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Post date: February 19 2002

Spitzer Settles Public Work Benefit Abuse Investigation

Attorney General Spitzer today announced that he has entered into a settlement agreement with a Rensselaer County company requiring it to pay $500,000 for failing to comply with the state's prevailing wage law.

The agreement is the result of a statewide investigation by the Attorney General of contractors who allegedly were underpaying workers' wage supplements they had earned on public works projects.

LaCorte Companies, a major electrical contractor located in Rensselaer, entered into the agreement after an investigation revealed the company was violating state labor laws by paying benefits through an "Open Shop Plan" marketed by Compensation Programs, Inc. (CPI). The violation occurred when the plan used wage supplement monies earned by workers on public work projects to pay for the benefits provided by the company to all employees, including owners, management, and administrative staff.

Because the prevailing wage supplement contributions were distributed to all employees as profit sharing, instead of on the basis of how much each employee actually earned on public work, the lowest paid employees received the least money regardless of how much they actually earned.

"This settlement rights an injustice for more than 200 employees who were denied the income and benefits they had earned," Spitzer said. "I remain committed to pursuing my investigation to ensure that contractors comply with the state's prevailing wage statutes and that the rights of workers are protected."

Under the settlement, LaCorte will pay its under-paid workers a total of $500,000. In addition, it will make changes to its benefit plan making it easier for employees to determine their investment strategies, and provide the opportunity for employees to make withdrawals from the plan if they leave the company.

In agreeing to this settlement the Attorney General took into consideration various other changes LaCorte made to its benefit plan during the course of the investigation, such as stopping the pooling practices and allowing employees to vest in their benefits immediately instead of the 5-year period permitted by federal law.

The Attorney General will continue investigating contractors who use the CPI Open Shop Plan, or similar plans, to underpay benefits on public work projects and pursue available remedies to stop such practices and recover underpaid benefit monies.

The case was handled by Assistant Attorney General Pico Ben-Amotz of the Attorney General's Labor Bureau, under the supervision of Bureau Chief M. Patricia Smith.