1. 1 Helping SHNNY members navigate prevailing wage projects September 17, 2013 Labor Compliance at HPD

2. 2 Labor Compliance at HPD: Helping SHNNY members navigate prevailing wage Overview Who are the responsible parties? What does it mean to be compliant? What triggers noncompliance? Whats the distinction between an underpayment and a withholding and why it matters to you? Whats Enhanced Review? How can we improve the process?

3. 3 Labor Compliance at HPD: Who are the responsible parties? Affordable housing projects subject to prevailing wage have faced increased scrutiny from regulators, elected officials, law enforcement offices, unions and the media. The number of complaints by workers on HPD projects has quadrupled in a few years. Against this backdrop, HPD has sought to strengthen partner accountability in the area of labor compliance. Sponsors/Developers (DOLs Prime Contractors) General Contractors (DOLs Subcontractors) Subcontractors (DOLs Second Tier Subcontractors) Lenders Others Whats everyones role in a projects compliance? Due Diligence!

4. Examples of Due Diligence: Ask questions regarding labor compliance procedures Seek disclosure of compliance issues, administrative/legal proceedings, settlements, debarments and/or negative findings Ensure that contractors have financial capacity to pay workers Get references, conduct background checks (Google) Labor Compliance at HPD: Who are the responsible parties?

5. Labor Compliance at HPD: What does it mean to be compliant? HPDs Labor Monitoring Unit (LMU) requires key information to perform its function of ensuring compliance on prevailing wage projects. Requirements include: EO submissions for subcontractors (in addition to the EO submission required prior to closing) Subcontractor dollar value Weekly submission of payrolls in correct form Timely response to LMUs request for information (e.g., cancelled checks, sign in sheets, copies of workers identification) Contact information for point persons for contractors and sponsors/developers Records of employees identifying information Accurate tracking of hours worked and duties performed

6. Labor Compliance at HPD: What triggers noncompliance? What triggers noncompliance? Examples include: o Failing to submit any of the baseline compliance information o Using wrong Davis Bacon schedule o Incorrect payroll information Wrong rateand/or classification Identifying payment of fringe benefits Unregistered apprentices Lack of explanation for deductions Wrong dates Unsigned or incorrectly signed payroll Statement of Compliance o Worker Complaints, verified by LMU o Reports of workers unaccounted for on payrolls

7. Labor Compliance at HPD: Underpayments vs. Withholdings Underpayments LMU will issue an underpayment notice when it has identified amounts owed to workers. The contractor has an opportunity to issue a check to LMU to cover the back wages owed to workers. Underpayments left unresolved may result in a withholding. Withholdings LMU will issue a withholding when: Directed by the US Department of Labor Directed by law enforcement offices, including but not limited to, o New York State Attorney General o New York City District Attorney A contractor fails to submit payrolls and/or other documentation A contractor fails to resolve an underpayment LMU investigation reveals discrepancies Worker complaints requiring further investigation TIMING IS AN ISSUE

8. Labor Compliance at HPD: Whats Enhanced Review? HPD is committed to ensuring that the developers and sponsors who participate in HPD programs and the contractors (which includes general contractors, other prime contractors, and all subcontractors) that they select to perform construction and rehabilitation work funded through our projects operate with the highest level of integrity and accountability. HPD's Enhanced Contractor Review Procedure helps the agency determine whether to approve the participation of particular contractors on HPD projects. The new procedure can be found on HPD's website through NYC.gov under the tab for "Developers" and "Labor Standards. The new procedure's primary focus is on labor law compliance and construction quality. It supplements, but does not replace, the Sponsor Review process (which addresses additional issues that are not the subject of this procedure). A contractor will be placed on enhanced review status if it: o has $500,000 or more in prevailing wage withholdings; o has a history of multiple or significant construction quality issues; o has a history of multiple or significant labor law or construction law violations; or o has been debarred by another governmental entity.

9. Labor Compliance at HPD: Whats Enhanced Review? What does it mean if a contractor is under Enhanced Review status? A contractor on enhanced review status may submit bids on HPD projects. As with any other contractor, if its bid is selected, it must be cleared through HPD's sponsor review process before the project can close. The issues that led to the contractor being placed on enhanced review status would have to be dealt with in sponsor review. HPD makes sponsor review determinations on a project-by-project basis, so we can never say in advance how the process will turn out. The fact that the contractor is on enhanced review status simply means that it will be subject to extra scrutiny. There is no guarantee that it will (or will not) pass sponsor review. The agency will not make any determination about its willingness to do business with the firm until the end of the sponsor review process. The Agency may: (a) require additional monitoring by HPD staff; (b) require the contractor to retain a third party labor monitor or construction quality monitor selected by the Agency, at the contractor's expense; or (c) impose other conditions that it deems necessary or desirable to address the issues that caused the contractor to be placed on enhanced review status, at the contractor's expense. In some cases, the Agency may refuse to close on the transaction.

10. Labor Compliance at HPD: How can we improve the process? HPD plans to institute an online payroll system in early 2014. This system: Will increase transparency Improve efficiency of LMU review of payrolls and other information Enhance communication between partners and LMU Allow contractors to submit payroll and other documentation electronically Furnish agency partners with a record of submitted documentation