Building & Construction News
California State Labor Comish Fights On against Labor Law Violations
To that end, Su and her team have achieved settlements amounting to more than a half million dollars following an investigation into recent California labor code violations. As stated in a press release issued by the Office of the California Labor Commissioner (4/25/13), four general contractors involved with four different public works projects in the State face wage assessments and penalties totaling $610,186.
According to the report, Joseph Brothers Inc. of San Leandro was hired by three general contractors to undertake drywall work and related construction on three projects under the auspices of the State of California. Joseph Brothers Inc., it was alleged, committed various violations under California prevailing wage law - including the issuance of NSF checks to their workers.
However, while it was alleged that Joseph Brothers committed the violations under California employee labor law, the general contractors hiring Joseph Brothers were held jointly responsible for the unlawful actions of its subcontractor.
“Construction contractors are on notice that the Labor Commissioner has reinvigorated and focused her public works enforcement efforts to provide a fair and level playing field for those businesses who comply with public works requirements,” stated Christine Baker, director of the Department of Industrial Relations (DIR).
The wage violations were against 28 workers employed by Joseph Brothers. All 28, according to the release, will receive the full value of their earned California prevailing wages under the terms of the California labor lawsuit settlement.
The general contractors were involved in the following public works projects: a sanitary sewer in Martinez for the Central Contra Costa Sanitary District, a low income apartment housing project on Addison Street in Berkeley and the Twin Cities police station in Corte Madera. Joseph Brothers is a drywall and carpentry subcontractor hired by the three general contractors, identified as Bobo Construction of Elk Grove, who will pay $225,000 in wages and penalties. Midstate Construction of Petaluma faces $31,437 in penalties; and Jeff Luchetti Construction of Larkspur will be required to ante up $54,249.
In addition to reimbursing their workers for lost wages, Joseph Brothers Inc. faces $37,650 in additional penalties.
A fourth general contractor hired to undertake work at the Oakland Library branch located on 81st Street faces penalties totaling $299,500 in association with various California labor employment law violations against three workers. An investigation by the Office of the Labor Commissioner found that three employees of NBC General Contractors Corporation were not paid for all hours worked.
It was further alleged in the California labor lawsuit that workers were required to pay a portion of their wage to their employer in the form of a kickback. In April 2011, the president of NBC General, Monica Ung, pleaded guilty in Alameda Superior Court to various charges under California state labor laws, according to the release.
“Wage theft on public works projects in California not only cheats workers of their hard-earned wages, it is a violation of the public trust,” said Labor Commissioner Su, in the California and labor law release. “These cases send a message to general contractors that they should make sure they are working with legitimate contractors who abide by the law, and my office will do everything in our power to recover unpaid wages.”
It also sends a message to workers that you shouldn’t just roll over and take employer abuse. You have a right to compensation.
The Road to Justice Under California Labor Law
To that end, Valley Vanguard Properties, Inc. (Valley Vanguard) and six subcontractors have been hit with wage and penalty assessments for violating California labor code over a road widening in concert with the installation of a Wal-Mart store in Kerman, California.
According to PR Newswire (3/26/13), Valley Vanguard was given the nod to build a new Wal-Mart facility on behalf of East Kerman Development, the developer of record on the project. In concert with the facility build - and in view of an expectation for increased traffic flow stemming from the facility - the City of Kerman made it a condition when approving the new Wal-Mart that Highway 180 would require an expansion to four lanes, in order to handle the traffic flow.
To that end, even though the highway is a public thoroughfare, the widening was undertaken through private funding, with Valley Vanguard handling the road widening in concert with the aforementioned subcontractors.
However, according to the release, Valley Vanguard and its subcontractors got into some hot water under California labor law.
“Developers and contractors in California should be aware that public works laws may be triggered when a project requires work on state roads or highways as a condition of the project’s construction approval,” said Christine Baker, director of the Department of Industrial Relations (DIR).
Those words were echoed by the Office of the California Labor Commissioner. “If a project with private funding requires a Caltrans encroachment permit,” stated Labor Commissioner Julie A. Su, “the private funding cannot be used to avoid public works laws and the requirement to pay workers prevailing wages.”
Following a complaint and subsequent investigation, Valley Vanguard and six subcontractors were ordered to pay wage and penalty assessments exceeding $300,000.
