So You Want To Do Business in New York?

I’d like to share the story of my recent challenges with the New York State Labor Department.

For my second Sticky Lips BBQ restaurant, I purchased a building that was the old Road House Grill onJefferson Road.  This is situated on property that is controlled by the Genesee Valley Regional Market Authority, which is a New York State Authority.  I own the building but lease the land from the Authority.

It took me a year and a half to build the new Sticky Lips BBQ Juke Joint, and it is a real showpiece.  That took everything mentally, physically, and monetarily that I had.  I did not use any state, local, or federal money to build it.

Halfway through the project, I received a visit from the carpenters union, who was looking for work.  I was nice to the guys, but told them that I had my own independent contractors, of whom many are my personal friends.  I know that the construction industry has been slow, but being that mine was not a state or publicly funded job, I wondered why they would come to a small job like this.  The Sticky Lips construction was relatively small compared to schools, hospitals, and public buildings that are usually associated with union jobs.

Within two days after talking with the union reps, there was an OSHA inspector camped out across the street with a telephoto lens just waiting for an infraction to happen.   After spooking the contractors, this slowed our progress for a while.

About a month later the electrical union reps stopped by and were working for work.  Once again, I said that I had my own guys and did not need their help. (I guess they didn’t remember that eight years ago, when we built the first Sticky Lips, I did hire an electrical union contractor, who was a personal friend.)

Once again, within two days, Bob Bibbins from the New York State Department of Labor showed up.  He informed me that he wanted a list of my contractors and that we had to pay prevailing wages on this job.  During our initial negotiations with the GVRMA, we were not told about the prevailing wages issue.

My first question is: why and when did these two government agencies start doing the dirty work for the construction unions?

The restaurant opened in the first week of October, 2011.  I paid all the contractors and everyone is happy.  Now my contractors have just been served subpoenas for a May 16th hearing.

Bob Bibbins pressured me to go online to register this project with the labor department, which would automatically commit me or my contractors to pay prevailing wages.  He said he would start the violation from the date he showed up, but wouldn’t put that deal in writing.  I did not submit to this online filing. My lawyer at Woods Oviatt Gilman gave Bibbins our stance that we own the building privately and we are only making improvements to the building and not the land which it sits on.  I insisted that Bibbins tell me who was really behind this pressure that the Labor Department was putting on this project.  I asked him point blank if it was the electrical union.  In a round-about way, he let me know I wasn’t too far off.

According to Public Work Article 8, Section 220, N.Y.S. Labor Law, part A: “What is a Public Work?  In determining whether a construction project is a public work, two conditions must be fulfilled….”

Out of the two, the one that would apply is #2: “The contract must concern a public work project. To be public work, the project’s primary objective must be to benefit the public.  Ownership (public or private) is also a factor in determining whether a project is public work.”

More simply, Webster’s II New College Dictionary defines public works as “construction projects, as highways or dams, financed by public funds and constructed by a government for the general public.”

Also from the law, part B: “Who makes the determination whether a project is a public work? Generally, projects for construction, reconstruction, or maintenance done on behalf of a public agency (entity) are public work.  In instances where there is a question regarding whether this condition exist, the Bureau of Public Works will make a determination based on the project details.”

As I discovered, the Bureau of Public Works and Commissioner of Labor are both part of the N.Y.S. Labor Department, and in fact have offices on the same floor.  So who there can make an unbiased decision on what is a public work?

My take on this Article 8, N.Y.S. Labor Law is that the primary objective is to benefit a private entity not the public.  This alone should exempt Sticky Lips BBQ or myself from the prevailing wage.

In the meantime, Bibbins is going to push this and see that I pay these prevailing wages.  He has subpoenaed the contractors, who have to show up May 16th and attend before Ralph Gleason, public work wage investigator.  He has been designated by the Commissioner of Labor to conduct an investigation concerning Sticky Lips BBQ, “an entity subject to an investigation by the New York State Department of Labor concerning a public work project pursuant to the provisions of Article 8, New York State Labor Law.”

All I did was to put many construction workers to work.  I bought hundreds of thousands of dollars of construction materials from local companies.  At this restaurant, I have created over 120 good-paying jobs.  The business will collect and pay hundreds of thousands dollars in sales, property, employment, and other taxes.  Between my three restaurants, I have over 200 employees.  I am contributing to the state, I am creating jobs.  I am the type of businessman the state wants.  I feel like I am being attacked by these two unions, who have put pressure on the N.Y.S. Labor Department to see this through.

Not only do I need to reinvest my profits to grow my business, but now I have to pay thousands of dollars in legal fees and worst case scenario – if the Labor Department wins, many more thousands for this prevailing wage issue.

Is this the type of business practice I should expect from New York State as I try to grow my business in the upcoming years?

Howard Nielsen

 

Below are some documents that help to show my ownership (HBD Jefferson is the business name) of the building.  Also some correspondance withthe GVRM and NYS Dept. of Labor.