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Feds Ban Builder for Wage Violations

Tuesday, August 12, 2014

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A Detroit-based contractor has been banned from bidding on federal contracts for up to three years after investigators found that the firm had failed to pay $415,000 in wages.

The U.S. Department of Labor’s Wage and Hour Division investigated Malino Construction as part of a multi-year crackdown on widespread labor violations involving federally funded construction projects in the Detroit area.

Malino Construction has also been cited four times in the last three years by the Occupational Safety and Health Administration for serious and repeat safety violations.

The Investigation

According to federal investigators, Malino Construction and several subcontractors violated provisions of the Davis-Bacon and Related Acts, the Contract Work Hours and Safety Standards Act and the Fair Labor Standards Act while working on the Palmer Park Square affordable-housing project in Detroit in 2012 and 2013.

Malino Construction, owned by Mark Leipsitz and Kathy Makino-Leipsitz, pictured here at a fundraiser, are banned from seeking federal contracts for up to three years after failing to pay workers the prevailing wage.

The companies failed to pay required prevailing wages, fringe benefits and overtime to construction workers on the project; failed to keep accurate time and payroll records for employees; and provided falsified, certified payroll records to the government, the government said.

The extent of these willful violations prompted the Department of Labor to bar Malino from bidding on any federal contracts for up to three years.

“These are tough economic times for the people of Detroit, and the last thing we need is for the workers who are helping to rehabilitate this city to be denied their rightful wages and benefits,” said Timolin Mitchell, director of the Wage and Hour Division’s Detroit District Office, in a statement.

“The resolution of these investigations, and the debarment of Malino Construction from bidding on future federal taxpayer-funded projects, will help ensure that local prevailing wages and working conditions are not undercut by contractors who violate the law.”

Affordable Housing

Malino's has been active in Detroit's affordable-housing market, creating a niche in projects funded by the U.S. Department of Housing and Urban Development, according to an article in U.S. Builders Review.

The Palmer Lodge is one of 14 buildings that Malino Construction bought to revitalize the historic Palmer Park neighborhood in north Detroit.

Malino Construction owners Kathy Makino-Leipsitz and Mark Leipsitz bought 14 rundown buildings in the Palmer Park neighborhood for redevelopment.

The couple used stimulus funds from the American Recovery and Reinvestment Act to revitalize the neighborhood and buy property and 12 more buildings in two other Detroit neighborhoods, the article said.

Prevailing Wage

Under the Davis-Bacon Act, the prime contractor is responsible for ensuring that subcontractors on a job comply with wage laws, which the government says Malino failed to do.

The prevailing-wage standard is in place to make certain workers are paid fairly and allows for contractors and subcontractors to compete on a level field.

Under the multiyear strategic enforcement initiative, 19 investigations focused on the companies working on the project. All contractors found in violation have agreed to comply with applicable wage laws in the future.

Past Violations

In other enforcement actions, Malino Construction has received 21 OSHA citations over four occasions in the last three years for serious and repeat safety violations.

All citations involved either failure to provide fall protection to workers or failure to meet training requirements.


Editor's Note: The headline to this story was changed and an incorrect reference, mentioning Malino Construction as a subsidiary of another company, was removed at 8:30 p.m. on July 1, 2018.


Tagged categories: Building Envelope; Economic stimulus; Government contracts; Labor; OSHA; Regulations; Residential Construction; Residential contractors

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