The U.S. Department of Labor in May charged MDG Design & Construction with violating a slew of wage and labor laws — and has moved to ban the firm from bidding on federal projects for up to three years. ‘We would hope that when a contractor is under investigation there would be a heightened sense of scrutiny,’ says a lawyer for workers involved in a class-action suit against the firm.

The Housing Authority is handing taxpayer dollars to a private contractor accused of allowing construction workers to be cheated out of millions of dollars, the Daily News has learned.

The U.S. Department of Labor in May charged MDG Design & Construction with violating a slew of wage and labor laws on a $60 million federal housing project on the Lower East Side, and moved to ban the company from bidding for federal jobs for up to three years.

Three workers on that project and others filed a class-action lawsuit against the firm in October. They told The News they were entitled to more than $50 an hour in wages and benefits, yet received as little as $50 a day and were told to hide from inspectors.

Yet the New York City Housing Authority last month proudly announced its selection of MDG to fix 874 apartments in the Bronx, Brooklyn and Manhattan.

“We would hope that when a contractor is under investigation there would be a heightened sense of scrutiny,” said Lloyd Ambinder of Virginia & Ambinder LLP, lawyer for the workers.

MDG principal Michael Rooney disputes the charges.

He says alleged underpayments on the Grand Street Guild project in 2010 and 2011 were made by subcontractors without MDG’s knowledge, and pointed to a state-of-the-art compliance program the firm recently created, which has restored over $1.5 million to workers.

“MDG has zero tolerance for labor law violations,” he said. “There is no allegation that MDG was aware of, condoned, or participated in the violations of its subcontractors. MDG is confident that there will be no findings … that MDG engaged in any misconduct.”

But the workers and their advocates say MDG is part of an industry-wide problem.

“I hope the next administration in awarding contracts takes a harder look at the companies to make sure they follow the rules,” said Julia Dietz, staff attorney at Make the Road New York.

“Too often while law enforcement is conducting an investigation into criminal activities by a contractor, city agencies continue to do business with that contractor,” said Robert Bonanza, Mason Tenders District Council of Greater New York business manager.

Once when inspectors visited the Grand Street Guild site, a supervisor locked workers in a room, workers said. Another time, they said an MDG supervisor told them to leave for an hour.

“The supervisor told us to stop a moment because there were people asking about wages,” said plaintiff Miguel Cuaya, 33.

Workers interviewed by The News said they were paid in cash off the books, with no overtime.

MDG and its subcontractors were required to pay prevailing wages because the project used taxpayer funds. But some workers were paid as little as $10 an hour, and were ultimately ripped off for more than $5 million, federal investigators found.

MDG “failed to ensure its subcontractors’ compliance,” the probers said.

In June, the New York City Department of Housing Preservation and Development announced it had selected MDG for a new project in Williamsburg, Brooklyn. Next came NYCHA, tapping MDG in November.

Both agencies put out press releases touting the company.

The agencies now say their MDG contracts are not yet final and will undergo further review.

MDG and its subcontractors have requested hearings with a judge to dispute the DOL charges.

The company says it has put money in escrow to pay back the workers if a judge rules against it and the subcontractors.

Rooney, the company’s principal, called the workers’ lawsuit “baseless.”

“It is an obvious attempt to pursue MDG, as a deeper-pocketed general contractor, for alleged violations by subcontractors,” he said.

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