Perfume firm gets IDA tax breaks, with a warning to pay employees overtime

Suffolk County officials approved $2 million in tax breaks for a wholesale distributor of perfume and beauty products, but not before warning the owner to pay overtime to employees.

Unpaid overtime is the subject of a 2017 federal lawsuit filed against Perfume Worldwide Inc. by a group of former employees. The county's Industrial Development Agency was not aware of the suit in January when it granted preliminary approval for the tax breaks. IDA officials became aware of the suit from Newsday reporting.

At a meeting last week, the IDA board questioned a real estate attorney for Perfume Worldwide about the suit, which alleges workers are owed overtime because they weren’t paid for a 20-minute break each day. The attorney said the suit has been settled but a federal judge has yet to sign the necessary papers that call for funding backpay for about 80 workers.

The company is seeking tax aid to support a $30 million plan to purchase and upgrade a Melville warehouse that it has been renting since 2019.

Andrew D. Presberg, the company’s real estate attorney, told IDA board members last week that he wasn’t required to disclose the overtime-pay suit to them. He said the suit was mentioned in a footnote to Perfume Worldwide's financial statement filed with the aid application.

Presberg said, "The company believed what it was doing was absolutely proper" in not paying workers for their breaks. "They had the advice of counsel," he added, referring to another attorney.

IDA secretary Sondra Cochran, who also is executive director of the Wyandanch Community Development Corp., asked if Perfume Worldwide is now paying employees for the work breaks.

"They are paying them now for the break period," Presberg said.

Cochran replied, "That would be smart."

She was among four board members who expressed concern about the pay dispute.

"You have to understand our circumstance here," said IDA treasurer and businessman Anthony Giordano. "From a [public] perception standpoint…here we are giving tax breaks to companies that may be hurting an employee, although it may be legal to cut [employees’ pay]."

Presberg said Perfume Worldwide’s pay policy "has changed" and that a similar dispute in the future is unlikely.

Jacques Catafago, the company’s attorney in the overtime-pay case, told Newsday on Tuesday, "The issue has been resolved. All the required breaks are being paid for. I can assure you that [the company] is fully compliant" with federal and state wage laws, he said.

Perfume Worldwide employees earn, on average, $46,664 per year, records show.

Last week, the IDA board voted unanimously to grant final approval for the tax incentives, which include $1.1 million off property taxes on the warehouse at 135 Spagnoli Rd., or a 29% savings over 15 years.

In return, Perfume Worldwide will add 50 people to its work force of 68 in Melville. The company also has an operation in Ronkonkoma, where 357 people work.

In January, Perfume Worldwide CEO and co-owner Piyush Golia said without the tax breaks he would be forced to combine his two local facilities in another state, possibly New Jersey or North Carolina.

The company fills customer orders for Bloomingdale’s, CVS, Macy’s, Nordstrom, Sephora, Walmart and other major retailers. Its revenue has grown from $10 million in 2010 to $200 million in 2019.

By James T. Madore

james.madore@newsday.comJamesTMadore

James T. Madore writes about Long Island business news including the economy, development, and the relationship between government and business. He previously served as Albany bureau chief.