The penalties break down as follows: $263,670 in wages, $4,289 in training fund contributions and $45,745 in penalties as a result of the California labor employment law violations.
According to the release, the six subcontractors were identified as Barracuda Construction, Inc., Prestige Electric Corporation and Safety Network, Inc., all of Fresno; Clovis-based contractor Davis & Roberts Construction, Inc.; Kerman Telephone Co., based in Kerman; and R & L Gibbs Construction, based in Squaw Valley.
Streets and Highways Code Section 670.1 mandates the payment of prevailing wages for road and highway work requiring a Caltrans encroachment permit as a condition for residential and commercial construction. “Valley Vanguard, as the prime contractor for the highway expansion project,” said Commissioner Su, “is responsible for ensuring that all workers performing construction work on a public works project are paid the correct prevailing wage rates.”
Often, as the result of a complaint or violation report, the Labor Commissioner’s office will undertake a California labor lawsuit. Such an undertaking, while upholding California state labor laws, is important for two reasons...
To provide justice for workers who have been shortchanged out of their rightful provisions under California employee labor law, and to protect law-abiding corporations who respect and adhere to California prevailing wage law.
Big or Small, Violation of California Labor Law Is Just Wrong
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.
Another Million-Dollar Bust Under California Labor Law
Beyond having a proactive labor commissioner dedicated to advocating on behalf of workers, in many instances a California labor lawsuit is the only recourse workers have to fight unfair treatment.
According to a release by US State News (12/17/12), FTR International Inc. was found to have failed to pay their workers the correct prevailing wages according to California and labor law guidelines. The Office of the California Labor Commissioner also accused the firm of failing to pay its employees daily overtime, and failure to pay premium rates for work performed during weekends, in addition to other violations.
FTR International, according to the statement, was hired by the Southern California Regional Rail Authority to undertake the Los Angeles Union Station 'Platform 7' project. The firm does business as a general contractor, and was ordered to pay $401,041 in back wages and $185,725 in fines with regard to its affront to California labor employment law.
A similar story unfolds with Wirtz Quality Installations Inc. (Wirtz), a stone and tile contractor that was cited by the Labor Commissioner for failure to pay proper wages to 55 workers toiling on behalf of the general contractor on a construction project for Palomar Pomerado Health Systems.
In the Wirtz case, the contractor was found to have charged workers a percentage of their wages in various fees for payments made into a fringe benefit plan for supplemental unemployment insurance. The charge translated into what was deemed a significant underpayment of prevailing wages according to legislative guidelines governing California prevailing wage. According to an investigation by the Division of Labor Standards Enforcement (DLSE), Wirtz was also found to have failed to pay their workers appropriate overtime wages.
The Labor Commissioner for the state of California, Julie A. Su, stated in a news release that wage theft in any form would not be tolerated under her watch.
"Construction workers work long hours and perform invaluable work building the infrastructure in our communities," Commissioner Su said in a statement. "My office is here to ensure that all public works contractors pay fringe benefit packages as required by law. Charging fees for these benefits is an unlawful end-run around prevailing wage laws."
Wirtz was ordered to pay $102,292.47 in back wages and $402,450 in fines to answer for violations against the California prevailing wage law.
As for FTR International, Su had this to say about the contractor's violation against California employee labor law: "The action against FTR should serve as a warning to other contractors who fail to abide by our laws," said Commissioner Su. "These enforcement actions are also a message to law-abiding contractors that we are here to help you by going after the scofflaws."
ERISA Not Just About Protecting Investments
employee stock plans, the truth is that ERISA covers much more than retirement plans. Included in ERISA benefits are insurance provided through an employer, meaning that any claims about employer-provided insurance are covered by ERISA.
Covered by the Employee Retirement Income Security Act of 1974 (ERISA) are retirement, health, life insurance, and disability insurance plans. Covering only private employers, ERISA does not require employers to provide health insurance or other benefits plans; it simply sets out rules for when employers choose to offer such benefits. If employers choose not to offer benefits as covered by ERISA, they are not governed by ERISA rules. Furthermore, ERISA does not cover insurance policies that are purchased privately. It only covers those provided by an employer.
Under ERISA, those in charge of health plans and other benefits must provide information about the plan's funding and features, must abide by their fiduciary responsibilities and must provide an appeals process for people who have a grievance with their plans. Finally, ERISA gives participants the right to sue plan fiduciaries in cases where there is a breach of fiduciary duty.
