N.Y. LAB Law § 235 — New York Code / Act LAB / Article 9 / Section 235
Investigation and hearing
Status: in_force

§ 235. Investigation and hearing.  1. Whenever the fiscal officer has\nreason to believe that a service employee has been paid less than the\nwages stipulated in the contract, or if such contract has no wage\nschedule attached thereto and the fiscal officer has reason to believe\nthat a service employee has been paid less than the wages prevailing for\nhis craft, trade or occupation, the fiscal officer may, and upon receipt\nof a written complaint from an employee employed thereon, shall conduct\na special investigation to determine the facts relating thereto.\n  2. a. At the start of such investigation the fiscal officer may notify\nthe financial officer of the public agency interested who shall, at the\ndirection of the fiscal officer, forthwith withhold from any payment due\nto the contractor executing the contract sufficient money to safeguard\nthe rights of the service employees and to cover the civil penalty that\nmay be assessed as provided herein, or, if there are insufficient moneys\nstill due or earned to the contractor or subcontractor to safeguard the\nrights of the service employees and to cover the civil penalty that may\nbe assessed as provided herein, the financial officer of another civil\ndivision which has entered or subsequently enters into a building\nservice work contract with the contractor or subcontractor, who shall\nwithhold from any payment due the contractor or subcontractor executing\nany building service work, sufficient moneys to safeguard the rights of\nthe service employees and to cover the civil penalty that may be\nassessed as provided herein.\n  b. If there are still insufficient moneys still due or earned to the\ncontractor or subcontractor to safeguard the rights of the service\nemployees and to cover the civil penalty that may be assessed as\nprovided herein, the financial officer shall immediately so notify the\nfiscal officer, who may issue a notice of withholding to any of the\nfollowing: any substantially-owned affiliated entity or successor or\nsubsidiary of the contractor or subcontractor; an officer of the\ncontractor or subcontractor who knowingly participated in the violation\nof this article, any of the partners, if the contractor or subcontractor\nis a partnership, or any of the five largest shareholders of the\ncontractor or subcontractor, as determined by the fiscal officer.\n  c. The notice of withholding shall provide that the fiscal officer\nintends to instruct the financial officer, not less than ten days\nfollowing service of the notice by mail, to withhold sufficient moneys\nto safeguard the rights of the service employees and to cover the civil\npenalty that may be assessed as provided herein, from any payment due\nthe notified party under any building service work contract pending\nfinal determination. The notice of withholding shall provide that within\nthirty days following the date of the notice of withholding the notified\nparty may, contest the withholding on the basis that the notified party\nis not a partner or one of the five largest shareholders of the\nsubcontractor or contractor, an officer of the contractor or\nsubcontractor who knowingly participated in the violation of this\narticle, a substantially-owned affiliated entity or successor. If the\nnotified party fails to contest the notice of withholding, or if the\nfiscal officer, after reviewing the information provided by the notified\nparty in such contest, determines that the notified party is a partner\nor one of the five largest shareholders, a substantially-owned\naffiliated entity, an officer of the contractor or subcontractor who\nknowingly participated in the violation of this article, or a successor,\nthe fiscal officer may instruct the financial officer to immediately\nwithhold sufficient moneys to safeguard the rights of the service\nemployees and to cover the civil penalty that may be assessed as\nprovided herein from any payment due the notified party under any\nbuilding service work contract pending the final determination.\n  d. The financial officer shall immediately implement the notice of\nwithholding and confirm in writing to the fiscal officer the amount of\nmoney withheld.\n  e. If the notified party contests the withholding after a withholding\nhas been effected, and if the fiscal officer determines that the\nnotified party is not a partner or one of the five largest shareholders,\na substantially-owned affiliated entity or successor, an officer of the\ncontractor or subcontractor who knowingly participated in the violation\nof this article the fiscal officer shall immediately notify the\nfinancial officer to release all payments being withheld from the\nnotified party.\n  f. The money shall be held in trust pending completion of the\ninvestigation.\n  3. If, despite the requirements of law, the contract for the service\nwork has been awarded without the annexation thereto of the schedule of\nwages provided for in this article, the fiscal officer shall determine\nin the proceeding before him the wages prevailing at the time the work\nwas performed for the crafts, trades or occupations of the employees\ninvolved.\n  4. In an investigation conducted under the provisions of this section,\nthe inquiry of the fiscal officer shall not extend to work performed\nmore than two years prior to: (a) the filing of the complaint, or (b)\nthe commencement of the investigation upon the fiscal officer's own\nvolition, whichever is earlier in point of time.