Office of the Comptroller ex. rel. Local 924

v. Office of Labor Relations OATH Index No. 1624/15 (Aug. 10, 2016), adopted, Comptroller’s Determination and Order

(Oct. 27, 2016), appended

OATH has jurisdiction over the Comptroller’s challenge to OLR’s

implementation of a Comptroller’s order requiring that the City pay the

prevailing rate of wages and supplemental benefits to Laborers. Evidence

established that OLR failed to properly implement the order by not paying

double the regular wage rate to Laborers for work on Sundays and certain

holidays and by not accounting for all hours worked by each Laborer in

calculating supplemental benefits.

Comptroller adopted ALJ’s recommendation and supplemented it with a

finding that OLR’s methodology for determining retiree benefits is

permissible under the Labor Law.

__________________________________________________________

NEW YORK CITY OFFICE OF

ADMINISTRATIVE TRIALS AND HEARINGS

In the Matter of

OFFICE OF THE COMPTROLLER,

EX. REL. LOCAL 924, DISTRICT COUNCIL 37, AFSCME, AFL-CIO Petitioner

- against -

OFFICE OF LABOR RELATIONS OF THE CITY OF NEW YORK Respondent

__________________________________________________________

REPORT AND RECOMMENDATION

ASTRID B. GLOADE, Administrative Law Judge

Petitioner, Office of the Comptroller of the City of New York (“Comptroller” or

“petitioner”), brought this proceeding pursuant to section 220 of the Labor Law and title 44,

chapter 2, of the Rules of the City of New York (“RCNY”) on behalf of Local 924, an affiliate of

District Council 37, AFSCME, AFL-CIO (“Union”). Petitioner alleges that respondent, the Office

of Labor Relations of the City of New York (“OLR” or “respondent”), failed to implement a

Comptroller’s order and determination dated October 13, 2010 (the “Order”) setting the prevailing

wage and supplemental benefits rate due to workers employed in the civil service title of Laborers

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and City Laborers (“Laborers”). Petitioner seeks a finding that from July 1, 2002 to June 30,

2010, OLR, on behalf of New York City (“City”), failed to pay Laborers wages double the regular

wage rate for hours worked on Sundays and certain holidays, and failed to provide prevailing

supplemental benefits (also referred to as supplements) for all hours worked by each Laborer (ALJ

Ex. 1). The Union separately claims that OLR’s methodology for calculating the cost of retiree

health and welfare benefits is unreasonable and inequitable (Tr. 29-37). Petitioner does not join

the Union in this claim.

During a four day trial, petitioner, respondent, and the Union presented seven witnesses

and voluminous trial exhibits. The record closed on December 28, 2015, with the submission of

post-trial memoranda of law and replies thereto.

For the reasons below, I find that respondent failed to properly implement the Order

setting the rate of prevailing wages and supplements owed to Laborers by not paying double the

regular wage rate on Sundays and specified holidays and by not accounting for all hours worked

by each Laborer in calculating supplemental benefits.

ANALYSIS

Statutory Framework

Section 220 of the Labor Law implements the mandate of the New York State Constitution

that contractors on public works pay their workers, laborers, and mechanics no less than the rate

of wages and supplements that is prevailing for the applicable trade or occupation in the locality

where the project is located. N.Y. Const. art. I, § 17 (Lexis 2016). It provides that: “[t]he wages

to be paid for a legal day’s work . . . to laborers, workmen or mechanics upon such public works,

shall be not less than the prevailing rate of wages” and “[t]he supplements . . . to be provided to

laborers, workmen or mechanics upon such public works, shall be in accordance with the

prevailing practices in the locality.” Labor Law § 220(3)(a), (b) (Lexis 2016). Supplements are

defined as “all remuneration for employment paid in any medium other than cash, or

reimbursement for expenses, or any payments which are not ‘wages’ within the meaning of the

law, including, but not limited to, health, welfare, non-occupational disability, retirement, vacation

benefits, holiday pay, life insurance, and apprenticeship training.” Labor Law § 220(5)(b).

Section 220 imposes the obligation to pay prevailing wages to municipal workers, as well as

private workers, who are employed on public works.

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As “fiscal officer” for the City of New York, the Comptroller sets the rate of prevailing

wages and supplements annually and investigates complaints brought pursuant to the Labor Law.

Labor Law §§ 220(5)(e), (7).

Section 220 requires that the City and public employee organizations (referred to herein as

unions) negotiate in good faith to enter into written agreements regarding the wages and

supplemental benefits to be paid to prevailing wage employees. However, if they are unable to

reach an agreement, the union is authorized to file a complaint with the Comptroller on behalf of

the employees. The Comptroller is required to conduct an investigation to determine the

prevailing wages and supplements due to the workers and to hold a hearing prior to making any

order or determination. Labor Law §§ 220(7), (8), (8-d).

Procedural Background

This matter arises from a previous prevailing wage dispute between the same parties in

which the Comptroller sought a determination of the prevailing wage and supplemental benefits

rate to be paid to Laborers employed by the City. See Office of the Comptroller ex rel. Local 924

v. Office of Labor Relations, OATH Index No. 464/10 (July 2, 2010), adopted, Comptroller’s

Determination (Oct. 13, 2010), aff’d, 93 A.D.3d 584 (1st Dep’t 2012).

Following a trial, Administrative Law Judge Tynia Richard found that the work performed

by Laborers is comparable to that of workers in the title of mason tenders of the Mason Tenders

District Council of Greater New York (“Local 79”). Id. at 44. She recommended adoption of the

Comptroller’s preliminary determination that Laborers be paid wages and supplements

commensurate with those set forth in the private sector collective bargaining agreement for Local

79. Id. at 46-47. On October 13, 2010, the Comptroller adopted Judge Richard’s recommendation

and issued the Order setting out an hourly wage rate and supplemental rate for the period from

July 1, 2002 to June 30, 2010 (Pet. Ex. 1). The Order mandates that the City “shall pay the

complainants wages and wage supplements commensurate with those contained in the collective

bargaining Agreement of Local 79 . . . and summarized in the ‘Summary of Prevailing Wages and

Benefits for City Laborers attached to the August 14, 2009 petition . . . .” (Pet. Ex. 1).

Respondent challenged the Comptroller’s determination in an Article 78 proceeding, which was

dismissed in March 2012. City of New York v. Liu, 93 A.D.3d 584, 585 (1st Dep’t 2012).

In June 2012, OLR implemented the Comptroller’s Order and issued retroactive wage

payments based on the mason tender rates for the period from July 1, 2002 to June 30, 2010 (Pet.

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Ex. 3). In addition, OLR implemented prospective supplemental (or “fringe”) benefit adjustments

to “match the cost of the Local 79 hourly fringe benefit rates set forth in the Order.” These

adjustments reduced or eliminated the Laborers’ paid leave and annuity fund contributions (Pet.

Ex. 3; Tr. 382-85).

The Union filed a complaint with the Comptroller on June 13, 2012, pursuant to section

220(7) of the Labor Law, alleging that the City, The New York City Health and Hospitals

Corporation, and the City University of New York (“CUNY”) failed to provide back pay for

double-time work performed on Sundays and seven specified holidays between June 30, 2002 and

July 30, 2012 (Pet. Ex. 6). The Union filed a second complaint on June 28, 2012, alleging that

Laborers were receiving less than the prevailing supplemental benefits rate mandated by the Order

(Pet. Ex. 5). Following unsuccessful negotiations between the Union and OLR, the Comptroller

filed a petition with this tribunal on January 28, 2015 (ALJ Ex. 1).

The Comptroller alleges that the City failed to properly implement the Order directing

payment of prevailing wages and supplements to Laborers, resulting in a failure to pay Laborers

wages for all overtime hours worked and failure to provide prevailing supplements for all hours

worked from July 1, 2002, to June 30, 2010 (ALJ Ex. 1).

Justiciability of Petitioner’s Claims

As an initial matter, respondent’s contention that this tribunal should refrain from issuing a

report and recommendation as to whether OLR employed the proper methodology for calculating

the cost of supplemental benefits is without merit (Respondent’s Post-trial Memorandum (“Resp.

Mem.”) at 28; Respondent’s Reply Memorandum (“Resp. Reply Mem.”) at 1). According to

respondent, nothing in section 220 “permits the Comptroller to make an order simply stating the

City wrongly calculated the value of its supplements, and this tribunal should not issue a report

and recommendation invalidating a methodology . . . absent some evidence of actual

underpayment” (Resp. Reply Mem. at 2). In essence, OLR contends, without reference to

authority, that this matter is not appropriate for review because the Comptroller failed to submit

proof that OLR underpaid Laborers in implementing the Order.

