Luxury LIC Developer Stiffed Workers Of $700K, Attorney General Says

LONG ISLAND CITY, QUEENS — The developer of a Long Island City luxury building must pay a $3 million settlement after under-paying workers by more than $723,000, officials said last week.

In 2011, developer Heatherwood Communities built the 27-story rental tower on 27th Street and 42nd Road known as "27 on 27th," as well as the luxury tower 568 Union in Williamsburg, Brooklyn.

Both buildings advertise long lists of amenities, from yoga studios to rooftop terraces to gyms and children's playrooms. When it built both projects, Heatherwood benefited from tax breaks through the state's 421-a program, and promised in exchange to pay "prevailing wages" to its building workers, Attorney General Letitia James's office said Thursday.

Instead, between 2012 and 2013, Heatherwood paid service workers at the Long Island City tower just $8.50 to $15 per hour — a fraction of the $22 to $26 that would have counted as "prevailing wages,"

Had that promise been kept, workers would have received between $22 and $26 per hour, according to authorities.

"I am a working person, and I expect my employer to pay me what was promised," said Francisco Giuliano, one of the buildings' workers, in a statement. "Underpaying workers is not just wrong. It throws lives into chaos."

An investigation by James's office uncovered the under-payment, which affected 24 workers between the two buildings and amounted to $723,324 — the full amount they were owed, plus interest, authorities said.

Besides repaying the workers, the $3 million settlement with the state requires Heatherwood to pay $1,146,196 in penalties to the city and $686,527 to the state, plus $446,952 to the union 32BJ SEIU, which served as a whistleblower by alerting authorities.

Heatherwood must also keep paying prevailing wages to its workers, prosecutors said.

"I have two children and am single," said Katherine Bustamante, another of the workers. "By underpaying workers and denying us benefits, Heatherwood made it harder for us to provide for our families."

Attorney General James said that the 24 employees "worked day and night to make ends meet but were denied their hard-earned money.

"Paying workers fair wages and benefits is not a luxury, it’s the law and Heatherwood cheated these workers and taxpayers," she said.

The 421-a program at the center of the dispute was allowed to expire last spring, as state lawmakers acknowledged longstanding critiques that the tax breaks did not produce much affordable housing, contrary to one of its stated goals.