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Workers Cheated Out of $35M, Lawsuit Says

November 5, 2014
By Joe Maniscalco

Companies with 'alter egos' are costing construction workers big time.
Companies with ‘alter egos’ are costing construction workers big time.

New York, NY – A new lawsuit brought by members of the Concrete Industry Coalition alleges that a major construction firm working with the City of New York used a collection of “alter egos” to avoid paying more than $35 million in union benefit funds.

The owners of Navillus Tile are signatories of collective bargaining agreements with several unions including Metal Lathers Local 46, Cement and Concrete Workers District Council, Cement Masons Local 780, and the New York City District Council of Carpenters. But the unions involved in the lawsuit filed last month, charge that Navillus formed two “alter ego” companies – Advanced Construction Solutions [ACS] and Time Square Construction – to avoid paying contractually obligated payments that should have helped fund worker health benefits, pensions, training, education and more.

According to the suit, ACS and Time Square performed work covered by union contracts at the City Point project on DeKalb and Flatbush avenues in Brooklyn, a publicly funded project in the Bronx located at 1191 Boston Post Road, and two other sites in Manhattan located at 400 155th Street and 551 West 21st Street. 

The complainants in the lawsuit contend that Navillus’ actions violated collective bargaining agreements, as well as the Employee Retirement Income Security Act [ERISA]. 

Navillus did not respond to request for comment. 

The company was founded in 1987 and specializes in “high-end commercial masonry, tiling and stone,” and is involved in hundreds of construction projects annually.

Big companies like Navillus benefit from collective bargaining agreements in a number of ways, among them, having immediate access to a ready pool of highly trained professionals who can be called upon as the needs of individual construction projects evolve. 

When companies who have entered into collective bargaining agreements turn around and use many of those same resources to do non-union work under a different name, the resulting entity is viewed as an “alter ego.” 

Industry insiders say that the use of “alter ego” companies like the ones Navillus is accused of creating, is becoming an increasing trend that organized labor must now confront. 

About six months ago, a company called River Avenue Contracting Corp. and its non-union entity RNC industries, settled a more than $6 million lawsuit with the Metal Lathers Local 46 and Carpenters benefit funds, after the unions brought suit seeking to show that RNC was, in fact, River Avenue Contracting's  “alter ego.”

Prior to that, River owner Richard Tonyes, was sentenced to 13 months in federal prison on charges of tax evasion for paying employees of Extreme Concrete Corp. – another company he owns – off the books.

Labor supporters are calling for more oversight to crack down on union signatories like Navillus who are accused of using union-busting ‘alter egos.”

“Here in New York City we value collective bargaining, the right to organize, and the greater process," said Councilman I. Daneek Miller [D-27th District], Civil Service & Labor Committee chair. "This is undermined when groups attempt to operate outside the rules and through these so-called ‘alter egos’. Such behavior is unacceptable and we must work to maintain the dignity of workers here in our city.”

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