State fines Maile Sky Court contractor $767,095
June 24, 2018 | 76° | Check Traffic

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State fines Maile Sky Court contractor $767,095

  • JAMM AQUINO / JAQUINO@STARADVERTISER.COM

    The Maile Sky Court hotel and apartment is seen on Aug. 29 in Waikiki. State and federal investigators raided the Maile Sky Court in Waikiki last month in response to complaints from workers and the Pacific Resource Partnership, which represents the Hawaii Regional Council of Carpenters.

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A contractor on the $25 million Maile Sky Court hotel renovation project has been fined $767,095 by the state Department of Labor and Industrial Relations for workplace irregularities.

State and federal investigators raided the Maile Sky Court in Waikiki last month in response to complaints from workers and the Pacific Resource Partnership, which represents the Hawaii Regional Council of Carpenters. DLIR found that Texas-based R&R Construction Services allegedly misclassified 65 construction employees as independent contractors. By doing so, the contractor avoided requirements to provide unemployment, workers compensation, temporary disability and prepaid health care insurances.

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

R&R Construction Services has twenty days to appeal the citations.

More findings from DLIR’s Unemployment Insurance and Occupational Safety & Health Divisions are expected soon. The company also could face further sanctions from the U.S. Department of Labor’s Wage and Hour Division, which enforces the wage and record-keeping provisions of the federal Fair Labor Standards Act, and the Hawaii Department of Commerce & Consumer Affairs, which enforces licensure.

California-based Clearview Hotel Capital LLC owns the budget Waikiki hotel, which it purchased for $76 million in 2015. The company, which could not immediately be reached for comment, had previously announced that its ownership plans included a comprehensive renovation followed by the repositioning of the hotel into a Holiday Inn Express.

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  • “Law-abiding contractors who pay their fair share face unfair competition and workers suffer when deprived of their rights and benefits,” – Translation – You didn’t donate to the appropriate Hawaii Politicians like PRP does and did not hire any PRP unionized contractors to assist in construction this project, therefore we are taking your profit margin in the form of fines.

    • I translate the statement as R & R Construction Services trimmed their cost by classifying their employees as independent contractors so they didn’t have to pay fringe benefits. By doing so, they were able to underbid the competition and won the contract. At the same time, R & R’s employees weren’t receiving the benefits that are required as protection while on the job.

    • However, now the feds will get involved and charge and fine them. Will probably also look into how they are classifying workers on other jobs.

      Company will also be responsible for workers comp and unemployment insurance and possibly other payroll taxes that were supposed to have been withheld and paid.

  • To avoid paying high Union wages, some companies work this way. If the employee is willing to work for less pay and maintain the safety and quality, why not go that route. Sounds like Government si interfering in a right to work issue!

    • There’s a good reason why all of these rules and regulations got implemented in the first place. Seems all fine and dandy until it affects you personally or somebody close to you. Workers have gone through a lot of pain and suffering for decades to get them to where they are today. If they aren’t going to do anything about these guys who think they are above the law, then their contracts aren’t worth even the paper they are written on if they enforce the rules.

    • union workers get laid off and gets to sit on the bench if their productivity sucks.

      these 65 workers were classified as independent contractors….UNLICENSED SUBCONTRACTORS. maybe the state should go after these 65 independent contractors too….and hit R&R for hiring unlicensed subcontractors.