Before a lawsuit can be filed, however, under ERISA the claimant must exhaust administrative remedies before filing a lawsuit. This means that if the insurance company has an internal appeals process, the claimant must file an appeal before filing a lawsuit, if the insurance policy in question is provided by the employer (private insurance, because it is not covered by ERISA, does not have such a requirement and a lawsuit can be filed once the first denial is received.)
Many insurance companies have rules for filing appeals, including a set time in which to file. Certain medical records and an appeal letter may also be required. If that appeal is then denied, a lawsuit can be filed to enforce the claimant's rights. A plan beneficiary or participant can file the lawsuit, depending on the circumstances, and the lawsuit is typically filed against the plan fiduciary or administrator.
It is important to note that under ERISA a claimant will not be awarded punitive damages; all that can be claimed are costs associated with the insurance policy.
California Sub-contractor to Pay Over $1 Million for California Labor Law Violations
According to a statement released by the California Department of Industrial Relations (DIR 11/6/12), Nicodemus Plumbing and Mechanical has been mandated to pay $858,840.20 in back wages to 44 employees who worked for Nicodemus on a public works project at Stockton's San Joaquin Community College. The California labor lawsuit, brought by the Office of the Labor Commissioner, accused Nicodemus of falsifying certified payroll records.
The California labor code investigation by the DIR's Division of Labor Standards Enforcement (DLSE), also known as the Labor Commissioner's office, revealed that Nicodemus shaved the number of actual hours worked by the 44 identified workers, and thus failed to pay proper wages under California prevailing wage law.
Taisei Construction Corporation served as the primary contractor for the facility. Taisei, in turn, hired Nicodemus to undertake the plumbing work. According to state labor laws, even though the misdeeds were carried out by Nicodemus, Taisei as the primary contractor can be held jointly responsible for the California employee labor law violations committed by Nicodemus. Taisei, in fact, was served with a penalty by the Labor Commissioner, although the amount was not identified.
"Prime contractors can be held jointly responsible when their subcontractors fail to follow California's labor law," said California Labor Commissioner Julie A. Su. "We will 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."
Su likens the actions of Nicodemus to wage theft, and vows vigilance is necessary in a soft economy when employers skirting around state labor laws make it harder for legitimate companies, with equally deserving employees, to compete for work.
"Wage theft will not be tolerated," said Commissioner Su. "Falsifying records to underreport the number of hours worked is stealing money from workers and my office will take swift and aggressive action to end this illegal and abusive practice."
DIR Director Christine Baker echoed some of those sentiments in her own comments. "It is imperative in these times that enforcement action is taken to fight against California's underground economy and provide a fair and level playing field for businesses who comply with our laws."
Nicodemus was also assessed a total of $230,050 in fines for violation to the California prevailing wage and other violations to the California labor code.
The investigation determined that Nicodemus also failed to pay overtime, in accordance with California labor law.
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“Off-the-Clock California Overtime Lawsuits on the Rise", says Employment Law Attorney
Employees are usually working “off-the-clock” when an employer forces or pressures workers to work outside of hours that are not clocked in. “Employers are facing pressures to keep the bottom line and expenses down,” says Yeremian. “An obvious solution is to not pay their employees California overtime and/or under-report hours they are working.”
Yeremian sees many off-the-clock claims from the construction industry, where workers don’t have traditional time clocks: either they self-report hours on written time sheets or their supervisors write up a 9 to 5 day. But in reality they could be starting work hours earlier, and leaving later.
“We also see this California overtime violation in the retail industry,” adds Yeremian. “Employees are clocking out and subject to security checks, so they are locked into the store, or wherever they happen to be working.”
One example of this California labor law violation and subsequent California overtime lawsuit involved Costco employees who were held hostage- they were locked in the store after clocking out while management performed closing duties. Because Costco violated the United States Fair Labor Standards Act, a federal judge in California ruled the the Costco employees’ overtime lawsuit could proceed as a state class action in California and a conditional collective action nationwide.
Yeremian says the rise in off-the-clock overtime claims is that the enforcement of labor laws has increased with the prevalence of class action lawsuits. “Workers are increasingly more aware of their rights and employers have been sued for one labor violation or another in the past, but employers still think they can get away with it,” he explains. “And there are simply forces of human nature: Managers have a lot of pressure by upper management and owners to keep costs--especially labor costs--down. That translates to under-reporting and off-the-clock work.