In opposition, petitioner argues that there is an actual controversy to be determined, to wit,

the proper methodology for calculating supplemental benefits under the Order (Pet. Reply Mem.

at 5). According to petitioner, the issue is one of first impression because it has previously

deferred to respondent in implementation of its prevailing wage and supplemental benefit orders

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for municipal employees and has not audited respondent to ascertain compliance with its orders

(Pet. Reply Mem. at 3, 4-5).

The novelty of the issue does not bar this tribunal from issuing a report and

recommendation in a matter over which it has jurisdiction when there is a justiciable dispute

between the parties. This tribunal has jurisdiction over agency adjudications, which are defined as

“proceeding[s] in which the legal rights, duties or privileges of named parties are required by law

to be determined by an agency on a record and after an opportunity for a hearing.” Charter §§

1041(1), 1048(1) (Lexis 2016). Section 220(7) provides a mechanism for the conduct of hearings

and the Comptroller has designated this tribunal to hold hearings pursuant to that provision. See

44 RCNY § 2-02(d) (Lexis 2015) (“an administrative law judge assigned to OATH shall conduct

hearings pursuant to Labor Law §§ 220 and 235.”). Here, the Comptroller brought a proceeding

pursuant to section 220, which is within the jurisdiction of this tribunal.

This tribunal has noted that “courts and administrative tribunals, unless authorized to issue

advisory opinions, refrain from determining claims that are not ripe for adjudication or review.”

Transit Auth. v. Chen, OATH Index No. 379/03 at 3, n. 1 (Jan. 8, 2003), aff’d in part, rev’d in

part, Transit Auth. Dec. (Jan. 24, 2003). It has, however, exercised its jurisdiction where a

decision would resolve an actual controversy between the parties. See Comptroller v. CDI 21st

LIC, LLC, OATH Index No. 1125/05, mem. dec. at 4 (Sept. 14, 2005), adopted, Comptroller’s

Decision (Jul 17, 2006) (finding it appropriate to determine claim where “decision would affect

the legal rights of respondents and the workers on whose behalf the Comptroller seeks payment”).

This matter presents actual controversies between the parties and a decision would affect the

rights of those on whose behalf petitioner initiated the proceeding, as well as respondent’s rights.

Consistent with this understanding of its jurisdiction, this tribunal issued a decision in a

prevailing wage dispute between petitioner and respondent regarding how “the prevailing practice

of providing supplements in relation to carpenters and supervisor carpenters employed by the

City” should be determined. Comptroller v. Office of Labor Relations, OATH Index No. 254/05

at 1 (Feb. 28, 2005). The focus of much of the dispute was the appropriate methodology for

valuing the benefits to be provided to the employees. In that case, the disputed issues concerned

the method for valuing private sector benefits, whether overtime hours worked should be included

in the valuation of benefits, and whether premium pay for overtime work should commence after

seven or eight hours of work. Id. at 3-4. The procedural posture of the 2005 case is different in

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that the dispute as to methodology arose before the prevailing wages and benefits had been

established. Id. at 1-3. This tribunal found it appropriate to issue a decision as to those issues.

Here, although the dispute as to methodology arose after the Comptroller issued the Order, it

involves interpretation of section 220, which is within the jurisdiction of this tribunal. See also

Matter of McFarland v. Office of Labor Relations, 23 Misc. 3d 1127(A) (Sup. Ct. NY County

2009) (Under similar facts, court concluded that section 220 provides an administrative remedy

that unions must exhaust before seeking judicial review of the City and OLR’s unilateral change

in leave balances. The court found that section 220 “authorizes the Comptroller to adjudicate the

complaints of aggrieved employee organizations” and does not “proscribe the ability of the

Comptroller to ‘make either an order, determination or other disposition . . . of [the] verified

complaint’” where efforts fail to resolve disputes about prevailing wages and supplements through

collective bargaining) (quoting Labor Law § 220(7)).

In a related argument, OLR maintains that this tribunal should refrain from issuing a

decision because petitioner failed to present any evidence of underpayment to a particular Laborer

and, absent such proof, petitioner is seeking an advisory opinion (Resp. Br. 28). In OLR’s view,

petitioner must conduct a full audit before bringing a claim.1 Respondent contends that both the

Comptroller and the Union failed to put forth evidence of underpayment of the prevailing rate of

supplements. Furthermore, respondent alleges that the Comptroller and the Union had access to a

“voluminous” amount of data from 2006 to 2010 showing hours worked by Laborers and could

not show an underpayment (Resp. Reply Mem. at 2).

However, petitioner’s contention that Labor Law section 220 does not require that it

complete a full audit of the City’s records to prove an underpayment is persuasive (Petitioner’s

Post-trial Memorandum (“Pet. Mem.”) at 3-4; Petitioner’s Reply Memorandum (“Pet. Reply

Mem.”) at 1-5).

1 Petitioner and the Union noted that OLR’s contention that a complete audit of the payroll records is required is at

odds with its position during discovery, when it did not produce all relevant payroll records as requested (Pet. Reply

Mem. at 4, n.2; Union Reply Memorandum (“Union Reply Mem.”) at 3). The parties agreed that the payroll records

are incomplete because they only contain information from 2006 to 2010 and do not include records for Laborers who

worked for some City entities. The parties further agreed that the records were submitted for illustrative purposes in

addressing the methodology OLR used when it implemented the Order (Tr. 83-87). The Union argues that even if

there is no evidence of actual underpayment of supplemental benefits, this tribunal should issue a recommendation

about the proper methodology because of the ongoing nature of this dispute and the fact that the parties will have to

argue the same issues in the future (Union Reply Mem. 4).

-- 7 --

Relying on Gaston v. Taylor, petitioner maintains that unlike enforcement matters

involving a private contractor, an audit of payment records made by the City is unnecessary in an

enforcement case against a public employer. 274 N.Y. 359, 365 (1937). In Gaston, the Court of

Appeals held that section 220 applies to public employers as well as private employers on public

works projects. Id. at 363. The court also noted that although section 220 provides a mechanism

for enforcing the obligation to pay prevailing wages, including provisions for “compelling the

production of schedules of wages and books and records pertaining to the rate of wages paid to

employees,” these enforcement provisions “can have no application to payment of the prevailing

rate of wages by the city. They are adapted only to proceedings to enforce against contractors . . .

.” Id. at 365. The Court recognized that for purposes of enforcing the prevailing wage law, a

governmental employer is different from a private contractor because wages paid by the

government are a matter of public record. Therefore, the court reasoned, it is unnecessary to

compel production of such evidence. Id.

Respondent’s attempt to distinguish Gaston is unconvincing. Respondent asserts that in

the typical section 220 case between the Comptroller and the City, the Comptroller seeks to

determine the applicable prevailing wage and supplemental benefits rates. This, respondent

claims, is consistent with Gaston because the disagreement is about what the prevailing rate is, not

whether it has been paid. By contrast, respondent asserts that in this case the City claims that it

has already paid the prevailing rate and supplements pursuant to a Comptroller’s order.

Therefore, respondent seems to conclude, the Gaston rationale is not applicable and the

Comptroller must conduct an audit to prove that the City has not paid the prevailing rate of wages

and supplements (Resp. Reply Mem. at 1). Here, however, the issues are whether the City failed

to meet its obligation to pay prevailing wages for work on certain days and whether it used a

flawed method to calculate the hourly cost of benefits. Resolving these issues does not require an

audit to prove that individual Laborers were underpaid.

It is regrettable that neither party undertook the analysis that is at the center of this dispute,

as it may have provided a basis for more productive negotiations between the parties as

contemplated by the Labor Law. Moreover, such an analysis would have gone a long way

towards making petitioner’s methodology argument more tangible. Nevertheless, resolving the

issues raised in the petition does not require an audit, although it may become necessary to

conduct one in the wake of this proceeding. Accordingly, petitioner is not required to conduct an

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audit of respondent’s complete payment records to establish actual underpayment of wages or

supplemental benefits.

Prevailing Wages for Hours Worked On Sundays and Certain Holidays

Petitioner alleges that OLR failed to pay Laborers double the rate of wages for work

performed on Sundays and certain holidays from July 1, 2002 through June 30, 2012, as required

by the Order.

In an enforcement case brought under Labor Law section 220, the petitioner must prove by

a preponderance of the credible evidence that the respondent failed to pay its workers prevailing

wages and supplements for work performed on public works projects. Comptroller v. Viva

Victoria Enterprise, Ltd., OATH Index Nos. 1043/06 & 1042/06 at 4 (May 18, 2006);

Comptroller v. RIP Marine Systems, Inc., OATH Index Nos. 2133/99 & 2134/99 at 3 (Aug. 18,

1999). Accordingly, the Comptroller must establish by a preponderance of the credible evidence

that the City failed to pay Laborers the correct prevailing wage rate on Sundays and certain

holidays. The Comptroller has satisfied its burden.

