officer shall consider the

size of the employer's business, the good faith of the employer, the

gravity of the violation, the history of previous violations of the

employer, successor or substantially-owned affiliated entity or any

successor of the contractor or subcontractor, any officer of the

contractor or subcontractor who knowingly participated in the violation

of this article, and any of the partners if the contractor or

subcontractor is a partnership or any of the five largest shareholders

of the contractor or subcontractor, as determined by the fiscal officer,

and the failure to comply with recordkeeping or other non-wage

requirements.

6. When a final determination has been made and such determination is

in favor of an employee, such employee may, in addition to any other

remedy provided by this article, institute an action in any court of

appropriate jurisdiction against the person or corporation found to have

violated this article, any substantially-owned affiliated entity or any

successor of the contractor or subcontractor, any officer of the

contractor or subcontractor who knowingly participated in the violation

of this article, and any of the partners if the contractor or

subcontractor is a partnership or any of the five largest shareholders

of the contractor or subcontractor, as determined by the fiscal officer,

for the recovery of the difference between the sum, if any, actually

paid to him by the aforesaid financial officer pursuant to said order

and the amount found to be due him as determined by said order. Such

action must be commenced within three years from the date of the filing

of said order, or if the said order is reviewed in a proceeding pursuant

to article seventy-eight of the civil practice law and rules, within

three years after the termination of such review proceeding.

Provided that no proceeding for judicial review as provided in this

section shall then be pending and the time for initiation of such

proceeding shall have expired, the fiscal officer may file with the

county clerk of the county where the employer resides or has a place of

business the order of the fiscal officer containing the amount found to

be due. The filing of such order shall have the full force and effect of

a judgment duly docketed in the office of such clerk. The order may be

enforced by and in the name of the fiscal officer in the same manner,

and with like effect, as that prescribed by the civil practice law and

rules for the enforcement of a money judgment.

7. When, pursuant to the provisions of this section, two final orders

have been entered against a contractor, subcontractor, successor, or any

substantially-owned affiliated entity of the contractor or

subcontractor, any of the partners if the contractor or subcontractor is

a partnership, any of the five largest shareholders of the contractor or

subcontractor, any officer of the contractor or subcontractor who

knowingly participated in the violation of this article within any

consecutive six-year period determining that such contractor or

subcontractor and/or its successor, substantially-owned affiliated

entity of the contractor or subcontractor, any of the partners or any of

the five largest shareholders of the contractor or subcontractor, any

officer of the contractor or subcontractor who knowingly participated in

the violation of this article has willfully failed to pay the prevailing

wages in accordance with the provisions of this article, whether such

failures were concurrent or consecutive and whether or not such final

determinations concerning separate public building service contracts are

rendered simultaneously, such contractor, subcontractor, successor, and

if the contractor, subcontractor, successor, or any substantially-owned

affiliated entity of the contractor or subcontractor, any of the

partners if the contractor or subcontractor is a partnership, or any of

the five largest shareholders of the contractor or subcontractor, any

officer of the contractor or subcontractor who knowingly participated in

the violation of this article, or any successor is a corporation, any

officer of such corporation who knowingly participated in such failure,

shall be ineligible to submit a bid on or be awarded any public building

service work for a period of five years from the date of the second

order, provided, however, that where any such final order involves the

falsification of payroll records or the kickback of wages, the

contractor, subcontractor, successor, substantially-owned affiliated

entity of the contractor or subcontractor, any partner if the contractor

or subcontractor is a partnership or any of the five largest

shareholders of the contractor or subcontractor, any officer of the

contractor or subcontractor who knowingly participated in the violation

of this article shall be ineligible to submit a bid on or be awarded any

public building service contract or subcontract with the state, any

municipal corporation or public body for a period of five years from the

date of the first final order. Nothing in this subdivision shall be

construed as affecting any provision of any other law or regulation

relating to the awarding of public contracts.

8. a. When a final determination has been made in favor of a

complainant and the contractor or subcontractor found violating this

article has failed to make payment as required by the order of the

fiscal officer, and provided that no relevant proceeding for judicial

review shall then be pending and the time for initiation of such

proceeding shall have expired, the fiscal officer may file a copy of the

order of the fiscal officer containing the amount found to be due with

the county clerk of the county of residence or place of business of any

of the following:

(i) any substantially-owned affiliated entity or any successor of the

contractor or subcontractor;

(ii) any of the partners if the contractor or subcontractor is a

partnership or any of the five largest shareholders of the contractor or

subcontractor, as determined by the fiscal officer; or

(iii) any officer of the contractor or subcontractor who knowingly

participated in the violation of this article; provided, however, that

the fiscal officer shall within five days of the filing of the order

provide notice thereof to the partner or top five shareholder or

successor or substantially-owned affiliated entity. The notified party

may contest the filing on the basis that it is not a partner or five

largest shareholders, an officer of the contractor or subcontractor who

knowingly participated in the violation of this article, successor or

substantially-owned affiliated entity. If, after reviewing the

information provided by the notified party in support of such contest,

the fiscal officer determines that the notified party is not within the

definitions described herein, the fiscal officer shall immediately

withdraw his filing of the order.

b. The filing of such order shall have the full force and effect of a

judgment duly docketed in the office of such clerk. The order may be

enforced by and in the name of the fiscal officer in the same manner,

and with like effect, as that prescribed by the civil practice law and

rules for the enforcement of a money judgment.

9. When a final determination has been made against a subcontractor in

favor of a complainant and the contractor has made payment to the

complainant of any wages and interest due the complainant and any civil

penalty, and providing that no relevant proceeding for judicial review

shall then be pending and the time for initiation of such proceeding

shall have expired, the contractor may file a copy of the order of the

fiscal officer containing the amount found to be due with the county

clerk of the county of residence or place of business of the

subcontractor. The filing of such order shall have the full force and

effect of a judgment duly docketed in the office of such clerk. The

judgment may be docketed in favor of the contractor who may proceed as a

judgment creditor against the subcontractor for the recovery of all

monies paid by the contractor under such order.