“These overtime violations are typically happening with hourly and minimum-wage workers who are less apt to know their rights and are taken unfair advantage of. And they are less apt to enforce their own rights, particularly in an economy that recently had a downturn. Employees are simply afraid to speak up for fear of losing the only job they have, and there aren’t too many job vacancies right now.”
Be Pro-Active with Off-the-Clock Overtime Claim
If you are thinking about filing an off-the-clock overtime claim, Yeremian advises the following:
1. Keep track of your hours. Write them down in a journal, a calendar, a diary, anything. You have the right to report this uncompensated time to your supervisor and the law protects you. You are protected even though you may be incorrect regarding how you are supposed to be paid. As long as you have a good faith belief that a violation occurred and are terminated, demoted or suspended for reporting such a violation you may have a claim for wrongful termination or retaliation against your employer.
2. Report off-the-clock hours to you supervisor, HR, company owner (if you work for a small company), the California labor board (free of charge), and a California employment attorney. The vast majority of wage and hour lawyers will provide a free consultation over the phone and if they agree to represent you in a case, they will do so on a contingency basis??"meaning you don’t have to pay out of your pocket.
3. Talk to your co-workers and see if they are having similar problems. When one worker is suffering from these types of wage violations, typically other workers are in the same boat.
If you bring a class action lawsuit to obtain proper compensation for these violations, you can obtain compensation on behalf of yourself and everyone else who has suffered the same violation. Furthermore, if you bring the class action, you may be awarded an additional sum from the court due to bringing the case forward.
If you have been terminated or demoted from work, you may have a claim of retaliation against the employer. Through that claim you may be able to recover damages, including lost wages, emotional distress and if severe enough, punitive damages.
At what Point would my Employer know that I have filed a claim against them?
Many workers are reluctant to bring a claim against their employer because it might lead to a hostile work environment. But employers will not know that a claim has been filed until they have actually been served with the complaint.
“For most California wage and hour violations, employees have three or four years within which they can bring a lawsuit,” says Yeremian. “But of course I encourage employees who believe they are suffering from these overtime violations to contact an attorney or the California Labor Board at their earliest opportunity because some types of remedies-- such as penalties--are only recoverable for violations that occurred within the last year.
In certain types of cases where the court finds that the employer has violated minimum wage laws by failing to compensate employees for all hours worked, the court may award double the unpaid wages to the employee.”
Yeremian and his law firm recently filed a case against a large retailer alleging that there is a systematic under-reporting of actual hours worked by employees who work in distribution centers. “A former employee??"she worked stacking boxes??"called us with her complaint,” he explains. “In her case, which includes her co-workers, they would clock out at the end of their shifts and would then be forced to wait at a security check line, sometimes up to 15 minutes in order to be inspected for theft. We are looking at hundreds of employees coming off the line at the end of a shift all at the same time and then waiting for the bag and coat security check.
These employees will likely have their day in court.”
David Yeremian is an experienced litigator and business counselor and co-founder of Orshansky & Yeremian LLP. He has worked on a wide variety of litigation matters including employment, real estate, securities, shareholder and partnership disputes, contract actions and business fraud.
Misclassified Construction Employee owed California Overtime?
“I am classified as exempt but I can’t hire or fire anyone,” says Chester. “I am just on the jobsite to make sure the project goes along without a hitch--I have to be on site while they are working to make sure nobody gets hurt, and make sure proper procedures are carried out. How can I be considered exempt when I report to others on the jobsite and at the company’s office—I am definitely not the boss in any capacity.”
Chester says he was the construction superintendent and project manager at different jobs over a period of five years. Most projects were involved with public works and government contracts and they were time-sensitive. “If we had a job order contract with a government agency, work had to be done at night and weekends,” he says. “I still did my regular 40-hour week job so all nights and weekends worked should have been overtime.
"We worked on the Rose Bowl renovation in Phase 1, and had to finish the Gold Cup soccer match by a certain date, so we worked around the clock. Typically we worked 10 hours overtime per week and it was simply expected of me. For several months after the Rose Bowl I worked about 300 hours overtime so I finally brought up the overtime issue with my employer.
