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City escalates argument with White Lodging over prevailing wage

Thursday, June 6, 2013 by Michael Kanin

The City of Austin’s Contract Management Department has issued an ultimatum to the developers behind the new JW Marriott Hotel at Third Street and Congress Avenue, ordering them to pay back wages to 13 project carpenters whose work was improperly categorized. The ultimatum expired at noon Tuesday.

 

In Fact Daily obtained both a copy of a letter sent by Contract Management Director Rosie Truelove to White Lodging and a response from White Lodging’s President and CEO for Investments and Development Deno Yiankes. Yiankes maintains that White Lodging was acting on assurances from a former assistant city manager, and that Truelove’s letter “contradicts” that communication. The reference is to former Assistant City Manager Rudy Garza, who retired from the city in 2012.

 

Yiankes then asks for the issue to be placed on the “first available City Council agenda for clarification and ratification.” 

 

Truelove’s letter states that the document represents White Lodging’s “final opportunity to comply with the City of Austin prevailing wage requirements” associated with the development incentives agreement inked two years ago. As part of that deal, White Lodging agreed to pay workers a prevailing wage in exchange for $3.8 million in city fee waivers.

 

In February, In Fact Daily reported that activists with the Workers Defense Project had obtained affidavits from construction workers on the Marriott project who said their positions had been misclassified. There is also some debate over calculations associated with the prevailing wage associated with the project, and the fact that a former high-level city employee wrote an email to White Lodging that contained “approvals that turned out to be ‘contrary to the (agreement) passed by the (City) Council.’” (See In Fact Daily, Feb. 6.)

 

Truelove’s letter further details the history of communications between White Lodging and city staff regarding the issue. She writes that a Feb. 20 communication instructed White Lodging to comply with three city demands: That it should pay the back wages to the 13 misclassified employees; that White Lodging provide pay stubs and checks as proof of that action; and interviews with four contractors to “determine if any back wages are due to employees hired as carpenters’ helpers.”

 

According to Truelove, White Lodging “provided an incomplete response” to her request on March 15. On March 22, she raised the stakes in another letter, adding a requirement “for payroll documentation for all employees from project inception to date.” Truelove further writes that the company provided another incomplete response.

 

The latest letter, dated May 31, orders the company to perform three tasks: provide proof of payment for the 13 workers; provide a date, time, and location “for staff to interview four individuals as a representative sampling of employees hired as carpenters’ helpers”; and provide payroll documentation for all employees that it has not yet turned over to city contract staff.

 

“Failure to comply with this request will result in my notification to Mayor and Council of White Lodging’s failure to comply with the City’s prevailing wage requirements associated with the (project),” Truelove writes. “As a result of this failure to comply, White Lodging would need to reimburse the city for all development fee waivers provided.”

 

For his part, Yiankes wrote that – until Council clarifies the situation – they would proceed under the direction they got from the assistant city manager.

 

Council Member Mike Martinez told In Fact Daily in February that Council would not have to take action to recoup the fees. “It’s in the ordinance that they would have to return those incentives if they have been paid to them,” he said at the time.

 

Meanwhile, Workers Defense Project attorneys are headed to court this afternoon to argue for the right to depose a White Lodging official about the lingering wage issues. The deposition could arm them with more legal ammunition to use against White Lodging.

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