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October 2nd, 2013

Schneiderman announces a $5m settlement for hurricane workers

NEW YORK, NY - Attorney General Eric T. Schneiderman has announced the resolution of an investigation into employee complaints that National Grid, the multi-state electric and gas utility company, failed to properly pay its New York workers as required under state and federal law in the months after Hurricane Sandy. In addition to repaying previously unpaid wages, which has already largely occurred, the Attorney General’s agreement requires National Grid to pay another $750 to every hourly employee who worked for the company between November 1, 2012, and March 31, 2013. The total in additional monies, going to 6,500 workers, is more than $4.8 million.

"Some of the affected employees in this case reported that they were unable to repair their own homes after the storm because of National Grid’s underpayments," said Attorney General Schneiderman. "National Grid’s workers will receive some compensation - and an explanation - for the financial hardship they endured in the aftermath of the storm."

The agreement with the Attorney General’s Labor Bureau requires National Grid to provide an accounting to employees summarizing unpaid and underpaid wages, and to explain the date and manner in which payment problems - which the company attributes to computer glitches - have been fixed. In addition, the agreement requires National Grid to provide the Attorney General’s Office with a report summarizing causes of systemic payroll failures, a description of steps taken to remedy the problems, a summary of lessons learned and a description of measures National Grid will take to prevent any future recurrence.

National Grid provides energy to business and residential customers in large parts of New York State, including Northern and Western New York and on Long Island. National Grid, headquartered in Massachusetts, employs more than 10,000 people in New York State.

More than 6,500 hourly employees who worked for National Grid in New York State ("New York employees") did not receive their full pay on time. During a period of 19 weeks, there were approximately 32,000 incidents in which employees were underpaid and provided with inaccurate wage statements.

National Grid’s failure to properly pay employees, from Long Island to Syracuse, was the result of the company’s conversion to a new computer system, which involved changes to its time-keeping and payroll systems. The new system was scheduled to "go live" on November 5, 2012. Despite the forecasts of a hurricane headed for the East Coast, National Grid failed to delay this company-wide computer conversion. This caused massive disruption to National Grid’s pay and timekeeping system, including nonpayment of wages, nonpayment of overtime and inaccurate wage statements to employees. In addition, the Attorney General’s office found that for more than a month after this disruption, the staffing resources devoted to fixing the system remained insufficient.

After Sandy hit the New York area, National Grid employees worked greatly expanded hours. Many workers were underpaid or not paid at all. They experienced disruptions in direct bank deposits of their wages. Among other problems, certain established payroll deductions did not take place for some, resulting in employees defaulting on child support garnishments and other legal obligations.

The non-payment and underpayment of earned wages had serious consequences for many National Grid employees, some of whom reported to the Attorney General that they were left unable to pay rent, repair their homes and pay for other basic necessities. This failure to pay all wages owed in a timely manner caused significant stress, confusion and anxiety to employees, many of whom worked extremely long hours in the weeks after the storm, repairing damage caused by Sandy, in an effort to restore service to National Grid customers.

In addition to the OAG investigation, four private lawsuits concerning the underpayments were filed in New York State. Any funds paid toward settlement of those lawsuits will be credited toward National Grid’s obligations under the Attorney General’s settlement. In the course of the investigation, the Attorney General’s Office collaborated with the Massachusetts Attorney General’s Office, which has announced a similar settlement with National Grid.

Under New York law, employers are required to pay manual laborers at least weekly and to pay clerical and other covered workers in accordance with agreed terms of employment and at least semi-monthly. Employers must also pay employees at least the minimum wage, currently $7.25 per hour, and must pay overtime at time and one half of employees’ regular hourly rate for all covered workers. Employers must maintain payroll records, including hours and actual pay, and furnish to each employee a statement with every payment of wages, listing hours worked, rates paid, gross wages and allowances, if any, claimed as part of the minimum or promised wages.

Donald J. Daley Jr, Business Manager of IBEW Local Union 1049 on Long Island, said, "Our hardworking members deserved to be paid correctly and on time. For National Grid to implement a new payroll system during the Hurricane Sandy restoration was highly irresponsible. I want to personally thank New York State Attorney General Eric Schniederman his close attention to this matter and bringing it to fair resolution."

The case was handled by Assistant Attorney General Kevin M. Lynch and Labor Bureau Special Counsel Patricia Kakalec, under the supervision of Bureau Chief Terri Gerstein, Executive Deputy Attorney General for Social Justice Alvin Bragg and First Deputy Attorney General for Affirmative Litigation Janet Sabel.

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