421-a Owners Receive Increased Scrutiny Over Wage Rules

New York City and State regulators are increasing efforts to enforce wage rules for service workers at luxury apartment buildings whose owners receive 421-a tax breaks. The New York City Department of Housing Preservation and Development, the city comptroller, and the New York Attorney General’s Office have sent out joint letters to these owners asking for certified statements and evidence that they had paid their workers the legally required wages or an explanation of why they were not required to do so.

The 2007 law requires owners of bigger buildings receiving the tax subsidy to pay service employees such as doormen and janitors the “prevailing wage” for their positions – a rate set by the city comptroller that is calculated to give non-union workers pay comparable to those to union wages. The law, which historically was not enforced, also entitles workers to get additional benefits such as health insurance.

In 2015, state lawmakers transferred oversight of the prevailing wage rules to the city comptroller, whose office now has the authority to investigate violations of the law and present them to the housing agency for enforcement. Workers can file complaints with the comptroller, and – if an underpayment is not repaid – the housing agency can revoke the tax benefit, according to new regulations that spell out how the wage requirement will be enforced.