Section 220 of the New York Labor Law requires employers, including the City to pay the

prevailing wage rate to certain workers on public works projects. The prevailing wage rate is

defined as

[T]he rate of wage paid in the locality, as hereinafter defined, by virtue of

collective bargaining agreements between bona fide labor organizations and

employers of the private sector, performing public or private work provided

that said employers employ at least thirty per centum of workers, laborers or

mechanics in the same trade or occupation in the locality where the work is

being performed.

NY Labor Law § 220(5)(a).

Stuart Rimmer has been Director of Audits at the New York City Comptroller’s Office

Bureau of Labor Law since 1995. His duties include conducting wage and benefit audits to

determine whether there were underpayments. In performing these audits, Rimmer and his staff

rely on the section 220 prevailing wage schedule published annually by the Comptroller (Tr. 50-

51). Rimmer testified that the Comptroller promulgated the prevailing wage and supplemental

benefits schedule for Local 79 mason tenders for July 1, 2002 to June 30, 2010, pursuant to

section 220 of the Labor Law (Tr. 49-50, 74-75; Pet. Ex. 7). That schedule sets forth the hourly

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prevailing wage rate and the hourly supplemental benefits rate, overtime rules, and shift rates for

mason tenders, which title the Order deemed the private sector match for Laborers for purposes of

setting prevailing rates (Tr. 74-75; Pet. Ex. 1).

The Comptroller relied upon the private sector collective bargaining agreements between

Local 79 and the Building Contractors Association, Inc., to determine the prevailing wage rate due

to the Laborers (Tr. 52-53, 75; Pet. Exs. 7, 8, 9). These agreements provide that “all work

performed during lunch hour, Sundays and on the following legal holidays: New Year’s Day,

Presidents’ Day, [Memorial] Day, Independence Day, Labor Day, Thanksgiving Day, Christmas

Day, shall be paid at the rate of double time” (Pet. Exs. 8, 9; Tr. 78-80). Consistent with this

provision, the Order indicates that double time is to be paid for work performed on Sundays, and

the same designated holidays (Pet. Ex. 1 at 5). The Order further provides that “time and one half

shall be paid for all work performed on Saturdays and for all work in excess of eight hours per

day” (Pet. Ex. 1 at 5).

The Order required that the City pay Laborers wages and supplements commensurate with

those contained in the Local 79 collective bargaining agreement for July 1, 2002 through June 30,

2010 (Pet. Ex. 1). A summary of prevailing wages and benefits annexed to the Order provides:

OVERTIME

Time and one-half shall be paid for all work performed on

Saturdays and for all work in excess of eight hours per day.

Saturday may be used as a make-up day at straight time when a day

is lost during that week to inclement weather. Double time shall be

paid for all work performed on Sundays and the following holidays:

New Year’s Day, President’s Day, Memorial Day, Independence

Day, Labor Day, Thanksgiving Day and Christmas Day.

(Pet. Ex. 1 at 5). Petitioner alleges that OLR failed to properly implement the Order because it did

not pay double the regular rate of wages for Sundays and the seven specified holidays.

The parties stipulated that Laborers were paid time and one-half, not double time, for

hours worked on Sundays and on New Year’s Day, President’s Day, Memorial Day,

Independence Day, Labor Day, Thanksgiving Day, and Christmas Day (Tr. 12).

Rimmer created payroll summaries that reflected weekend, holiday and overtime hours

worked by each Laborer between 2006 and 2010 using payroll records provided by OLR (Tr. 82-

83; Pet. Exs. 10, 11, 12, 13, 14, 15, 16, 17, 18, 19). According to Rimmer, the payroll records

indicate that all Laborers employed by mayoral agencies, New York City Housing Authority, and

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CUNY junior colleges collectively worked an average of 30,000 hours a year in overtime,

weekends, and holidays from 2006 to 2010, or a total of over 150,000 overtime hours in that

period (Tr. 81-85, 94-95; Pet. Ex. 20).

OLR all but conceded that it is obligated to pay double time to Laborers for work on

Sundays and the specified holidays. OLR contends, however, that the City paid time and one-half

on certain holidays when only straight-time pay was required by the Order, resulting in an

overpayment to the Laborers. According to OLR, such an overpayment offsets any underpayment

for double time (Resp. Mem. at 34).

Rimmer acknowledged that the City provided Laborers with twelve paid holidays and

some holidays were, in fact, paid at time and one-half when the Order did not require it (Tr. 65).

Rimmer testified that if an employer pays its employees time and one-half for a holiday that

should only be paid at the regular rate, it is permissible to use that overpayment to offset an

underpayment of wages on holidays where the employer failed to pay double the prevailing wage

rate as required (Tr. 108). In its reply brief, petitioner did not “dispute that respondent is entitled

to take a credit for the overpayment of wages for work on other holidays when it calculates the

underpayment of prevailing wage for each employee on Sunday and holiday hours worked,

assuming that time and one-half the regular wage rate was not otherwise required by federal law”

(Pet. Rep. Br. 2, n. 1).

While the parties seem to agree that overpayment of wages warrants an offset of

underpayment of wages, the Union urges that the offset period be limited to a calendar year

(Union’s Post-trial Memorandum (“Union Mem.”) at 25). The Union contends that it filed a

complaint with petitioner in June 2002 and the Comptroller delayed filing the petition until 2009.

According to the Union, permitting the City to use its overpayments on wages between 2002 and

2010 to offset underpayment of wages during that same period will reward respondent and punish

the Laborers for the Comptroller’s delay (Union Mem. at 25, 35-36). The Union further posits

that should the Comptroller allow the offset period to be as long as the period under review, “all

prevailing rate titles would have a viable claim for prejudice every time the Comptroller delayed

more than a year in acting on a complaint” (Union Mem. at 36).

Rimmer testified that in his experience an overpayment of wages may be used to offset an

underpayment of wages. His testimony was unclear, however, about the amount of time for which

offset is permitted. Rimmer testified that in his experience, the average period for which the

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Comptroller has permitted an offset of underpayment of wages with an overpayment has been a

year or two, but also testified that an offset of up to four or five years is permissible (Tr. 107-08,

115). Rimmer ultimately concluded that the Comptroller permits an overpayment of wages to

offset an underpayment of wages based on principles of fairness, reasonableness, and adherence to

the Labor Law’s requirement that workers be paid a minimum rate (Tr. 107-08).

In seeking to limit the offset period, the Union proposes what could amount to a windfall

for the Laborers, who would receive credit for the City’s failure to pay double-time hours from

July 2002 through June 2010, yet would not have to account for excess payments they received at

time-and-a-half the wage rate during the same period.

The circumstances in this case, which involve payments over a period of eight years, are

anomalous because of the length of time involved. It is undisputed, however, that an overpayment

of wages may be used to offset an underpayment of wages. The Union offers no support for its

contention that the offset period should be limited, nor any justification for its suggestion that the

offset be limited to one year. Moreover, the Union offers no rationale for imposing upon the City

the price of the Comptroller’s delay by limiting the offset period.

Accordingly, I find that respondent failed to properly implement the Order with respect to

prevailing wages by not paying double the regular wage rate to Laborers for work on Sundays and

on New Year’s Day, President’s Day, Memorial Day, Independence Day, Labor Day,

Thanksgiving Day and Christmas Day. Petitioner and respondent do not dispute that proper

implementation of the Order includes a methodology that allows respondent to offset its

obligation to pay double time by deducting amounts it has overpaid for other holidays.

Respondent should be able to determine whether such offset is appropriate for individual Laborers

by review of its records. I decline to limit the period of such offset to one year as urged by the

Union.

Method of Costing Prevailing Supplemental Benefits

Petitioner’s second claim is that OLR failed to use the proper methodology to calculate the

hourly cost of supplemental benefits that the City provides to Laborers when it implemented the

Order. Specifically, Petitioner alleges that in determining the cost of supplemental benefits it

provides to Laborers, OLR assumed that all Laborers worked the same total number of hours per

year. However, petitioner contends, because individual Laborers worked overtime hours and/or

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did not use their allocated paid leave OLR’s costing failed to calculate supplemental benefits for

all hours worked, in violation of the Order.

