New York State Attorney General Letitia James

New York State Attorney General Letitia James Credit: Marcus Santos

A luxury residential property developer must pay back $3 million to some of its employees, New York City and the state for underpaying the workers while also receiving tax exemptions, a release from the Office of New York Attorney General Letitia James said Thursday.

Heatherwood Communities LLC received tax exemptions on rental properties in Long Island City and Williamsburg through a program administered by the New York City Department of Housing Preservation and Development. 

Through the program, developers are granted tax breaks, with certain conditions, on new multiunit residential buildings. One of the conditions includes setting aside a number of affordable housing units or pay prevailing wages to building service workers for buildings with at least 30 units.

According to the release, Heatherwood officials said they would pay prevailing wages and benefits to building service employees but did not.

 “Workers are the backbone of New York, and they deserve fair pay and benefits for their hard work,” said James in a news release. “Paying workers fair wages and benefits is not a luxury, it’s the law and Heatherwood cheated these workers and taxpayers.”

The announcement was made in conjunction with New York City Comptroller Brad Lander and 32BJ SEIU, the union for the cheated workers.

Representatives for Heatherwood could not immediately be reached.

Heatherwood will return $723,324, the full amount owed plus 16% interest, to 24 workers. The company will also pay the city $1,146,196 and the state $686,527 in penalties. Heatherwood is also required to continue paying building service employees the prevailing wage, the release said.

An investigation led by James’ office found the discrepancies following a whistleblower allegation. 

Under the tax-exempt program developers are required to comply with prevailing wage rules, which determine the wage and benefits payable to building service workers according to schedules issued by the New York City Comptroller, the release said.

The investigation found Heatherwood paid janitorial and concierge workers at one location between $9 and $14 per hour without benefits, and paid workers at the other location between $8.50 and $15, also without benefits.  At the time, the prevailing wages plus benefits amounted to a range, depending on seniority and title, of roughly $22 to $26.

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