Exec. Cleaning Servs. Corp. v. N.Y.S. Dep't of Labor

• Decision Date: 28 January 2021
• Docket Number: 529096
• Citation: 193 A.D.3d 13,141 N.Y.S.3d 170
• Parties: In the Matter of EXECUTIVE CLEANING SERVICES CORPORATION et al., Petitioners, v. NEW YORK STATE DEPARTMENT OF LABOR et al., Respondents.
• Court: New York Supreme Court — Appellate Division

193 A.D.3d 13
141 N.Y.S.3d 170

In the Matter of EXECUTIVE CLEANING SERVICES CORPORATION et al., Petitioners,
v.
NEW YORK STATE DEPARTMENT OF LABOR et al., Respondents.

529096

Supreme Court, Appellate Division, Third Department, New York.

Calendar Date: January 11, 2021
Decided and Entered: January 28, 2021

141 N.Y.S.3d 172

Michael D. Diederich Jr., Stony Point, for petitioners.

Letitia James, Attorney General, New York City (Jessica Agarwal of counsel), for respondents.

Before: Lynch, J.P., Clark, Mulvey, Pritzker and Colangelo, JJ.

OPINION AND JUDGMENT

Lynch, J.P.

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Combined proceeding pursuant to CPLR article 78 and action for declaratory judgment (transferred to this Court by order of the Supreme Court, entered in Albany County) to, among other things, review a determination of respondent Commissioner of Labor finding, among other things, that petitioners failed to pay prevailing wages and supplements.

Pursuant to the terms of an oral agreement, petitioner Executive Cleaning Services Corporation employed six individuals to perform cleaning services at the Ossining Public Library between December 2014 and October 2015. Prior to entering into the contract, the library did not represent that it was a public agency or that the prevailing wage law applied. Executive Cleaning paid the employees $10 per hour for their service, less than the prevailing wage. In or around October 2015, the library received a complaint from one of the employees alleging that Executive Cleaning had failed to provide compensation for

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the work performed under the contract.¹ In response, the library's Board of Trustees sent a letter to petitioner Cef Saiz – Executive Cleaning's sole shareholder – informing him of the complaint and advising that, as a public employer subject to Labor Law article 9, the library would withhold final payment under the contract until it received documentation of Executive Cleaning's certified payroll records. The library also notified respondent Department of Labor (hereinafter the Department) of the employee's complaint, prompting the Bureau of Public Work to commence an investigation. Upon review, the Bureau concluded that the contract was subject to the prevailing wage provisions of Labor Law article 9.

The Department then sent a notice of hearing to petitioners scheduling an evidentiary hearing on the matter for December 2017. In response, petitioners moved to dismiss the administrative proceeding for lack of jurisdiction, alleging, among other things, that the notice of hearing was jurisdictionally defective and the library was not a "public agency, public benefit corporation, or other public entity covered by prevailing wage provisions." Following an evidentiary hearing, a Hearing Officer issued a report and recommendation denying petitioners' motion to dismiss and determining

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that the contract was subject to the prevailing wage provisions of Labor Law article 9, finding, among other things, that the library was a public agency within the meaning of Labor Law § 230(3) insofar as it was established by official action of a school district as a "public library," rather than as a private "association library" (see Education Law § 253 ). In accordance with that finding, the Hearing Officer assessed an underpayment of $16,671.57 in wages and supplements, and determined that the underpayment was non-willful "[g]iven [Executive Cleaning's] inexperience, and [the library's] failure to provide a written contract and prevailing wage-rate schedules." The Hearing Officer also recommended that Executive Cleaning be assessed interest in the amount of 6% per annum on its underpayment, as well as a civil penalty in the amount of 5% of the underpayment and interest (see Labor Law § 235[5][b], [c] ). Respondent Commissioner of Labor adopted the Hearing Officer's findings and recommendations in full.

Petitioners thereafter commenced this combined CPLR article 78 proceeding and action for declaratory judgment challenging

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the Commissioner's findings and seeking, among other things, a declaration that the contract was not subject to the prevailing wage provisions of Labor Law article 9 because the library is not a public agency as specified in Labor Law § 230(3) and the work performed was not "construction-like" labor.² Respondents joined issue and the proceeding was transferred to this Court.

