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Within the foyer of its midtown Manhattan headquarters, Fedcap Rehabilitation Providers has a big wall show that pays homage to its close to 90-year historical past of main “the struggle for fairness and alternative” for the disabled neighborhood.
The nonprofit is understood in New York as having pioneered the sphere of vocational rehabilitation, a service that helps discover jobs for folks with disabilities.
Fedcap has obtained dozens of contracts price greater than $110 million from 10 New York Metropolis and state businesses since 2018.
That’s even supposing the corporate has dedicated thousands and thousands of {dollars} in wage theft in opposition to a whole lot of its employees in recent times.
Underneath New York Metropolis and state procurement legal guidelines, contracting businesses are required to test distributors’ backgrounds, together with for labor legislation violations, and award contracts solely to these deemed “accountable.”
However who’s a “accountable vendor” is vaguely outlined. And New York state’s contracting guidelines are extra lenient than another locations in the case of approving wage theft violators for contracts. Advocates and officers in these locations say tighter guidelines have been an efficient deterrent in opposition to wage theft.
In New York, an organization is barely banned from receiving contracts if it dedicated a number of “willful” violations of wage legal guidelines, and that ban solely applies to public development tasks and constructing service work, similar to janitorial and safety providers. Many wage theft circumstances, together with Fedcap’s, usually are not deemed willful, which means that the federal Division of Labor didn’t decide that it knowingly broke the legislation.
Because of this, metropolis and state businesses repeatedly award contracts to corporations even after the vetting course of flagged histories of wage theft, an investigation by Documented and ProPublica has discovered. Joseph Brill, a spokesperson for the state Workplace of Common Providers, which oversees many centralized contracts for the state, stated in an announcement that “we’re not conscious of any vendor that has been deemed non-responsible solely due to a failure to pay applicable wages.”
Not less than 25 corporations and organizations, together with Fedcap, have obtained a New York Metropolis or state authorities contract inside three years of federal and state investigators discovering that they’d owed at the very least $100,000 in again wages to their employees, in line with an evaluation of practically six years of contract information starting in 2018, in addition to wage-theft databases obtained from the U.S. and New York Labor departments.
Between January 2018 and September 2023, these employers obtained about 160 contracts collectively price greater than $500 million from dozens of metropolis and state businesses — all inside three years of committing wage theft, in line with the evaluation. The contracted work included catering, profession help, nursing, safety providers, and freeway and subway development.
With Fedcap, its historical past of wage theft was hardly hidden. A 2018 investigation by the U.S. Division of Labor discovered that Fedcap had didn’t pay required retirement advantages for over one 12 months, then subsequently didn’t pay the right amount for employees at a New York Metropolis location. The company expanded its investigation to 18 different federal workplaces and amenities served by Fedcap, and it additionally discovered that the corporate illegally deducted third-party administrative charges from its employees’ wages. The corporate agreed to pay $2.8 million to greater than 400 employees to resolve the violations.
“When employers obtain federal funds to offer providers to the federal government, they need to adjust to all relevant legal guidelines to make sure that their workers obtain legally required pay and advantages,” stated David An, Wage and Hour Division District Director in New York Metropolis, in a press launch in regards to the case issued by the company.
Then, in 2021, a employee for Fedcap’s job placement program filed a class-action lawsuit on behalf of herself and associates, alleging that the corporate dedicated wage theft in opposition to them.
In courtroom paperwork, the lead plaintiff, Brickzaida Aponte, alleged that she commonly labored lengthy hours — typically 100 hours every week — however was denied full wages. Aponte, who labored for the corporate for eight months ending in January 2019, additionally alleged that Fedcap made her work by way of unpaid breaks and required her to work double shifts that concerned commuting to different places with out compensating her for the journey time.
Fedcap denied wrongdoing however settled the case final 12 months, agreeing to place $850,000 right into a settlement fund for roughly 4,000 employees, in addition to legal professional’s charges and different bills.
Among the many 25 contractors, Fedcap dedicated the best quantity of wage theft, in line with our evaluation of state and federal wage theft databases. Inside three years of the 2018 Labor Division investigation, the corporate obtained 25 metropolis and state contracts price practically $100 million. Since then, it has additionally obtained at the very least 5 further contracts price $18 million. (A kind of was initiated inside months after settling the class-action lawsuit final 12 months.) The contracted work included offering rehabilitation providers for mentally in poor health and previously incarcerated folks, in addition to job placement packages.
In an e mail to Documented and ProPublica, Fedcap spokesperson Josh Vlasto defended the corporate, noting that among the issues with funds occurred throughout a “change in programs” and that when it turned conscious of the difficulty, Fedcap “instantly corrected the error and paid the required funds with curiosity.” Vlasto additionally stated that aside from figuring out that again wages have been owed, the Labor Division didn’t difficulty “any fines, penalties, or different punitive assessments.” The legislation that Fedcap violated — which units wage and profit requirements for workers engaged on authorities contracts — doesn’t authorize penalties or fines, in line with the Division of Labor.
