Big or Small, Violation of California Labor Law Is Just Wrong

Sacramento, CA One case involves a million-dollar assessment against a contractor. Another case involves a lessor amount against a California employer. The latter assessment amounting to about $69,000 is a lot less than nearly $1 million. But the issue is the same: the violation of California labor law as it pertains to wages. According to the law, there are minimum requirements for wages, and employers are expected to hold up their part of the bargain.

In the larger case, Ace Cooling & Heating Corporation has been ordered to pay $824,570.63 in back wages, $114,300 in fines and $23,685.12 in training fund contributions to about 10 employees over violations of the California labor code.

At issue is work performed by the contractor in association with the Torrance-based El Camino Community College Bookstore Modernization project. According to an investigation by the California Department of Industrial Relations’ Division of Labor Standards Enforcement (DLSE), the contractor failed in its obligation to pay the necessary California prevailing wage.

California employee labor law dictates that employees with a certain skill set and qualifications are to be paid according to a certain level. As reported by a news release made available by the California Department of Industrial Relations, sheet metal workers deployed on the project were paid between $8.50 and $16.00 per hour.

They should have been paid a lot more under California state labor laws. An investigation determined that workers were underpaid between $39 and $46 per hour. In other words, according to labor laws, they should have been paid three to five times more than they were paid for the work they were doing.

“This is a classic example of wage theft,” stated California Labor Commissioner Julie A. Su, in a release, “and my office will take immediate action against a business who steals money from its workers.” The subcontractor was identified as Ace Cooling & Heating Corporation. It was reported that Mackone Development Inc. of Los Angeles was hired as the primary contractor for the renovation. Mackone contracted with Ace to undertake the heating, cooling and air work for the project. Under California labor code, primary contractors are responsible for the conduct of their subcontractors as it relates to the job at hand, and for this reason, Mackone was also served a civil wage and penalty assessment. The amount was not disclosed.

“Prime contractors are jointly and severally liable for their subcontractors who fail to follow California’s labor law,” continued Labor Commissioner Su. “It is our practice to investigate all parties responsible for labor law violations to put the proper incentive on decision-makers in construction projects to deal only with honest, law-abiding contractors.”

On a much smaller scale, the California Department of Labor investigated an employer based in Sunnyvale, after Bloom Energy Corp. employed a group of 14 workers brought in from Chihuahua, Mexico, to aid in the refurbishment of power generators at the company’s headquarters at Sunnyvale. According to a news release from the state Labor Department (2/4/13), it was determined that Mexican workers toiled alongside US workers, doing the same work but paid far less than their Sunnyvale-based counterparts. The investigation found that the 14 Mexicans were paid in Mexican pesos, which translated to an hourly wage of about US $2.66.

Bloom Energy was identified in the news release as a manufacturer of clean energy power generating systems with contracts amongst some of the major business players in the US, including Coca-Cola, FedEx Corp., Kaiser Permanente, Wal-Mart Stores Inc., eBay Inc. and Bank of America Corp.

Bloom Energy was found to be in violation of the Fair Labor Standards Act and was ordered to pay $31,922 in back wages to the 14 Mexican workers, together with an equal amount in liquidated damages. The firm was also assessed a civil penalty of $6,160 for its violation of California prevailing wage law.