It is well-established that the purpose of section 220 is to protect those employed on public

works from being required to accept wages below a prevailing wage and that the provision must

be liberally construed to effectuate that purpose. See Bucci v. Village of Port Chester, 22 N.Y.2d

195, 201 (1968) (“We are here required to give effect to a unique statutory scheme, one that has as

its entire aim the protection of workingmen against being induced, or obliged, to accept wages

below the prevailing rate from a public employer . . . section 220 must be construed with the

liberality needed to carry out its beneficent purposes.”); Austin v. New York, 258 N.Y. 113, 117

(1931) (Section 220 “is an attempt by the State to hold its territorial subdivisions to a standard of

social justice in their dealings with laborers, workmen and mechanics. It is to be interpreted with

the degree of liberality essential to the attainment of the end in view.”); see also Beltrone

Construction Company v. McGowan, 260 A.D.2d 870, 871 (3d Dep’t 1999) (the purpose of the

prevailing wage law is to “ensure that employees on public works projects are paid wages

equivalent to the prevailing rate of similarly employed workers in the locality where the contract

work is to be performed”). This protection extends to those workers employed by state and local

governments as well as to those working for private contractors. Gaston v. Taylor, 274 N.Y. at

364.

Section 220 requires payment of supplemental benefits, which the employer may satisfy

by providing employees on public work projects “with the cash equivalent of the cost of obtaining

the prevailing benefits or by providing an equivalent benefits plan, or by a combination of benefits

and cash equal to the cost of the prevailing benefits.” Action Electrical Contractors Co., Inc. v.

Goldin, 64 N.Y.2d 213, 218 (1984).

The Court of Appeals has recognized that determining whether an employer’s

supplemental benefits correlate to the prevailing supplemental rate is not a simple matter.

Chesterfield Associates v. New York State Dep’t of Labor, 4 N.Y.3d 597, 601 (2005) (“whether a

contractor pays a prevailing wage is easy enough to figure out . . . [h]ow an employer’s fringe

benefits relate to a prevailing supplement is less straight forward”); see also Action, 64 N.Y.2d at

221 (noting the statute’s ambiguity regarding how to determine whether an employer has

complied with its obligation to pay supplemental benefits).

-- 13 --

Recognizing the difficulty in computing the hourly cost of supplemental benefits, the

Commissioner of the New York State Department of Labor adopted regulations that include a

method for such calculations. See 12 N.Y.C.R.R. § 220.2(d) (Lexis 2016); Chesterfield, 4 N.Y.3d

at 601. The regulations provide that to determine the hourly cash equivalent of supplements

provided to or on behalf of prevailing wage workers, the Commissioner is to “divide the

[employer’s] actual contribution or cost for providing such supplement by the total annual hours

worked [by employees] on both public and private work” where the employer provides proof of

payment and hours worked. 12 N.Y.C.R.R. § 220.2(d)(1). Where the employer fails to provide

“proof of total annual hours worked by the employee on both public and private work” the

Commissioner is to “divide the actual annual contribution or cost for providing such supplement

by the 2080 hours (8 hours per day x 5 days per week x 52 weeks).” 12 N.Y.C.R.R. § 220.2(d)(2).

Thus, the New York State Department of Labor’s regulations for computing the hourly cash

equivalent of supplements require accounting for the total annual hours worked by each individual

employee. Where the employer is unable to prove the total annual hours worked, it is presumed

that the employee worked a full year, with no deduction for leave time. While the State

Department of Labor regulations are not applicable here, it is instructive that the methodology

contained in those regulations is consistent with that advanced by petitioner. See Comptroller v.

Office of Labor Relations, OATH Index No. 254/05 at 4 (Feb. 28, 2005) (annualization rule

instructive for determining whether private sector supplements should be valued based on cost of

benefits to the employee or value of the benefit actually received).

Petitioner contends that the applicable section 220 prevailing rate schedule, the relevant

collective bargaining agreements, and the Order require that OLR calculate the City’s cost of

providing supplemental benefits based on an individualized assessment of total hours worked by

each Laborer instead of the straight-time analysis OLR used, which assumed that all Laborers

worked the same total number of hours per year (Pet. Mem. at 19-22). There is merit to

petitioner’s claim.

Unlike in the private sector, the City does not make hourly contributions into a benefits

fund for Laborers, but provides benefits to all its employees. The supplemental benefits the City

provides include a defined benefits pension, health insurance for active and retired employees,

contributions to union welfare funds, annuity contributions, and paid leave time such as annual

leave, sick leave, holidays, and leave regulation time (Tr. 379-80). To determine whether the City

-- 14 --

has provided benefits comparable to the rate of supplemental benefits prevailing in the locality, it

is necessary to determine the hourly cost of the benefits the City provides.

Steven Banks, the Assistant Commissioner of Labor Relations at OLR, is the assigned

negotiator for the City’s prevailing wage rate groups, which include over 50 separate units and

roughly 10,000 employees (Tr. 377). Banks testified that in bargaining with prevailing rate

unions, the City offers unions the choice of bargaining based on the prevailing rate or on the

civilian pattern package applicable to that round of bargaining (Tr. 378).

Under the prevailing rate bargaining approach, the City looks at wages and supplemental

benefits as distinct components of the prevailing rate (Tr. 378). For the wages component, the

City, with guidance from the Comptroller as to the applicable prevailing rate, looks at the

prevailing wage established for that title. For supplemental benefits, the City prepares an analysis

to reflect the cost to the City of providing supplemental benefits in comparison to the prevailing

supplement rate. According to Banks, while health and pension benefits are mandated by statute,

there is flexibility in the bargaining process to adjust paid time off, annuity and welfare fund

contributions (Tr. 380).

If the Union opts for the civilian pattern bargaining approach, the City bargains with and

enters into a settlement with a civilian union, typically District Council 37, and the wage and

benefits agreed to in that round of bargaining become the basis for agreements with other unions

(Tr. 450). If a prevailing rate union accepts the civilian pattern, the City avoids having to conduct

a costing of the supplemental benefits (Tr. 381, 450-51).

Whether negotiations proceed by the prevailing rate or the civilian pattern bargaining

method, a successful bargaining session results in a consent determination among the City, the

union, and the Comptroller that establishes wages and other economic conditions for the time

period at issue (Tr. 381).

Following the 2010 Order and OLR’s unsuccessful appeal, Banks and the Union engaged

in negotiations that focused on the prevailing supplemental benefits. In June 2012, having failed

to reach a negotiated agreement, OLR unilaterally implemented the Order based on its prevailing

rate costing analysis (Tr. 382; Pet. Ex. 3).

Petitioner contends that in implementing the Order, OLR failed to undertake an

individualized inquiry as to each Laborer’s actual total hours worked annually. As a result of

OLR’s failure to account for actual hours each Laborer worked, petitioner argues, the City

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underpaid supplemental benefits to Laborers who worked overtime or did not use all of their

allocated leave time between 2002 and 2010. Furthermore, the City continued to improperly

implement the Order by significantly reducing the amount of leave time provided to the Laborers

starting in 2012 (Tr. 17; Pet. Mem. at 23-25).

OLR’s Straight-Time Methodology

OLR acknowledges that it did not undertake an assessment of actual hours worked by

individual Laborers between 2002 and 2010. Instead, OLR used a “straight-time method,” which

it contends is permitted under the Labor Law (Resp. Mem. at 29).

Straight-time means that in determining the total number of hours worked for purposes of

calculating the hourly cost of the supplemental benefits, OLR took 261 work days per year,

multiplied that number by eight hours per day, for a total of 2088 per year. OLR then deducted

from 2088 hours vacation allowance, paid holidays, sick leave allowance hours, and leave

regulation hours (Lake: Tr. 292-93). The City has utilized the straight-time method since at least

the early 1980s and used it for all the prevailing rate unions during the 2002 to 2010 period (Tr.

292, 328-29). The straight-time method is an aggregate approach under which it is assumed that

all Laborers work the same total number of hours per year (Tr. 288).

OLR prepared a spreadsheet that reflects OLR’s methodology for determining the cost to

the City of supplemental benefits provided to Laborers (the “Costing Sheet”) (Tr. 278; Pet. Ex. 4).

The Costing Sheet was prepared by Tamara Lake, an Assistant Commissioner at OLR (Tr. 278;

Pet. Ex. 4). Lake has been Assistant Commissioner since 2012, and has been involved in

prevailing rate negotiations since 1995 (Tr. 278-81). She explained that costing models ascribe a

cost to the City for providing supplemental benefits to its employees and are usually used as a tool

in bargaining, but sometimes also for implementing a Comptroller’s order (Tr. 282-83).