"Because I am on salary he said I couldn’t have any overtime compensation. I told my boss that wasn’t fair because contractors and sub-contractors got paid overtime at the Rose Bowl job but I worked for a general contractor. According to public works, our sub-contractors had to turn in a certified payroll every two weeks, showing how many hours the guys worked and that they were getting paid for hours worked. During the Rose Bowl reno, guys working for the sub-contractor got paid a lot of overtime, but everyone with the general contractor Angeles Contractors Inc., the company I worked for, didn’t get any overtime."
Instead of overtime, the general contractor placated Chester with comp time—more vacation time. But Chester figures a few weeks more of vacation time per year doesn’t amount to $40,000. Getting vacation time in lieu of overtime is also a California labor lawviolation.
Angeles Contractors laid off Chester last month. He thinks it is because he asked for overtime pay. Chester says that if he made an issue out of any labor laws violated by the company, his employer told him that he won’t get any job recommendations.
“When I was hired, my boss said I had to work overtime if the project needed it,” explains Chester, who was OK with that—for a while. “But these projects are increasingly more demanding with my time. I have some records of my overtime hours going back at least three years and that is how I came to this amount owed to me.”
Chester’s complaint is similar to that of a construction superintendent employed by F.H. Paschen--a general contractor and construction company with offices nationwide. He was misclassified as exempt from overtime and denied compensation for time worked over 40 hours per week. He sued on behalf of all construction superintendents employed by F.H. Paschen in California for a number of California labor code violations. The court certified the case for class treatment in February 2005 and a settlement of $1,080,000 was reached on behalf of 84 class members.
And in 2008, a group of construction workers filed a California overtime lawsuit alleging they were made to skip breaks, travel without compensation, and sign blank time sheets, as well as not getting paid for overtime work.
Increasingly, people working in the construction industry are realizing their rights to overtime and other California labor laws.
Contractor Fined for Violations of California Labor Law
The release states that the violations by TL Pavlich led to a flash fire that caused a welder to suffer severe burns on a public works project last December. Cal/OSHA determined that the violations were serious enough that they posed an immediate danger to workers and, as a result, halted all work until the hazard was properly dealt with.
The agency also said that the contractor continued to send workers into portions of a steel water pipe despite the fact that he had been told to correct the hazard and notify Cal/OSHA before conducting more work on the project.
"We cannot and will not tolerate bad actors who intentionally sacrifice the safety of their workers," said Department of Industrial Relations (DIR) Acting Director Christine Baker. "Employees should never be placed in a work environment that is a known hazard."
The contractor was reportedly performing the work in the city of Montebello, which has a population of more than 62,000.
Was Worker's Death Due to Ignorance of California Labor Laws?
Margarita Mojica was 26 at the time of her death two years ago when she became entrapped in a box creasing and cutting machine. She was 17 weeks pregnant at the time with her second child.
California labor code, as with many federal statutes, dictates not only the requirement that an employer provide a safe work environment, but also that a worker has a right to protest if he or she feels at any time in danger while on the job.
It is not clear if the victim was even aware of the potential for disaster while simply doing her job.
According to the October 19th issue of the San Francisco Chronicle, the Oakland wife and mother of a young daughter was preparing a box creasing and cutting machine to start a job at the facility to replace a cutting die. According to prosecutors she was leaning into the machine when it suddenly activated and closed like a giant clamshell around her.
It is alleged that the owners of Digital Pre-Press International (DPI) of San Francisco were employing a previously owned cutting and creasing machine originally purchased in 2003. It has been reported that workers at some juncture asked to have a safety bar removed from the machine to allow for the handling of thicker cardboard. Investigators say the safety bar was not reinstalled.
While it is unclear if the accident would have been prevented had the safety bar been in place, there are a number of allegations that suggest workers at the facility were not properly schooled in safety protocols according to the tenets of California and labor law.
Regulators cited DPI on two previous occasions, in 1998 and again in 2001, for failing to maintain a worker safety program. The owner of DPI, Sanjay Sakhuja, is reported to have communicated to regulators that he had a training program in place by 2002; and an insurance inspection in 2007 found no problems with the machines at the facility.
However, following the tragic death of Mojica, state regulators under California labor employment law issued no fewer than 14 citations against DPI for not training workers properly. While the plant was reported to have a written safety program, workers told regulators they were never instructed on machine safety.
Sakhuja, along with pressroom manager Alick Yeung, have each been charged with manslaughter and willful violation of California state labor laws. A wrongful death civil suit has since been settled, according to The Chronicle. The value of the settlement was reported to be $6 million.
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