State investigates labor, licensing, tax compliance during Ala Moana Center expansion

Local News

The Hawaii Department of Labor and Industrial Relations (DLIR) says it’s checking to see if laws regarding wages, worker safety, and insurance are being followed at Ala Moana Center.

The center’s Ewa Wing expansion is set to open next month. Its construction is one of the biggest projects in the state, with a price tag exceeding $500 million.

On Monday, we learned that state agencies are investigating to ensure contractors and sub-contractors working on projects were properly licensed and projects were appropriately supervised.

The investigations were triggered by a complaint filed by Hawaii Construction Alliance, which tells KHON2 it wants to make sure workers are being paid fairly and work is being done properly so customers are safe.

The alliance has been looking at possible unlicensed contracting activity for the past several weeks at nine stores in the Ewa wing, according to its executive director.

Tyler Dos Santos-Tam told KHON2 he has statements from workers who were paid in cash “off the books.”

“When people are being underpaid and undervalued for the work that they put in, that’s a problem for us here as a community, and we need to say no to that,” he said.

Hawaii Construction Alliance represents 15,000 workers in the construction industry.

State officials said personnel from the Department of Taxation (DoTAX) conducted educational outreach to inform contractors of their responsibilities, and offer assistance should there be any questions about tax laws. Department of Commerce & Consumer Affairs’ Regulated Industry Complaints Office (RICO) investigators were also present.

“While the new shops at Ala Moana may have glamor (sic) appeal, let’s not overlook Hawaii’s workers and contractors who build them,” Linda Chu Takayama, DLIR director, said in a statement. “Working people and local contractors need to benefit fairly from the luxury development going on around us.”

“There are numerous ones and DLIR went in there today, and they are going to investigate and find out exactly how many violations are occurring and make sure they don’t happen again,” Dos Santos-Tam said.

If any rules were broken, a labor department spokesman says it will likely be several weeks before any violations and/or penalties are issued.

“Law-abiding contractors who pay their fair share face unfair competition and everyone pays more to make up for lost tax revenue, while employees suffer when their rights and benefits are reduced, for example, when they have no credited employment for benefits like unemployment insurance,” said Chu Takayama.

According to the department, “The misclassifying of construction employees as independent contractors, or simply paying them in cash ‘off-the-books,’ could affect Hawaii’s hard-working contractors, workers, and State funds. Misclassification and cash payments avoid payments for Unemployment Insurance, Workers Compensation, Temporary Disability Insurance and Prepaid Health Care. State and Federal taxes are often also not paid along with neglecting to obtain licenses to operate legally in Hawaii.”

Ala Moana is the world’s largest open air-mall and on Nov. 12 at 9 a.m., 39 stores will open in the new wing, including Hawaii’s first Bloomingdale’s.

General manager Francis Cofran tells KHON2 the opening remains on schedule.

He released the following statement in response:

We were notified about the investigation and have been cooperating with all of the involved state departments and have been facilitating access to the site.

At this point, this is an issue between the state investigators and some tenants. And we are closely monitoring the situation because GGP requires its tenants to fully comply with all applicable laws and regulations.

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