\n  5. a. The investigation and hearing shall be expeditiously conducted\nand upon the completion thereof the fiscal officer shall determine the\nissues raised and shall make and file an order in his office stating\nsuch determination and forthwith serve personally or by mail a copy of\nsuch order and determination together with a notice of filing upon all\nparties to the proceeding and upon the financial officer of the public\nagency involved.\n  b. In addition to directing payment of wages found to be due, such\norder of the fiscal officer may direct payment of a further sum as a\ncivil penalty in an amount not exceeding twenty-five percent of the\ntotal amount found to be due. In assessing the amount of the penalty,\ndue consideration shall be given to the size of the employer's business,\nthe good faith of the employer, the gravity of the violation, the\nhistory of previous violations of the employer, successor or\nsubstantially-owned affiliated entity or any successor of the contractor\nor subcontractor, any officer of the contractor or subcontractor who\nknowingly participated in the violation of this article, and any of the\npartners if the contractor or subcontractor is a partnership or any of\nthe five largest shareholders of the contractor or subcontractor, as\ndetermined by the fiscal officer, of such underpayment of wages or\nsupplements, and any officer of the contractor or subcontractor who\nknowingly participated in the violation of this article, and the failure\nto comply with recordkeeping or other non-wage requirements. Where the\nfiscal officer is the commissioner, the penalty shall be paid to the\ncommissioner for deposit in the state treasury. Where the fiscal officer\nis a city comptroller or other analogous officer, the penalty shall be\npaid to said officer for deposit in the city treasury.\n  c. If the order directs the payment to specified employees of wages\nfound to be due and unpaid, including interest at a rate not less than\nsix per centum per year and not more than the rate of interest then in\neffect as prescribed by the superintendent of financial services\npursuant to section fourteen-a of the banking law per annum from the\ntime such wages should have been paid, the financial officer of such\npublic agency shall, upon the service to him of such order, pay to such\nemployees from the trust money withheld the amounts specified in such\norder and shall pay the civil penalty as provided herein, provided no\nreview proceeding pursuant to the provisions of article seventy-eight of\nthe civil practice law and rules is commenced within thirty days of the\ndate said order was filed in the office of the fiscal officer. If such\nreview is timely commenced, the money withheld shall remain in trust\npending final disposition of the review proceeding. In determining the\nrate of interest to be imposed the fiscal officer shall consider the\nsize of the employer's business, the good faith of the employer, the\ngravity of the violation, the history of previous violations of the\nemployer, successor or substantially-owned affiliated entity or any\nsuccessor of the contractor or subcontractor, any officer of the\ncontractor or subcontractor who knowingly participated in the violation\nof this article, and any of the partners if the contractor or\nsubcontractor is a partnership or any of the five largest shareholders\nof the contractor or subcontractor, as determined by the fiscal officer,\nand the failure to comply with recordkeeping or other non-wage\nrequirements.\n  6. When a final determination has been made and such determination is\nin favor of an employee, such employee may, in addition to any other\nremedy provided by this article, institute an action in any court of\nappropriate jurisdiction against the person or corporation found to have\nviolated this article, any substantially-owned affiliated entity or any\nsuccessor of the contractor or subcontractor, any officer of the\ncontractor or subcontractor who knowingly participated in the violation\nof this article, and any of the partners if the contractor or\nsubcontractor is a partnership or any of the five largest shareholders\nof the contractor or subcontractor, as determined by the fiscal officer,\nfor the recovery of the difference between the sum, if any, actually\npaid to him by the aforesaid financial officer pursuant to said order\nand the amount found to be due him as determined by said order. Such\naction must be commenced within three years from the date of the filing\nof said order, or if the said order is reviewed in a proceeding pursuant\nto article seventy-eight of the civil practice law and rules, within\nthree years after the termination of such review proceeding.\n  Provided that no proceeding for judicial review as provided in this\nsection shall then be pending and the time for initiation of such\nproceeding shall have expired, the fiscal officer may file with the\ncounty clerk of the county where the employer resides or has a place of\nbusiness the order of the fiscal officer containing the amount found to\nbe due. The filing of such order shall have the full force and effect of\na judgment duly docketed in the office of such clerk. The order may be\nenforced by and in the name of the fiscal officer in the same manner,\nand with like effect, as that prescribed by the civil practice law and\nrules for the enforcement of a money judgment.