Lake, who has prepared hundreds of costing spreadsheets, prepared the Costing Sheet for

the Laborers when OLR and the Union were engaged in negotiations in early 2012 after the

appellate court affirmed the Order (Tr. 282-84). The Costing Sheet reflects OLR’s calculation of

the cost of the benefits that the City provides to its employees, reduces that cost to an hourly rate,

and compares that cost to the relevant prevailing rate of supplements established by the

Comptroller (Tr. 378-79; Pet. Ex. 4). The Costing Sheet she prepared for the Laborers determined

the cost to the City of providing supplemental benefits between July 2002 and June 2010 on a

straight-time basis (Tr. 282; Pet Ex. 4).

-- 16 --

The Costing Sheet is organized in rows that are captioned in six-month periods from July

2002 to June 2010. The second column from the left indicates the hourly prevailing wage rate.

The third through eleventh columns indicate the hourly cost to the City for pension, welfare fund

contributions, health benefits, retiree health and welfare, average vacation allowance, paid

holidays, sick leave allowance, leave regulation, and annuity. The hourly cost of the supplemental

benefits was derived by dividing the total annual cost of the benefit provided by the “Total

[Hours] Worked” column, which ranged between 1676 and 1693 hours from 2002 to 2010 (Tr.

63-65; Pet. Ex. 4). The total cost per hour to the City of these supplemental benefits is indicated

in the next column. The hourly wage rate and the total cost of supplements per hour were

combined to reach the total compensation paid per hour on average for each Laborer during each

period (Tr. 285; Pet. Ex. 4).

OLR arrived at its “total hours worked” figure in the Costing Sheet by deducting the total

number of paid leave hours provided to a Laborer in a year from the standard total number of

hours worked in a year. The calculation started with 2080 hours, which represents the standard

number of hours in a typical forty-hour work week for an eight-hour per day trade multiplied by

52 weeks in a year (Tr. 66).2 OLR determined that Laborers were provided with about 400 hours

of paid leave per year (annual leave, sick leave, paid holiday, and leave regulation), which it

deducted from the standard total number of hours worked to arrive at its “total hours worked”

figures (Tr. 66-67; Pet. Ex. 4).

Lake and Banks testified that the ‘total hours worked” in the Costing Sheet did not account

for any overtime hours worked, whether in excess of the regular eight-hour day, on weekends, or

on paid holidays, and did not factor employees’ use of paid leave that was less than the maximum

allowed leave (Lake: Tr. 293, 306-09; Banks: Tr. 402-03). Accordingly, OLR’s costing

calculation assumes that between July 2002 and June 2010, each Laborer worked the same

number of total hours, which ranged between 1676 and 1973 hours (Pet. Ex. 4).

To determine the hourly cost of sick, holiday, and annual leave time, OLR multiplied the

number of days of leave allocated to Laborers by eight hours per day then multiplied the sum of

that calculation by the hourly wage rate in the period the leave was provided. The sum of those

calculations was then divided by the total number of hours worked, determined under the straight-

2 OLR’s calculation also used 2088 as the standard total number of hours worked, instead of 2080 (Tr. 292-93). OLR

multiplied the total number of workdays per year, 261, by eight hours per day, for a total of 2088 per year (Tr. 292-

93). The difference does not appear to materially affect OLR’s methodology.

-- 17 --

time model (Tr. 291-92). Certain benefits are a fixed amount, such as the welfare fund

contribution cost that the City contributes for each Laborer (Tr. 289; Resp. Ex. A). In addition,

the hourly value of the pension fund, welfare fund, and health care contributions are calculated by

dividing the total amount of the cost to the City for each category by the total hours worked, on

average, each year by a Laborer (Tr. 287-90).

Using the straight-time method, OLR concluded that the City provided Laborers with

supplemental benefits in excess of the prevailing rate set forth in the Order between 2002 and

2010. OLR calculated the cost of the excess supplements at between $8.39 and $10.05 per hour

for each six-month period between July 2002 and June 2010. Banks testified that an analysis

completed by OLR and the Office of Management and Budget showed that based on payments

OLR made in excess of the supplemental benefit rate between July 2002 and January 2010,

Laborers would have needed to work on average between 700 and 1,100 hours extra each year to

match the overpayment (Tr. 388-89; Resp. Ex. B).

The Costing Sheet reflects the City’s efforts to provide benefits to Laborers that were

equal to the prevailing supplement rate set forth in the Order. The bottom row of the Costing

Sheet, designated “balance to prevailing rate,” shows that by reducing or eliminating supplemental

benefits, OLR was able to bring the City’s cost of providing wages and supplemental benefits to

Laborers within six cents of the applicable prevailing rate of wages and supplements (Rimmer: Tr.

71; Lake: Tr. 286, 320-23; Pet. Ex. 4). OLR implemented the reduction in benefits in June 2012

(Pet. Ex. 3).

Comptroller’s Method of Accounting for Total Hours Worked by Each Laborer

Rimmer testified that the Order included a summary of prevailing wages and supplemental

benefits for Local 79 mason tenders for six-month periods between July 1, 2002 and December

31, 2009 Pet. Ex. 1). While the summary did not explicitly state that wages and supplemental

benefits are to be provided for each hour worked, according to Rimmer this was “assumed” to be

the case because the document is based on the Local 79 collective bargaining agreement, which

provides that wages and benefits are to be paid for each hour worked (Tr. 53-54; Pet. Exs. 8, 9).

Rimmer testified that the Comptroller’s Bureau of Labor Law employs two different

methods for determining the hourly cost of supplemental benefits, neither of which is consistent

with the method OLR used (Tr. 70). One method is typically used when the contractor is a small

“mom and pop” business that purchases the benefits it provides to its employees. The Bureau of

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Labor Law reviews the cost of the benefits the employer paid for an individual worker and divides

that amount by the number of hours that the employee worked to arrive at the hourly benefit rate

the employer paid. The second method, used where the workers are union members, is to credit

the employer for paying the union rate of benefits (Tr. 69). Under the first method, when the

Bureau of Labor Law lacks proof of the total number of hours an employee worked in a given

year, it performs calculations based on an assumption that the employee worked 2080 hours per

year (Tr. 69-70).

Rimmer testified that respondent’s method for calculating the hourly cost of the

supplemental benefits the City provides to Laborers is inconsistent with petitioner’s methods for

conducting such calculations because it fails to account for overtime hours that a Laborer works

and it deducts all paid leave provided in a calendar year, instead of actual leave taken. In sum,

petitioner’s complaint is that OLR’s method assumes that no Laborer worked overtime or took

less than the full amount of paid leave allocated in a year (Tr. 67-70).

Petitioner contends that individual Laborers worked overtime hours during the inquiry

period (Resp. Mem. at 22). By way of illustration, Rimmer testified that in 2006 Laborer Burnett

worked a total of 35.5 holiday hours and 889.5 overtime hours (Pet. Ex. 11; Tr. 91-92). Even

accounting for paid leave of approximately 400 hours in 2006, Burnett worked a total of about

2500 hours in 2006 (Tr. 92-93). This is well above the total hours worked of 1671 and 1673 hours

that OLR used in its costing analysis for 2006, which did not account for overtime hours worked

(Tr. 92-93: Pet. Ex. 4).3 However, petitioner did not present specific calculations showing

evidence of individual underpayment of prevailing supplements for individual Laborers. Instead,

petitioner relied on the calculations detailed in the Costing Sheet to conclude that underpayment

would be inevitable given that Laborers often worked overtime hours and on paid holidays (Tr.

95, 99-100; Pet. Exs. 4, 11, 13, 15, 17, 19). Rimmer testified that “it was obvious [to him] that

there were certain instances [where] there would be an underpayment in benefits” for some

Laborers (Tr. 99).4

3 To reflect that the prevailing wage and supplement rates change every six months (Tr. 53), the Costing Sheet

provides data in six-month increments. The Costing Sheet indicates total hours worked for 2006 as 1671 for the first

six months of the year and 1673 hours for the second six-month period (Pet. Ex. 4). 4 The Union presented alternate methodologies for determining the hourly rate of supplementary benefits through

testimony of its research librarian, Christopher Maisano (Tr. 219). Maisano, who acknowledged that he had no

experience in prevailing rate costing prior to this proceeding, completed two costing analyses using variables that the

Union thought were more appropriate (Tr. 219-20, 224-25; Union Exs. 3A, 5A). As discussed below, the Union

argued independently that the ratio of retirees to active laborers used by OLR when calculating the cost of retiree

-- 19 --

Petitioner’s assertion that the Labor Law requires an individualized assessment of total

hours worked by each Laborer in calculating the hourly cost of supplemental benefits is

compelling. Section 220(3)(b) provides that supplements “shall be in accordance with the

prevailing practices in the locality.” The “prevailing practice in the locality” is defined as “the

practice of providing supplements . . . as provided by virtue of collective bargaining agreements

between bona fide labor organizations and employers of the private sector, performing public or

private work provided that said employers employ at least thirty per centum of workers, laborers

or mechanics in the same trade or occupation in the locality. . . .” Labor Law § 220(5)(c).