Initially, we reject petitioners' argument that the notice of hearing was defective because it failed to set forth the basis of the Department's jurisdiction. Petitioners maintain that the notice of hearing was defective for failing to allege that the library was a public agency subject to the prevailing wage law or that an Executive Cleaning employee filed a complaint with the Department alleging nonpayment of prevailing wages. State Administrative Procedure Act § 301(2)(b) provides, in pertinent part, that all parties to an adjudicatory proceeding "shall be given reasonable notice of such hearing, which ... shall include ... a statement of the legal authority and jurisdiction under which the hearing is to be held" (see 12 NYCRR 701.4 [a][2] ). Although the notice of hearing did not expressly state that the library was a public agency under Labor Law § 230(3), it cited the provisions of Labor Law § 235 and stated that an investigation was commenced "to determine whether [Executive Cleaning] complied with the requirements of [Labor Law] [a]rticle 9 ... to pay or provide the prevailing rates of wages and supplements to building service employees employed in the performance of a public building service contract with [the library]" (emphasis added). This description was "reasonably specific ... and thus sufficient to apprise ... petitioners of the charges against them [so as] to allow for the preparation of an adequate defense" ( Matter of D & D Mason Contrs., Inc. v. Smith, 81 A.D.3d 943, 943, 917 N.Y.S.2d 283 [2011], lv denied 17 N.Y.3d 714, 2011 WL 5041665 [2011] ; see Matter of Block v. Ambach, 73 N.Y.2d 323, 333, 540 N.Y.S.2d 6, 537 N.E.2d 181 [1989] ; Matter of Zlotnick v. City of Saratoga Springs, 122 A.D.3d 1210, 1211–1212, 997 N.Y.S.2d 809 [2014] ). Moreover, the notice of hearing expressly stated that the

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Department commenced an investigation upon being "advised of a complaint by an [Executive Cleaning] employee ... alleging that [Executive Cleaning] failed to pay the proper

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prevailing wages and supplements for work performed in furtherance of the [c]ontract." In any event, an employee complaint is not required for the Department to commence an investigation under Labor Law article 9 (see Labor Law § 235[1] ), and the failure to protest underpayments does not vitiate an employee's right to recover wages in accordance with the prevailing wage law (see Labor Law § 236 ). As such, we conclude that the notice of hearing sufficiently set forth the basis of the Department's jurisdiction.

That said, we agree with petitioners that the contract at issue is not subject to the prevailing wage provisions of Labor Law article 9. N.Y. Constitution, article I, § 17 provides, as relevant here, that "[n]o laborer, worker or mechanic, in the employ of a contractor or sub-contractor engaged in the performance of any public work, ... shall ... be paid less than the rate of wages prevailing in the same trade or occupation in the locality within the state where such public work is to be situated, erected or used." This constitutional mandate is implemented in Labor Law article 8, which requires the payment of prevailing wages to "laborers, work[ers] or mechanics" performing construction-like labor in connection with certain public work contracts ( Labor Law § 220[3][a] ; see De La Cruz v. Caddell Dry Dock & Repair Co., Inc., 21 N.Y.3d 530, 535, 975 N.Y.S.2d 371, 997 N.E.2d 1223 [2013] ; Matter of New York Charter School Assn. v. Smith, 15 N.Y.3d 403, 407, 412, 914 N.Y.S.2d 696, 940 N.E.2d 522 [2010] ).

In 1971, the Legislature enacted article 9 of the Labor Law, which extended such prevailing wage protections to certain types of service contracts (see Labor Law § 231[1] ; Matter of Murphy's Disposal Servs., Inc. v. Gardner, 103 A.D.3d 1015, 1016, 960 N.Y.S.2d 525 [2013] ). In particular, Labor Law § 231(1) provides that "[e]very contractor shall pay a service employee under a contract for building service work a wage of not less than the prevailing wage in the locality for the craft, trade or occupation of the service employee." Building service work means "work performed by a building service employee" ( Labor Law § 230[2] ), which, in turn, means "any person performing work in connection with the care or maintenance of an existing building ... for a contractor under a contract with a public agency which is in excess of [$1,500]" and expressly encompasses

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"building cleaner[s]" ( Labor Law § 230[1] [emphasis added] ).³ A public agency...