\n  7. When, pursuant to the provisions of this section, two final orders\nhave been entered against a contractor, subcontractor, successor, or any\nsubstantially-owned affiliated entity of the contractor or\nsubcontractor, any of the partners if the contractor or subcontractor is\na partnership, any of the five largest shareholders of the contractor or\nsubcontractor, any officer of the contractor or subcontractor who\nknowingly participated in the violation of this article within any\nconsecutive six-year period determining that such contractor or\nsubcontractor and/or its successor, substantially-owned affiliated\nentity of the contractor or subcontractor, any of the partners or any of\nthe five largest shareholders of the contractor or subcontractor, any\nofficer of the contractor or subcontractor who knowingly participated in\nthe violation of this article has willfully failed to pay the prevailing\nwages in accordance with the provisions of this article, whether such\nfailures were concurrent or consecutive and whether or not such final\ndeterminations concerning separate public building service contracts are\nrendered simultaneously, such contractor, subcontractor, successor, and\nif the contractor, subcontractor, successor, or any substantially-owned\naffiliated entity of the contractor or subcontractor, any of the\npartners if the contractor or subcontractor is a partnership, or any of\nthe five largest shareholders of the contractor or subcontractor, any\nofficer of the contractor or subcontractor who knowingly participated in\nthe violation of this article, or any successor is a corporation, any\nofficer of such corporation who knowingly participated in such failure,\nshall be ineligible to submit a bid on or be awarded any public building\nservice work for a period of five years from the date of the second\norder, provided, however, that where any such final order involves the\nfalsification of payroll records or the kickback of wages, the\ncontractor, subcontractor, successor, substantially-owned affiliated\nentity of the contractor or subcontractor, any partner if the contractor\nor subcontractor is a partnership or any of the five largest\nshareholders of the contractor or subcontractor, any officer of the\ncontractor or subcontractor who knowingly participated in the violation\nof this article shall be ineligible to submit a bid on or be awarded any\npublic building service contract or subcontract with the state, any\nmunicipal corporation or public body for a period of five years from the\ndate of the first final order. Nothing in this subdivision shall be\nconstrued as affecting any provision of any other law or regulation\nrelating to the awarding of public contracts.\n  8. a. When a final determination has been made in favor of a\ncomplainant and the contractor or subcontractor found violating this\narticle has failed to make payment as required by the order of the\nfiscal officer, and provided that no relevant proceeding for judicial\nreview shall then be pending and the time for initiation of such\nproceeding shall have expired, the fiscal officer may file a copy of the\norder of the fiscal officer containing the amount found to be due with\nthe county clerk of the county of residence or place of business of any\nof the following:\n  (i) any substantially-owned affiliated entity or any successor of the\ncontractor or subcontractor;\n  (ii) any of the partners if the contractor or subcontractor is a\npartnership or any of the five largest shareholders of the contractor or\nsubcontractor, as determined by the fiscal officer; or\n  (iii) any officer of the contractor or subcontractor who knowingly\nparticipated in the violation of this article; provided, however, that\nthe fiscal officer shall within five days of the filing of the order\nprovide notice thereof to the partner or top five shareholder or\nsuccessor or substantially-owned affiliated entity. The notified party\nmay contest the filing on the basis that it is not a partner or five\nlargest shareholders, an officer of the contractor or subcontractor who\nknowingly participated in the violation of this article, successor or\nsubstantially-owned affiliated entity. If, after reviewing the\ninformation provided by the notified party in support of such contest,\nthe fiscal officer determines that the notified party is not within the\ndefinitions described herein, the fiscal officer shall immediately\nwithdraw his filing of the order.\n  b. The filing of such order shall have the full force and effect of a\njudgment duly docketed in the office of such clerk. The order may be\nenforced by and in the name of the fiscal officer in the same manner,\nand with like effect, as that prescribed by the civil practice law and\nrules for the enforcement of a money judgment.\n  9. When a final determination has been made against a subcontractor in\nfavor of a complainant and the contractor has made payment to the\ncomplainant of any wages and interest due the complainant and any civil\npenalty, and providing that no relevant proceeding for judicial review\nshall then be pending and the time for initiation of such proceeding\nshall have expired, the contractor may file a copy of the order of the\nfiscal officer containing the amount found to be due with the county\nclerk of the county of residence or place of business of the\nsubcontractor. The filing of such order shall have the full force and\neffect of a judgment duly docketed in the office of such clerk. The\njudgment may be docketed in favor of the contractor who may proceed as a\njudgment creditor against the subcontractor for the recovery of all\nmonies paid by the contractor under such order.\n