The question whether overtime hours should be included in determining the cost of

benefits was reached by this tribunal in Comptroller v. Office of Labor Relations, OATH 254/05,

which analyzed the statutory mandate to provide supplemental benefits in accordance with the

prevailing practice reflected in relevant collective bargaining agreements. In that case, OLR

contended that overtime hours should be excluded because the City’s basic health plan covered all

employees equally, without regard as to whether they worked overtime. Id. at 5. That argument

mirrors one made by OLR in this case (Resp. Mem. at 30; Tr. 393-94). ALJ Charles Fraser

rejected this contention, noting that “accounting for overtime hours is part of the prevailing

practice for providing benefits,” before concluding that “inclusion of overtime contributions in the

determination of prevailing benefits, where such contributions are required in the relevant private

sector contract, constitutes a straightforward application of the statutory mandate that covered

City employees are entitled to prevailing benefits.” Id. at 5-6.

Here, under Labor Law section 220(5)(c), the supplemental benefits must be paid in

accordance with the relevant private sector contracts, which are the Local 79 mason tender

collective bargaining agreements. These agreements mandate that contributions to various mason

tender benefit funds are to be paid “for all hours worked by Mason Tenders” (Tr. 79-81; Pet. Exs.

8, 9). Accordingly, the prevailing wage schedule for mason tenders that petitioner issued pursuant

to section 220 states that “benefits are paid for EACH HOUR WORKED unless otherwise

noted” (emphasis in original) (Tr. 76; Pet. Ex. 7). While the Order does not explicitly state that

prevailing wages and supplements are to be paid for each hour worked, petitioner correctly notes

that wages and supplemental benefits are owed for each hour worked because the Order is based

health benefits was unreasonable. Accordingly, the Union incorporated its adjusted numbers when calculating the

cost of retiree health benefits.

-- 20 --

on the mason tenders collective bargaining agreements (Tr. 53-54). This conclusion is consistent

with the Labor Law’s mandate that supplements be paid in accordance with the prevailing

practices in the locality.

Petitioner’s evidence demonstrates that as a group Laborers worked an average of 30,000

hours in overtime per year between 2006 and 2010, or an aggregate of approximately 150,000

overtime hours that were unaccounted for in OLR’s calculations of the cost of the supplemental

benefits provided (Tr. 95; Pet. Exs. 20, 4). It is reasonable to believe that had such hours been

accounted for in OLR’s costing calculations, it would have reduced or eliminated the excess

supplemental benefits that OLR calculated using its straight-time method. For example, OLR

determined that to offset excess supplemental benefits in 2006, a Laborer would have had to have

worked 814 hours above the 1,671 total hours that it assumed each Laborer worked under the

straight-time model, for a total hours of 2,485 hours worked in 2006. Rimmer testified that while

he did not calculate an underpayment of benefits for each employee, he determined that at least

one Laborer, Burnett, worked 898.5 premium overtime hours in 2006 and it was obvious to him

that there were underpayments of benefits to certain employees (Tr. 92-93, 99).

OLR did not dispute that its analysis treats all the Laborers alike regardless of the number

of hours actually worked by each individual Laborer (Tr. 310). Lake acknowledged that if

supplemental benefits are to be paid for each hour worked and an individual Laborer worked a

substantial amount of overtime in a year, he or she could be owed the supplemental benefit rate

for those hours (Tr. 313-19). She also conceded that if supplemental benefits are owed for all

hours worked and if an individual Laborer failed to use an eight-hour leave day that he or she had

accrued in a year, that Laborer would have worked eight hours above the total number of hours

that is assumed in the OLR straight-time model, which is not accounted for in the OLR costing

method (Tr. 346-47). Thus, that individual Laborer would not be paid supplemental benefits for

those eight hours under the OLR costing model.

By failing to consider the total annual hours actually worked by each Laborer in its costing

method, OLR is, in essence, depriving Laborers who worked overtime and/or did not use all their

allocated paid leave of supplemental benefits for those hours. As Rimmer testified, the

Comptroller does not use an overpayment of prevailing supplements to one employee to offset the

underpayment of prevailing supplements to a different employee; instead, petitioner treats each

employee separately to “make sure that each worker is paid properly” (Tr. 72).

-- 21 --

OLR maintains that an individualized assessment of total hours worked by the Laborers

would thwart the legislative intent underlying the Labor Law’s requirement that prevailing wage

workers receive a prevailing rate of supplemental benefits (Resp. Mem. at 29-30). According to

OLR, the Labor Law was amended to require that employers pay the prevailing rate of

supplemental benefits to equalize “minimum labor costs” among contractors (Resp. Mem. at 29)

(quoting Action, 64 N.Y.2d at 222). OLR argues that this goal is achieved when the costs of

supplements are determined by reference to the aggregate group of workers rather than the

individual worker. An individualized assessment would require the City to make additional

payment to Laborers who work large number of hours without an offset for overpayments to

employees working fewer hours. This, OLR reasons, would impose greater costs on the City than

those born by private sector contractors who contribute to union benefit funds on a per-hour basis,

thus not risking an overpayment (Resp. Mem. at 29-30).

OLR’s argument misses the point. The legislature set a minimum standard for labor costs

that included the provision of supplemental benefits to eliminate unfair competition among

contractors during the bidding process. The concern was that contractors who employed nonunion

workers held an unfair advantage over union contractors who were required to pay fringe benefits.

In focusing on the purported greater cost that the City will bear under an individualized

accounting of total hours worked, OLR neglects to consider the overarching concern behind

section 220, which is to promote social justice through fair treatment of workers in their

compensation for work performed on public works projects. Moreover, OLR offers no support for

its contention that the City will bear a greater cost, nor is there any evidence that the City would

be at a competitive disadvantage vis-à-vis private sector contractors in a bidding process, which is

the issue the amendment sought to address.

OLR asserts several additional arguments in support of its contention that its straight-time

method is the more reasonable approach for calculating the cost of the supplemental benefits it

provides to Laborers. These arguments are unpersuasive.

First, OLR argues that in giving unions, instead of individual employees, standing to bring

section 220(8-d) actions, the legislature sought to protect collective bargaining between the City

and unions (Resp. Mem. at 31). OLR maintains that the legislature recognized that individualized

treatment of employees “could destroy collective bargaining between the City and unions

representing employees covered by section 220” (Resp. Mem, at 31). Therefore, OLR argues, the

-- 22 --

union is the relevant party and the appropriate inquiry is “whether the supplements provided to the

average unit member” met the City’s obligation to provide prevailing supplements (Resp. Mem. at

31).

Section 220(8-d) permits a union to file a single verified complaint on behalf of its

workers and recognizes the union as the exclusive representative of the employees for purposes of

an enforcement hearing. As petitioner noted, the purpose of the provision is to prevent individual

employees from rejecting a collectively bargained agreement and demanding a prevailing rate

hearing, which would raise the spectre of employees in the same bargaining unit receiving

different rates of wages or supplements (Pet. Reply Mem. at 11) (citing letter dated May 5, 1984

from Mayor Edward Koch to Governor Mario Cuomo). However, the subsection does not require

that workers be treated as a unit in assessing whether the employer complied with the prevailing

wage law.

What OLR suggests is that if its negotiations with a union fails to result in a negotiated

settlement, section 220(8-d) requires a unit-wide analysis that ignores the individual worker’s

actual hours worked. That cannot be the case. OLR’s characterization notwithstanding, section

220(8-d) does not extend its preference for unit-wide collective bargaining and enforcement action

to require a particular method for calculating the prevailing rate of supplemental benefits due to

each worker. Rather, the Labor Law requires setting the prevailing rate of supplements in

conformity with the prevailing practices in the comparable private sector union.

In addition, OLR contends that a decision favorable to the Comptroller will undermine

collective bargaining because it will provide an incentive to unions to litigate rather than negotiate

compromise agreements (Resp. Mem. at 32). OLR maintains that it has performed numerous

prevailing rate costings using an average total hours worked and reached negotiated settlements

based on those costings without the need for litigation. New York courts have recognized that in

cases involving the City and its prevailing rate employees, claims for failure to pay prevailing

rates pursuant to the Labor Law may be waived. See Manning v. Joseph, 304 N.Y. 278, 281

(1952); Ryan v. New York, 177 N.Y. 271, 279 (1904); Evadan Realty Corp. v. Patterson, 192

Misc. 850, 856 (Sup. Ct. N.Y. Co. 1948), aff’d, 276 A.D. 751 (1st Dep’t 1949). Negotiated

resolutions of prevailing rate disputes are favored and the City and unions may agree to

settlements in which the unions forego rights conferred by the Labor Law. However, unions have

the right to pursue their claims through litigation and, if they do so, OLR is required to account for

-- 23 --

each hour an employee works when calculating the cost of providing supplements if that is the

prevailing practice of the locality, as it is in this case.