Vlasto added that his firm had been prepared to “vigorously contest” the class-action lawsuit however determined to settle the case “not due to any admission or discovering of fault however as a result of as a nonprofit we couldn’t afford a prolonged litigation.”
Aponte, the lead plaintiff within the class-action lawsuit, declined to remark.
Employee advocates stated New York’s present guidelines are too obscure and unfastened to be efficient.
“The system is damaged,” Elizabeth Joynes Jordan, co-legal director at Make the Street New York, an immigrant-rights group that has advocated for employees in labor disputes, wrote in an e mail. “Town and state should do extra to make sure that they don’t seem to be awarding main contracts to wage thieves.”
The flexibility of wage-theft violators to obtain authorities contracts in New York stands in distinction to Washington state and a variety of cities throughout the nation — similar to Houston, Philadelphia and two Ohio cities, Cleveland and Columbus — which have a lot tighter restrictions.
In Washington, as an illustration, corporations and organizations are banned from bidding on all authorities contracts after a single willful wage-theft violation. In Cleveland and Columbus, corporations are banned from bidding on authorities contracts after they’re discovered to have dedicated any quantity of wage theft, whether or not intentional or not. The ban stays in place for 3 years in Washington, Cleveland and Columbus — no matter whether or not they pay again wages to their employees.
Washington Lawyer Common Bob Ferguson stated in an announcement that his state’s ban relies on a premise that “taxpayer-funded authorities contracts ought to solely go to those that play by the principles and pay their employees the wages and advantages they’ve earned.”
Others, together with New Jersey and cities like Philadelphia and Somerville, Massachusetts, have gone even additional, passing legal guidelines that permit them to strip wage-theft violators of their enterprise licenses.
In New York, nonetheless, latest efforts by state lawmakers to ban the awarding of presidency contracts to corporations that commit any quantity of wage theft have failed within the face of opposition from trade teams, such because the Enterprise Council of New York State, which represents greater than 3,000 corporations and chambers of commerce.
In 2021, as an illustration, then-state Sen. Brian Barnwell, a Democrat from Queens, proposed laws to bar wage-theft violators from bidding on authorities contracts in cities with a inhabitants of 1 million or extra within the state — which might have lined solely New York Metropolis. However his invoice failed to achieve traction and died with out getting a single committee listening to.
Assemblymember Jo Anne Simon, who represents a number of neighborhoods in Brooklyn, advised Documented and ProPublica that she’s decided to maintain making an attempt. She stated she believes wage theft “ought to be disqualifying” for any vendor bidding on authorities contracts; with out such a provision, “the state is subsidizing wage theft.”
Vetting Can Fail to Flag Wage Theft
To be able to obtain every of its authorities contracts, Fedcap needed to bear what’s generally known as a “vendor accountability” dedication, a two-step vetting course of required by each metropolis and state guidelines.
First, the corporate needed to confide in contracting businesses details about itself that could possibly be thought of “unfavorable” or “unfavorable” — similar to whether or not its enterprise license had ever been suspended or whether or not the corporate or its officers had come beneath a authorities investigation of any form in the course of the previous 5 years.
Subsequent, the businesses needed to conduct their very own vetting of Fedcap’s background by inspecting a variety of elements, together with the corporate’s efficiency on earlier authorities contracts, monetary capability and report of “integrity.”
Underneath town’s rule, the businesses have been particularly required to test whether or not the corporate had dedicated labor legislation violations. The state asks in its vendor accountability questionnaire if the seller was discovered to have dedicated any willful violations of labor legislation prior to now 5 years. In keeping with Brill on the state Workplace of Common Providers, a wage theft violation “doesn’t robotically make a vendor non-responsible.” He explains {that a} discovering of non-responsibility “will depend on a number of elements, similar to the character of the violation, the seller’s function, whether or not the seller has cured the issue, whether or not they have paid their restitution, and so forth.”
Based mostly on what was flagged in the course of the vetting course of, every company then needed to decide whether or not Fedcap ought to be deemed a accountable vendor.
Documented and ProPublica reached out to the ten metropolis and state businesses that awarded contracts to Fedcap inside three years of the 2018 Labor Division investigation. The information organizations wished to search out out whether or not the corporate’s wage-theft historical past had been flagged in the course of the vetting course of and, in that case, how they nonetheless determined to award contracts.
The businesses included town Division of Social Providers, which gave 9 contracts price $65 million to the corporate to offer profession help; the state Training Division, which gave two contracts price $11 million for vocational rehabilitation providers; and town Division of Well being and Psychological Hygiene, which gave three contracts price $9 million for rehabilitation for folks with psychological sickness and different providers.
