Moxy, shown here, and Hotel Distil are slated to open on Whiskey Row in November. | Photo by Kevin Gibson

The Metro Department of Codes and Regulations issued a written warning on May 31 to a contractor working on the construction of a new twin hotel project on Whiskey Row downtown, declaring that it was violating state and city law by subcontracting an unlicensed company to install the hotels’ fire sprinkler system.

A spokeswoman from Louisville Forward also confirmed that the unlicensed subcontractor improperly installed the hotels’ sprinkler system, which was now being replaced by new contractors.

The 14-story twin hotels being constructed on First and Main streets are that of Hotel Distil and Moxy, a project of Indiana-based hospitality company White Lodging that is scheduled to open in November.

The Codes and Regulations administrative warning was sent to SimplexGrinnell — a fire sprinkler company that is a subsidiary of international giant Johnson Controls — which was the designated contractor permitted by the city to install the hotels’ sprinkler system, having received the proper licensing from the city and state.

However, the warning letter went on to state that the subcontractor hired by SimplexGrinnell to install the sprinkler system “did not hold any type of Kentucky Fire Sprinkler License,” adding that it is a violation of state law to have such a system worked on by someone other than the certificate holder.

The warning letter from Codes and Regulations executive administrator Paul Nicholson added that it was the department’s understanding that SimplexGrinnell “remedied the situation” and was now in compliance with the law, but warned that any further violations “may be subject to further action being taken, up to and concluding suspension of your current license with Metro Louisville.”

A Louisville Forward spokeswoman, Caitlin Bowling, confirmed to Insider Louisville that the unlicensed subcontractor was IMP Mechanical, a firm based in Fayetteville, Ga., and that some of its work on the fire sprinkler system was improper and had to be reinstalled.

Bowling said that Codes and Regulations is “making sure things are installed correctly and there are licensed workers,” adding that the department has been “working with the developers and contractors to make sure everything is in order.” She also stated that warnings are typically issued before formal citations for violating city and state codes, as it gives contractors an opportunity to rectify the problem.

Spokespersons for White Lodging, SimplexGrinnell and Johnson Controls have not yet replied to emailed questions for this article.

Thomasina Brown, a registered agent with IMP Mechanical, told Insider that she vigorously disagreed with the assertion of Codes and Regulations in the warning letter about the subcontractor having to be licensed in Kentucky, saying that since the company’s workers were independent contractors instead of employees, only Johnson Controls had to be licensed.

Todd Johnson, a local union organizer for the Road Sprinkler Fitters UA Local 669, told Insider that he and others warned state and city departments weeks before the Codes and Regulations letter in May, expressing concern about what he called untrained and uncertified workers improperly installing safety features at the behest of an unlicensed, out-of-state subcontractor.

In a May 15 letter to the Department of Housing, Building and Construction in Frankfort, the prominent Kentucky labor attorney Dave Suetholz wrote that IMP was committing “major code violations” that were under investigation by Metro Codes and Regulations after an informal complaint was submitted, asking the state department to assist in that effort.

The next day, Suetholz sent a formal complaint to the same state department, accusing Johnson Controls of knowingly or recklessly subcontracting the fire sprinkler installation work to an unlicensed subcontractor and requesting the agency issue a cease and desist order and assess maximum administrative fines.

Insider was also provided with a signed affidavit by a former IMP Mechanical employee in July, which states that he installed sprinkler systems at the hotels for nearly three months until he finally became certified in late March by taking an instructional course. He added that he was instructed to install sprinkler heads into fittings improperly during this period, using a method that could dangerously clog sprinkler heads with glue and prevent water from coming through.

That same month, Johnson also sent a formal complaint to the Kentucky Department of Revenue and Louisville Metro Revenue Commission, accusing IMP Mechanical of improperly classifying its employees as independent contractors and not withholding any city or state taxes from their wages and remitting them to those agencies.

“Employee misclassification has become one of the fundamental pillars of the ‘race to the bottom’ business model that is so prevalent in the U.S. construction industry today,” stated Johnson in the letter to the state revenue agency on May 29.

“This business model is negatively affecting thousands of construction workers across the Commonwealth and, aside for the damage it inflicts upon those workers, it’s costing the Commonwealth of Kentucky millions of dollars every year in the loss of income taxes, unpaid workers’ compensation premiums and unemployment insurance taxes,” Johnson wrote.

The former IMP Mechanical worker who signed the affidavit also asserted that he worked 50 to 60 hours a week and did not receive any overtime, adding that his employer never deducted applicable taxes from his paycheck.

Bowling told Insider that the Metro Revenue Commission does not comment on whether businesses are in good standing when it comes to remitting payroll or occupational taxes to the city.

Insider submitted an open records request to the Metro Revenue Commission to see if IMP Mechanical had ever registered with that city agency — which would indicate that it at some point submitted tax payments — with the commission replying on Tuesday that it had no record of the company.

Brown of IMP Mechanical told Insider that the claims made by the city and union representatives were untrue, as they related to the alleged improper installation of sprinklers and alleged violations regarding licensure, the payment of workers and withholding taxes to the city and state.

Stating that IMP Mechanical workers were independent contractors instead of employees, Brown said the company was under no legal obligation to be licensed itself, withhold local taxes from those workers or comply with local overtime laws. She added that IMP Mechanical has done business as a subcontractor in many states and this is the first time that a local government agency has insisted that it be licensed in order to continue work on a project.

Brown added that their independent contractors are responsible for paying their own local taxes and waived any overtime rights when they signed their contract with the company.

Additionally, she said that IMP Mechanical’s workers had actually left the project by May 1, which was in part spurred by the presence of union officials on the site asking workers about overtime payments. Brown shared correspondence in which a Codes and Regulations official told the company on May 9 that it would have to become licensed in order to return to the project, but the company strongly disagreed that this was required and declined to return.

Brown also stated that IMP Mechanical completed 90% of the project’s sprinklers and that its work “passed every inspection” by government regulators.