Hotel Contractor Hit with Hefty Fines

TUESDAY, SEPTEMBER 27, 2016


A Texas-based commercial contractor faces more than $750,000 in fines for allegedly cheating 65 workers out of their proper compensation on a $25 million hotel renovation project in Hawaii, authorities announced.

R&R Construction Services, of Conroe, TX, was said to have misclassified the workers as independent contractors when they should have been considered employees, according to the state’s Department of Labor and Industrial Relations.

By doing so, the company avoided requirements to provide unemployment, workers compensation, temporary disability and prepaid health care insurances, officials alleged.

“Law-abiding contractors who pay their fair share face unfair competition and workers suffer when deprived of their rights and benefits,” DLIR Director Linda Chu Takayama said in a statement.

The case stems from an investigation launched into the Maile Sky Court Hotel project in Waikiki after workers and the Pacific Resource Partnership, which represents the Hawaii Regional Council of Carpenters, filed complaints with state and federal authorities in August.

The company has 20 days to respond to the case.

R&R Construction Services didn’t immediately respond Monday (Sept. 26) to a request for comment.

‘Rogue Project’

Kyle Chock, assistant financial secretary-treasurer of the Hawaii Regional Council of Carpenters told The Honolulu Star that the large fines reflect the severity of the case.

Wakiki beach
©iStock.com / Andy_Tam

“The visitor industry, and a pleasant visitor experience, is important to Hawaii, but Hawaii’s working people and law abiding contractors need to benefit fairly," according to DLIR Director Linda Chu Takayama. The hotel renovation project is near Wakiki beach in Honolulu.

“It's almost a construction site that has gone totally rogue,” Chock said. “We expect many more fines to come. We won't be surprised to see total fines collected in excess of seven figures—that would be one of the biggest fines that I've seen in over a decade-plus of doing construction in Hawaii.”

“It sends a strong message that our community won't tolerate this kind of blatant cheating that takes advantage of workers.”

In addition to the $767,095 tab, R&R could face further sanctions from the U.S. Department of Labor's Wage and Hour Division and the Hawaii Department of Commerce & Consumer Affairs.

Reports say the renovations began in April and are expected to be completed in November.

   

Tagged categories: Commercial Construction; Fraud; Hotels; Maintenance + Renovation; Personnel; Renovation; Workers

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