Of the 5 businesses that responded to our inquiries, three — town Division of Correction, the state Training Division and town Division of Well being and Psychological Hygiene — confirmed that they’d flagged Fedcap’s wage-theft historical past in their very own vendor accountability critiques. The opposite two advised Documented and ProPublica that they adopted the required vetting course of however didn’t say extra in regards to the choice to award contracts to the corporate.
5 different businesses, together with the Social Providers Division, didn’t reply to repeated requests for remark.
Spokespeople for 2 businesses — the Training Division and the Well being and Psychological Hygiene Division — defined that they’d determined to supply contracts as a result of the corporate had repaid again wages.
Sen. Brad Hoylman-Sigal, a Democrat whose district in Manhattan runs from Greenwich Village to the Higher West Facet, stated in an announcement that he believed New York ought to adhere to a coverage like these in another places and never do enterprise with corporations which have dedicated wage theft, no matter whether or not they paid again wages.
“I’m glad that, within the case of Fedcap Rehabilitation, again wages have been repaid,” Hoylman-Sigal stated. “However with none further fines, and new authorities contracts coming in, there’s nothing to cease locations like Fedcap from persevering with to take advantage of their employees sooner or later.”
Documented and ProPublica additionally discovered that the vetting course of doesn’t all the time catch circumstances of wage theft. Since 2018, two state businesses awarded 5 contracts price greater than $2 million to All Metro Well being Care, a Valley Stream-based house well being care providers firm, which dedicated wage theft in opposition to the best variety of employees among the many 25 corporations and organizations we examined.
Neither of these businesses flagged the wage theft throughout their critiques, although federal and state investigators had documented or open circumstances of wage theft earlier than the contracts have been awarded.
From 2015 to 2022, federal and state investigators discovered that the corporate had dedicated 31 separate circumstances of wage theft, totaling greater than $650,000 in again wages for 3,400 employees.
All Metro’s mother or father firm, Modivcare, didn’t reply to questions in regards to the firm’s wage-theft violations. In an announcement it stated the corporate “is devoted to making sure honest wages for all its teammates, with stringent insurance policies in place to forestall wage theft.” And it stated that because it acquired All Metro Well being Care in November 2020, it has “been vigilant in making certain that it aligns with Modivcare’s excessive requirements.”
As well as, in 2017, two former All Metro employees filed a lawsuit looking for class-action standing in opposition to the corporate.
In courtroom paperwork, the 2 plaintiffs accused the corporate of “systemic wage abuse,” together with the violations of the minimal wage and extra time guidelines. One plaintiff, house well being aide Chereda Ivory, alleged that she labored a number of 24-hour shifts every week however was paid the wages for under 13 hours per shift. The opposite plaintiff, assist providers aide Jacqueline Sistrunk, alleged that she was denied an additional hour of pay that she was entitled to beneath the “unfold of hours” regulation for days she labored for greater than 10 hours.
In December 2022, the courtroom accredited the lawsuit’s class-action standing, which covers roughly 23,000 employees, and the case is ongoing. In courtroom papers, the corporate denies the allegations and states that “Plaintiffs and the purported class members have been absolutely and correctly paid for all hours and all time which they’re entitled to compensation for.”
Jennifer O’Sullivan, spokesperson for the state Workplace for Folks With Developmental Disabilities, which awarded 4 contracts to All Metro, advised Documented and ProPublica that “our vetting course of didn’t determine any cases that might disqualify the seller.” She additionally famous that the company awarded contracts “by way of a strict and aggressive procurement course of, which incorporates due diligence of a vendor’s enterprise practices.”
O’Sullivan added that her company doesn’t have “entry to details about investigations by the Division of Labor.” Particulars of federal investigations are publicly accessible, and the state Labor Division additionally retains a database of substantiated wage theft circumstances; though it’s not public, the state DOL shares information with “enforcement companions” and different entities with which it has established information sharing agreements, a spokesperson for the company wrote in an e mail. Spokespersons for each the DOL and the Workplace for Folks With Developmental Disabilities didn’t reply to follow-up questions on whether or not they have a data-sharing settlement.
Danielle De Souza, a spokesperson for the state Well being Division, wrote in an e mail that her company awarded one contract after conducting “a full evaluation of all data supplied by the seller and thru further analysis efforts.” However a evaluation of the company’s contracting paperwork obtained by way of information requests exhibits that All Metro’s wage theft historical past was not flagged in the course of the vetting course of.
Jennifer Freeman, spokesperson for the Workplace of the New York State Comptroller, wrote in an e mail {that a} vendor’s failure to reveal all required data “often is the foundation for a discovering of non-responsibility.” However she famous: “It’s the accountability of the state contracting entity to observe up as applicable and reassess its accountability dedication in mild [of] any related new data dropped at its consideration.” The Workplace for Folks With Developmental Disabilities didn’t reply to this assertion.
