Acting State Labor Commissioner Roberta Reardon and Queens County District Attorney Richard A. Brown today announced the arrest of the owners of JEM Contracting, Inc. (JEM), Jose E. and Joseph S. Molina, of Maspeth, Queens, for allegedly failing to pay more than $80,000 in wages owed to their workers and defrauding the Unemployment Insurance system of more than $500,000. They are charged with Grand Larceny in the Second Degree, Grand Larceny in the Third Degree, Falsifying Business Records in the First Degree, Offering a False Instrument for Filing in the First Degree and Scheme to Defraud in the First Degree. If convicted, the defendants face up to 15 years in State Prison and a fine of up to $10,000.

“The State Labor Department is committed to detecting and stopping wage theft and fraud,” said Acting Labor Commissioner Roberta Reardon. “When employers steal from their workers and defraud the State, our investigators will find out, build a case and refer the case to local law enforcement for further investigation and prosecution. I thank District Attorney Brown and his team for their efforts in bringing these individuals to justice.” 

The arrests were made as a result of an investigation by the State’s Joint Enforcement Task Force on Employee Misclassification (JETF). The JETF conducted multiple enforcement operations at construction sites in the New York Metro area where JEM Contracting Corp. was present as a subcontractor. The JETF interviewed a total of 23 workers that were employed by JEM while conducting these inspections. 

The JETF found that JEM grossly underreported the number of employees and continuously and repeatedly filed false Quarterly Combined Withholding, Wage Reporting and Unemployment Insurance Returns with the Department of Labor. JEM also allegedly paid most of its workers off the books, in cash, without any deductions for taxes; failed to pay the proper rate for overtime; failed to provide wage stubs; and often failed to pay employees for hours worked. In one instance, a worker alleged that he worked 68 hours at one site without being paid any wages at all. 

Queens District Attorney Brown said, “I am pleased to be able to work with Acting Commissioner Reardon and the Department of Labor on such an important investigation.  In these difficult economic times, when many families are struggling financially to get by and living paycheck to paycheck, the defendants’ alleged act of withholding wages and cheating workers out of money they honestly earned could have proven catastrophic.  Similarly, by allegedly bilking the State out of hundreds of thousands of dollars intended for the Unemployment Insurance Trust Fund, the defendants stand accused of eroding a vital workplace protection that was created for the benefit of all workers.” 

The JETF conducts unannounced enforcement operations at businesses across the State as part of the Labor Department’s effort to root out and prevent employee misclassification. During these inspections, the JETF interviews the workers on-site in an effort to discover whether the employers are violating the Labor Law and other state laws that protect workers.

Employers pay contributions to the Unemployment Insurance Trust Fund, which, in turn, pays benefits to workers who lose their job through no fault of their own. When employers seek to game the system by misclassifying employees as contractors, paying workers off the books, or underreporting their employees and payroll, it hurts all employers. This type of fraud can increase Unemployment Insurance costs for all employers in the State and prevent business competition from being conducted on a level playing field. It is in the interest of all New Yorkers to report any cases of suspected employer fraud to the Department of Labor by calling 1-866-435-1499. 

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