Lastly, OLR maintains an individualized inquiry would be onerous and complicated.

Notably, Banks testified that calculating individual worker hours could be “impossible and

unwieldy” and that the unit-wide analysis allows the City to reach settlement agreements with the

unions (Tr. 397-98). OLR offered no proof that the calculations cannot be completed. Even

assuming that the undertaking is challenging, OLR cited no authority for the proposition that

difficulty in complying with the requirements of section 220 is a basis for excusing them.

In sum, OLR’s failure to account for the actual hours worked by each Laborer through an

individualized analysis runs afoul of the Labor Law’s mandate that supplements be paid according

to the prevailing practices in the locality, which is payment of supplemental benefits for all hours

worked. Accordingly, OLR failed to properly implement the Order with respect to prevailing

supplements.

Prospective Implementation of the Order

The parties disagree as to the permissible scope of this tribunal’s review of OLR’s

implementation of the Order. Petitioner maintains that by failing to account for all hours each

Laborer worked when it implemented the Order prospectively in June 2012, OLR employed the

same flawed methodology that it used in computing the cost of supplements during the 2002 to

2010 compliance period (Pet. Mem. at 23-24). Petitioner urges that respondent “use its records to

calculate the precise amount of prevailing supplements owed to each [Laborer] from June 2002

through the present” (Pet. Mem. at 25). By contrast, respondent contends that should this tribunal

reach the issue of methodology, its recommendation must be limited to the 2002 to 2010

compliance period in the Order and should not encompass the 2012 implementation (Resp. Reply

Mem. at 2-3).

In June 2012, OLR informed the Union and the City’s Office of Payroll Administration

that the prevailing wage rates in the Order were to be implemented retroactively. It also adjusted

the supplemental benefits prospectively to match the $22.40 per hour supplement rate set forth in

the Order for the last time period in the Comptroller’s determination (Tr. 382). Because OLR had

concluded that the supplemental benefits the City provided to Laborers between 2002 and 2010

far exceeded the prevailing supplement rate set forth in the Order, OLR reduced the Laborer’s

-- 24 --

supplemental benefits effective June 2012 in order to match the prevailing supplement rate for the

last period set forth in the Order (Tr. 387; Pet. Ex. 3).

OLR’s implementation of the Order dramatically reduced or completely eliminated

supplemental benefits that Laborers had received prior to June 2012 (Pet. Ex. 3; Tr. 382-85). The

effect of those adjustments was that going forward, Laborers accrued ten fewer annual leave days

and seven fewer sick leave days per year. Laborers were also rendered ineligible for leave

regulation benefits, and paid holidays, and annuity fund contributions ceased (Pet. Exs. 3, 4; Tr.

382-85). Banks testified that OLR was required to continue to pay the $22.40 per hour

supplement rate into the future, during what he described as the “status quo period,” even though

the Order only covered the 2002 to 2010 period (Tr. 411-12). The prevailing rate during the

“status quo period” is not necessarily reflective of the prevailing rates for the time period after

2010 (Tr. 386).

OLR argues that because the petition refers only to July 2002 to June 2010, its prospective

implementation of the Order starting in 2012 is irrelevant to this proceeding and is unsupported by

the record. Specifically, respondent argues that absent evidence regarding post-2010 prevailing

rates or supplement costs, an order directing the City to change its current benefits, which it

implemented in June 2012 based on its costing methodology, could require the City to pay more

than the prevailing rate of supplements (Tr. 57; Resp. Reply Mem. at 3-4).

The petition asserts claims regarding the methodology used to calculate supplements and

wages that are limited to July 1, 2002 to June 30, 2010 and does not seek relief as to

implementation of the Order commencing in June 2012 (ALJ Ex. 1). Consequently, I decline to

make a recommendation as to the period after June 30, 2010. See Office of the Comptroller v.

Office of Labor Relations, OATH Index No. 2445/14 at 13 (Mar. 5, 2015), adopted, Comptroller’s

Dec. (June 22, 2015) (where matter referred to tribunal to determine which private sector trade

was comparable to civil service titles included in the petition, disputes concerning wages and

supplements and whether overtime is triggered after seven or eight hours of work not properly

before tribunal); Comptroller v. Office of Labor Relations, OATH Index No. 254/05 at 9 (Feb. 28,

2005) (declining to determine issues relating to valuation of benefits provided by the City that

were not raised in the petition or by parties other than respondent).

It is evident, however, that to the extent that OLR’s June 2012 implementation is based on

the methodology discussed above, then this tribunal’s decision has implications regarding the

-- 25 --

validity of OLR’s prospective implementation of the Order. The parties should be guided,

however, by the Labor Law’s preference for negotiated resolutions of prevailing rate disputes

between the City and unions and should make diligent efforts to reach a consent determination

that resolves issues relating to the period after June 30, 2010.

Methodology for Calculating Cost of Retiree Health Benefits

In a claim asserted for the first time at trial, the Union contends that OLR’s methodology

for calculating the cost of retiree health benefits for Laborers is unreasonable and unfair because it

disproportionately burdens current Laborers (Tr. 31-32, 35; Union Mem. at 29-34). The Union

seeks a recommendation that respondent be required to use one of two alternative methodologies

that the Union proposes for allocating the cost of retiree health care benefits (Union Mem. at 37).

The Comptroller and OLR oppose the Union’s request (Pet. Mem. at 25-32; Resp. Mem. at 19-

26).

The City is required to provide health insurance to certain of its retired employees and

their dependents. See Admin. Code § 12-126(b)(1) (Lexis 2016). The City’s Costing Sheet

indicates that it cost between $8.64 and $12.55 per hour, or between $14,477 and $21,249 per

year, to provide health benefits to retired Laborers from July 1, 2002 until June 30, 2010 (Pet. Ex.

4). In its costing methodology, referred to as “pay-as-you-go,” the City passes to current Laborers

the cost of providing health benefits for retired Laborers (Tr. 132).

The Union directed significant effort towards challenging OLR’s pay-as-you-go

methodology, which calculates the cost of retiree health care benefits to the Laborers based on the

ratio of active-to-retired Laborers. Its evidence established that the ratio of active-to-retired

Laborers is significantly higher than that in other City prevailing rate titles, resulting in much

higher costs for retiree health care (Tr. 132-34; Union Ex. 1A; Pet. Ex. 4). However, the Union’s

evidence consisted only of the testimony of its president, who was admittedly interested in

maximizing benefits to current Union members, and that of a research librarian, who presented the

Union’s alternate costing methods, but provided no meaningful assessment of the City’s current

methodology and had no prior experience in prevailing rate costing (Simmons: Tr. 163; Maisano:

Tr. 219-20, 224-25). The Union also submitted an actuarial report, but offered no testimony from

the author of the report (Union Ex. 2A).

The Comptroller and OLR, on the other hand, presented credible, persuasive evidence that

the pay-as-you-go method is the primary method used for calculating the cost of providing health

-- 26 --

benefits to retirees, is consistent with how the mason tenders fund retiree health care, and that use

of the active-to-retired employees ratio for Laborers is consistent with prevailing practices in the

private sector (Tr. 476, 490-98; Pet. Exs. 21, 22, 23).

It is questionable, however, whether the issue of who should bear the burden of paying for

the health care benefits for retired Laborers is one to be resolved in a proceeding brought under

section 220 of the Labor Law. Even if it is appropriate to do so, the petition raises only claims

regarding prevailing wages for work on Sundays and certain holidays and OLR’s failure to

account for all hours worked in computing supplemental benefits (ALJ Ex. 1). The issue of the

correct methodology for costing retiree health benefits is distinct from those claims and is not

properly before this tribunal. See Office of the Comptroller v. Office of Labor Relations, OATH

2445/14 at 13; Comptroller v. Office of Labor Relations, OATH 254/05 at 9.

Moreover, to the extent that the Union’s claim is one for equitable relief, such relief is not

available in this proceeding. See Taxi & Limousine Comm’n v. Neumann, OATH Index No.

