So You Want to do Business in New York

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Governor Cuomo is wildly popular, and he’s getting loads of credit for helping to fix the state’s fiscal crisis, and also for implementing and advocating for reforms of the way in which the state does its business. Perhaps, however, the change he’s brought has been too tentative and not wide-reaching enough.  

Take, for instance, the case of Howard Nielsen, the owner of Sticky Lips BBQ in Rochester. I first became aware of his restaurant when I saw the new one being constructed along Jefferson Road, and I had a very nice lunch there recently. He’s written an exasperated open letter right on the front page of his restaurant’s website, called “So You Want to do Business in New York“.  

The land on which the restaurant sits is owned by the Genesee Valley Regional Market Authority and leased to Sticky Lips, which owns the building. It’s a small property – a former Roadhouse restaurant – and Sticky Lips completed its renovations through a private non-union contractor. It’s not a “public work”, he’s not required under any regulation or statute to retain the services of union labor, and he is just a guy who owns a restaurant who built it out and paid a bunch of people a lot of money to renovate and build it out. He didn’t use any public money to do so. 

But the shakedown began when, halfway through the project, a guy from the carpenter’s union showed up. It was a small job, and he was told, “no thanks”.  Two days later, there was an OSHA guy camped out across the street with “a telephoto lens”. A few weeks later, a guy from the electrical union showed up. They were also told, “no thanks.” Two days later, an inspector from the state Department of Labor was on site, demanding to see the contracts to determine whether prevailing wages were being paid. 

I’m generally pro-union, and I respect the notion of collective bargaining to ensure that workers who choose to unionize are treated fairly. But that should apply to big business, or public works. Ultimately – it’s the workers’ choice whether to work for a union shop or not, and small businesses renovating a non-chain restaurant should, frankly, be left alone, much less harassed. And why is it that state and federal inspectors are seemingly acting in concert – one could even say on behalf of – the union? 

Now? Sticky Lips’ contractors were all subpoenaed for a May 16th hearing at the Labor Department for an investigation of whether laws were broken. Nielsen continues, 

Bob Bibbins pressured me to go online to register this project with the labor department, which would automatically commit me or my contractors to pay prevailing wages.  He said he would start the violation from the date he showed up, but wouldn’t put that deal in writing.  I did not submit to this online filing. My lawyer at Woods Oviatt Gilman gave Bibbins our stance that we own the building privately and we are only making improvements to the building and not the land which it sits on.

Furthermore,

In the meantime, Bibbins is going to push this and see that I pay these prevailing wages. He has subpoenaed the contractors, who have to show up May 16th and attend before Ralph Gleason, public work wage investigator. He has been designated by the Commissioner of Labor to conduct an investigation concerning Sticky Lips BBQ, “an entity subject to an investigation by the New York State Department of Labor concerning a public work project pursuant to the provisions of Article 8, New York State Labor Law.”

All I did was to put many construction workers to work. I bought hundreds of thousands of dollars of construction materials from local companies. At this restaurant, I have created over 120 good-paying jobs. The business will collect and pay hundreds of thousands dollars in sales, property, employment, and other taxes. Between my three restaurants, I have over 200 employees. I am contributing to the state, I am creating jobs. I am the type of businessman the state wants. I feel like I am being attacked by these two unions, who have put pressure on the N.Y.S. Labor Department to see this through.

Not only do I need to reinvest my profits to grow my business, but now I have to pay thousands of dollars in legal fees and worst case scenario – if the Labor Department wins, many more thousands for this prevailing wage issue.

Is this the type of business practice I should expect from New York State as I try to grow my business in the upcoming years?

Nielsen has appended some documents to his letter to prove his point. So, why exactly was this relatively small venture targeted?