Assemblymember Linda Rosenthal, a Democrat who represents the Higher West Facet and the Clinton neighborhood in Manhattan, stated checking distributors’ wage-theft historical past with the Labor departments ought to all the time be a part of the vetting course of.
If the businesses aren’t checking, she stated, they’re “reducing corners” and inadvertently encouraging “extra of the dangerous habits” by wage theft violators who would discover it “simple to flee scrutiny.”
More durable Payments Underneath Consideration
This 12 months, New York lawmakers are attempting as soon as once more to move payments that might make it tough for wage-theft violators to do enterprise within the state.
In February, Sen. Jessica Ramos, a Democrat who chairs the Senate’s Labor Committee, launched a package deal of three payments associated to wage theft. Whereas Ramos’ measures don’t name for a ban on the awarding of state contracts to wage-theft violators, they’d permit the state to put a stop-work order or droop liquor and enterprise licenses if an organization owes greater than $1,000 in again wages to employees.
However Frank Kerbein, director of the Heart for Human Sources on the Enterprise Council of New York State, stated stricter measures are “pointless,” declaring that there’s already a vetting course of for distributors. If wage-theft violators are nonetheless receiving authorities contracts, he stated, “they’re not vetting accurately.” Kerbein added that the Enterprise Council helps requiring every vendor’s wage-theft historical past to be checked in the course of the vetting course of.
With out stricter measures, employee advocates stated, corporations that adhere to the legislation are at a aggressive drawback in opposition to unscrupulous corporations that may underbid on authorities contracts.
Ferguson, Washington’s legal professional basic, stated that’s what his state’s ban has been in a position to stop. “We imagine this legislation has deterred wage theft and helped degree the enjoying area for corporations that play by the principles,” he stated in an announcement. “I hope this legislation serves as a mannequin for different jurisdictions throughout the nation.”
In Columbus, Rob Dorans, a metropolis councilmember, stated his metropolis used the identical argument to counter enterprise teams that originally opposed its 2021 ordinance that bans the awarding of metropolis contracts to wage-theft violators.
“We’re simply asking everybody to observe the legislation,” stated Dorans, explaining that he sees the ordinance as a solution to “disincentivize” corporations from committing wage theft. “Why ought to one firm be competing in opposition to one other firm for a metropolis contract and certainly one of them their enterprise mannequin relies on stealing from working folks and the opposite people are doing issues the best means?”
Methodology
Figuring out wage-theft violators which have obtained authorities contracts required us to collect information from quite a lot of sources: wage-theft information from the U.S. and New York Labor departments, and contract information from the New York state and New York Metropolis comptroller’s workplaces.
To be able to give attention to latest occasions, we checked out all contracts from 2018 till September 2023, after we downloaded the contract information. Every contract listed each a begin date and a date when it handed by way of the state or metropolis comptroller’s workplace, which may happen earlier than or after the contract has began. Our objective was to incorporate contracts from the earliest recognized second that they have been on the company’s radar, so for our evaluation we used whichever of these two dates got here first.
With our timeframe in place, we got down to search for corporations that had obtained contracts inside three years of a wage-theft case with both the federal or state Labor Division. We discovered a whole lot of preliminary matches spanning 2015 to 2022 in federal and state wage-theft databases that we obtained in 2023. That was too many to vet, so we determined to search for the largest violators, which we verified by cross-referencing the enterprise addresses related to the wage-theft circumstances and contracts. Finally we recognized 25 corporations and organizations that had owed a complete of at the very least $100,000 in again wages inside three years of receiving contracts.
As a result of wage-theft circumstances can span many months — from the date of the violations to when an investigation was opened to when it was lastly resolved — we needed to depend on the dates every regulator made accessible to us. The state wage-theft database solely indicated the date when the case was first opened. The federal information didn’t embrace a date when the case was opened, however we used the closest equal accessible, which was the final date that violations occurred. For the federal database, we solely included wage-theft circumstances that listed a enterprise deal with in New York state.
Whereas this wasn’t excellent, we felt this strategy gave us a good window into the intersection of wage theft violations and contracts. Our evaluation may be very probably an undercount, since we could have missed some further corporations due to make use of of subsidiaries or variations in how an organization identify seems throughout the databases.
Finally, we discovered these 25 corporations and organizations had obtained greater than $500 million in contracts from New York state and New York Metropolis. Not all that cash has been paid out, typically as a result of the contract is ongoing or as a result of the providers weren’t absolutely utilized. And three of the businesses — together with All Metro — had contracts for which the state didn’t pay them instantly; as an alternative, the contract worth represented the estimated quantity that might be paid by clients by way of the state’s house well being care market program.