1555/11 at 5 (May 9, 2011) (equitable relief is unavailable in administrative proceedings and is

limited to courts of general jurisdiction) (citing Kaminsky v. Connolly, 73 Misc. 2d 789, 790 (1st

Dep’t 1972); Dep’t of Health v. Medrano Enterprises, Ltd., OATH Index No. 1506/02 at 4 (May

22, 2002) (same); Matter of 595 Broadway Associates, OATH Index No. 1083/02 at 3 (Mar. 28,

2007) (“[t]his tribunal is not a court of equity”).

Similarly, as acknowledged by counsel, the Union’s claim that OLR’s method of

calculating retiree health care costs has a disparate impact on the Union because its membership is

75% minority is not properly before this tribunal (Tr. 201-203).

FINDINGS AND CONCLUSIONS

1. OATH has jurisdiction to hear petitioner’s claim that OLR failed to use

the proper methodology in implementing the Order.

2. Respondent failed to pay double the regular wage rate to Laborers for

work on Sundays and on New Year’s Day, President’s Day, Memorial

Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas

Day for the period July 1, 2002 through June 30, 2010, as required by the

Order.

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3. Respondent failed to account for all hours worked by individual Laborers

in determining the hourly cost of supplemental benefits for the period

July 1, 2002 through June 30, 2010, as required by the Order.

RECOMMENDATION

I recommend that the Comptroller issue a determination consistent with the above findings

and conclusions.

Astrid B. Gloade

Administrative Law Judge

August 10, 2016

SUBMITTED TO:

SCOTT M. STRINGER Comptroller

APPEARANCES:

MICHAEL D. TURILLI, ESQ.

CONSTANTINE KOKKORIS, ESQ.

Attorney for Petitioner

STEVEN SYKES, ESQ.

AARON AMARAL, ESQ.

STUART LICHTEN, ESQ.

Attorneys for Complainant

DANIEL POLLAK, ESQ.

Attorney for Respondent

Comptroller’s Determination and Order (October 27, 2016)

Proceedings

The Comptroller’s Bureau of Labor Law (“Petitioner”) brought proceedings pursuant to New

York Labor Law § 220 against the Office of Labor Relations of the City of New York

(“Respondent”) as a result of a complaint filed with Petitioner by labor union Local 924, District

Council 37, AFSCME, and AFL-CIO (collectively the “Union”). Petitioner alleged that Respondent

failed to properly implement the Comptroller’s Order and Determination dated October 13, 20 I 0

(the “2010 Order” attached hereto as Appendix A) and because of that failure, workers employed in

the civil service titles of Laborer and City Laborer (“Laborers”) did not receive the prevailing wages

and supplemental benefits to which they were entitled for the period from July 1, 2002 through June

30, 2010. More specifically, Petitioner alleged that Respondent (1)paid Laborers time plus one half

the regular rate of pay for hours worked on Sundays and certain holidays instead of double the

regular rate and (2) failed to provide the prevailing supplemental benefits owed to each Laborer for

each hour of work, instead opting to provide all Laborers with the same supplemental benefits

regardless of the actual number of hours worked. Union separately argued that the pay-as-you-go

methodology used by Respondent to calculate the cost of health and welfare benefits provided to

retired Laborers was unreasonable and inequitable. Petitioner and Respondent opposed Union’s

argument on that issue.

The Honorable Astrid B. Gloade, Administrative Law Judge (“ALJ”) of the Office of

Administrative Trials and Hearings (“OATH”), conducted a four day trial. Each party, including

Union, was represented by counsel and had an opportunity to present testimony and documentary

evidence. The record closed on December 28, 2015 with the submission of post-trial memoranda

of law and replies thereto. ALJ Gloade issued a Report and Recommendation dated August 10,

2016.

I have reviewed ALJ Gloade’s Report and Recommendation (attached hereto as Appendix

B), the relevant portions of the record, the exhibits, and the briefs submitted by each party. Under

the powers and duties vested in me by the Comptroller, I adopt the ALJ’s Report and

Recommendation with one exception regarding retiree health benefits (explained in Discussion

section below) as the Comptroller’s Determination and Order.

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It is hereby ordered and determined that:

1. The prevailing collective bargaining agreement requires that Laborers

receive double the regular wage rate for hours worked on Sundays, New

Year’s Day, President’s Day, Memorial Day, Independence Day, Labor

Day, Thanksgiving Day, and Christmas Day from July 1, 2002 through

June 30, 2010. Respondent should calculate the amount due and owing to

each Laborer for each hour worked on the above-mentioned days.

2. Respondent failed to calculate the actual hours worked by each Laborer,

including overtime and unused annual and sick leave, before determining

the hourly cost of supplemental benefits from July 1, 2002 through June 30,

2010. Accordingly, Respondent must calculate the actual hours worked by

each Laborer, including overtime and unused annual and sick leave, and

provide supplemental benefits to each Laborer for actual hours worked

from July 1, 2002 through June 30, 2010.

Discussion

Although I have adopted the findings in the OATH Report and Recommendation, I must

supplement ALJ Gloade’s findings on the issue of retiree health benefits. ALJ Gloade found that

Union did not set forth sufficient evidence to support its claim that the pay-as-you-go methodology

used by Respondent for calculating the cost of retiree health benefits was unreasonable and

inequitable but, regardless, the issue was “not properly before [the] tribunal” because it was not

raised in the petition. Appendix B at 26. While the ALJ correctly points out that this issue was

not raised in the petition, I conclude that the issue was properly before the tribunal and is proper

for a written determination and order here.

New York Labor Law § 220 authorizes the “Comptroller to adjudicate the complaints of

aggrieved employee organizations.” McFarland v. City of New York, 23 Misc. 3d 1127(A), 2009

2009 WL 1383669, *5 (Sup. Ct. N.Y. County April 1, 2009). Moreover, New York Labor Law § 220

“expresses a strong preference for resolving disputes relating to covered wages and supplements

through the collective bargaining process and failing efforts through that process, an adjudication

before the Comptroller.” Id. In this matter, Union—the aggrieved employee organization—

complained about, among other things, Respondent’s use of the pay-as-you-go methodology to

calculate retiree health benefits. Petitioner investigated Union’s complaints, determined that this

particular complaint was without merit, and for that reason chose not to include claims regarding the

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pay-as-you-go methodology in its Petition. Nevertheless, during the hearing there were no objections

on the record to Union's introduction of testimony and evidence regarding the methodology. In fact,

each party presented witness testimony and submitted briefs detailing their respective arguments on

this issue.

Supplemental benefits include health, welfare, and retirement benefits. N.Y. Labor Law §

220(5)(b). It is within the Comptroller’s authority to determine whether the methodology used by

Respondent to determine the costs of supplemental benefits is consistent with prevailing practices

and thus an acceptable method to calculate the cost of those benefits. N.Y. Labor Law § 220(7)

(fiscal officer may “determine whether the contractor or a subcontractor has paid the prevailing

rate of wages and prevailing practices for supplements in the same. trade or occupation in the

locality within the state”); cf. Chesterfield Assoc. v. NY State Dept. of Labor, 4 N.Y.3d 597, 601-4

(2005) (affirming Commissioner’s determination and denying employer’s argument that the

Department of Labor’s methodology for calculating the cost of supplemental benefits was

unreasonable).

To determine whether Respondent’s pay-as-you-go methodology is a legally permissible

option for calculating the cost of retiree health benefits requires an analysis of the prevailing

practice in the private sector. N.Y. Labor Law §§ 220(3)(b),(5)(c). Christopher Brecht—a

certified public accountant with extensive experience providing administration and consulting

services for health, welfare, and pension funds—was the only witness to offer testimony regarding

the prevailing practice in the private sector. Brecht testified that within the private sector, the

pay­as-you-go methodology is the primary method used by multi-employer funds similar to the

Mason Tenders District Council Welfare Fund1 for calculating the costs of providing health

benefits to retirees. Tr. 476-99.2 Given Brecht’s experience, the overall strength of his testimony,

and the absence in the trial record of any evidence contradicting his opinions and conclusions, I

find Brecht’s testimony on this issue to be credible and persuasive.

Accordingly, it is further ordered and determined that:

3. The pay-as-you-go methodology used by Respondent for calculating the

cost of retiree health and welfare benefits for Laborers is legally

permissible under New York Labor Law § 220. Therefore, Respondent

may use that methodology to calculate the cost of retiree health and welfare

benefits for the period from July 1, 2002 through June 30, 2010.

1 The Mason Tenders District Council of Greater New York sets the prevailing practice for supplemental benefits for the

work at issue in this case. Appendix A 2. 2 Brecht testified that pay-as-you-go is the primary method used in both the private and public sectors. Tr. 476.

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SO DETERMINED AND ORDERED:

Kathryn E. Diaz Dated: October 27, 2016

General Counsel

Office of the Comptroller of the City of New York