US Department of Labor Recovers $1.5m for Laborers, Mechanics Working On Multi-Billion-Dollar Federal Program at California Navy Base

Posted by National Alliance for Fair Contracting on

Agency: Wage and Hour Division
Date: March 20, 2024
Release Number: 24-468-SAN

35 contractors violated federal labor laws, shortchanging 413 workers

SACRAMENTO – Widespread violations of federal labor and contracting regulations by nearly three dozen employers with federally funded contracts at Naval Air Weapons Station China Lake resulted in the U.S. Department of Labor recovering more than $1.5 million in back wages and damages for more than 400 workers at the Ridgecrest facility.

Part of an initiative by the department’s Wage and Hour Division, the investigations sought to ensure contractors working on the $3.9 billion earthquake recovery program at NAWS China Lake met federal regulations for the employment of workers on projects supported with federal funds. The initiative seeks to bring construction employers into compliance and hold them responsible for paying workers prevailing wages and health and welfare benefits as required.

In investigations of 35 contractors spanning a two-year period, division investigators recovered more than $1.5 million in back wages and $32,291 in liquidated damages for a total of 413 workers for violations of the Davis-Bacon and Related Acts, the Contract Work Hours and Safety Standards Act, the Service Contract Act and the Fair Labor Standards Act. The division also assessed employers with $14,020 in civil money penalties as a result.

“Federal projects like these often strengthen the region’s economy, but when employers fail to pay workers all the required wages and fringe benefits they’ve earned, the full benefits are not felt,” explained Wage and Hour Division Regional Administrator Ruben Rosalez in San Francisco. “Employers unclear of their legal obligations and workers unsure of their rights can contact us to learn what it takes to comply with federal laws.”

Among the largest violators were subcontractors working on projects awarded to Environmental Chemical Corp., a Burlingame design and construction company doing business as ECC. The company was awarded two contracts as part of the Earthquake Recovery Program, including the largest construction project, the South Airfield Complex at NAWS China Lake. The subcontractors found in violation include:

  • Adecco USA Inc., a Jacksonville, Florida, recruitment and staffing service, failed to pay required prevailing wage rates, health and welfare benefits, and overtime while providing temporary staffing for food service, clerical, maintenance and housekeeping work. The division recovered $626,341 in back wages for 115 workers – some of whom were owed nearly $40,000 – for the violations.
  • Blue Knight Security & Patrol Inc., a Rancho Cordova security guard and patrol service providing security at a temporary housing site for construction workers, failed to pay overtime wages, prevailing wage rates and health and welfare benefits as required by law. The division recovered $313,045 in back wages for 54 workers.
  • Hensel Phelps, a Greeley, Colorado, commercial and institutional building contractor providing construction services, failed to pay prevailing wage rates, health and welfare benefits, and overtime compensation. The division recovered $184,172 in back wages for 37 workers.
  • ATCO Structures and Logistics, a Spring, Texas, prefabricated wood building manufacturer building living units for construction employees, failed to pay prevailing wage rates and overtime wages. The division determined ATCO owed $104,935 in back wages to seven workers.

In addition to these contractors, 31 additional contractors violated federal labor laws. View a list of all employers cited in these investigations.

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The Role of State Attorneys General in Protecting Workers’ Rights

Posted by National Alliance for Fair Contracting on

American Constitution Society – Sept. 4, 2022

Terri Gerstein – Director of the State and Local Enforcement Project, Harvard Labor and Worklife Program. Senior Fellow, Economic Policy Institute.

This is the sixth piece in an eight-month long blog series aimed at highlighting state attorneys general and their work. You can find additional resources, news, and information about the State Attorney General Project here.

State Attorneys General (AGs) are playing an increasingly visible and important role in relation to workers’ rights. Although historically AGs have not been deeply involved in labor matters, since 2015, AG action in this area has mushroomed: ten states have dedicated labor units of various kinds, several jurisdictions have passed legislation granting state AGs expanded jurisdiction allowing them to address labor violations, and many AGs have brought cases to enforce workers’ basic rights.

As the midterms approach, with AG elections occurring in 30 states plus the District of Columbia, it is important to understand not only what AGs do in general, but also what they are doing and can do to protect our country’s workers.

Role of AGs

AGs are the top legal officers in their states. Offices vary considerably in terms of resources and jurisdiction, but some common elements are generally present. They represent state agencies in court and in appeals. AGs play a public advocacy role, enforcing the law in various ways to protect the people of their states, most commonly in areas like consumer and civil rights. Many AG offices also have criminal jurisdiction: a few are the sole criminal prosecutors in their states, like Delaware and Rhode Island, while most have jurisdiction in specific circumstances, such as in particular types of cases or upon request by a district attorney. AGs also issue opinion letters that provide authoritative guidance. AGs have also increasingly become involved in federal matters, suing the federal government (or weighing in to support it) and submitting comments regarding proposed rules. AGs also often propose or support legislation in their states, working together with state legislators. Finally, AGs are highly visible leaders, and they exercise soft power in various ways: authoring op-eds, issuing reports, and more.

AG Involvement in Workers’ Rights Matters

State AGs have pursued employers for wage theft, misclassifying workers as independent contractors instead of as employees, endangering workers, and otherwise violating core workplace protections. AGs have filed civil lawsuits, brought criminal prosecutions, and achieved settlements that collectively recovered tens of millions of dollars for working people. They’ve freed many thousands of workers from non-compete and no-poach agreements, stopped companies from stealing workers’ tips, and achieved other forms of injunctive relief. And they’ve sued to stop federal rollbacks of workers’ rights. Here are some highlights of AG action in the year since Labor Day 2021 (this list is not exhaustive):

Fighting misclassification of workers as independent contractors instead of as employees: The Illinois AG on Friday sued a construction company for violations of the state’s minimum wage, prevailing wage, and employee classification laws. The DC AG filed several misclassification lawsuits, including a drywall construction contractor (ultimately settled for over $1 million), an electrical contractor, a company (Arise Virtual Solutions) that provides customer service to top corporations like Disney and Airbnb; and Jan-Pro, a national janitorial contractor.

Criminal prosecution: The Virginia AGs office obtained a guilty plea to felony embezzlement charges of a drywall contractor who misclassified workers constructing the state’s General Assembly building as independent contractors instead of as employees. The Maryland AG obtained a guilty plea from a labor broker in the office’s first criminal labor case; a contractor building a state university forced workers to kick back money to him each week. Washington’s AG obtained guilty felony theft pleas from business owners who didn’t pay wage to 24 employees of their house cleaning business.

Rhode Island’s AG obtained a guilty plea in a case involving a janitorial contractor who failed to pay workers and evaded workers’ compensation laws in order to win a public contract on community college campuses. Rhode Island’s AG has been active in bringing criminal prosecutions related to wage theft; for example, an employer was charged with $93K of wage theft in a prevailing wages case involving construction on a school. The Rhode Island AG also led the effort to pass a bill strengthening penalties for wage theft testifying in a legislative hearing about the proposal.

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Commerce Fraud Bureau to get new powers to investigate wage theft, other financial crimes

Posted by National Alliance for Fair Contracting on

Max Nesterak
May 25, 2022

Labor leaders are calling a bill that passed the state House and Senate on Sunday the most significant piece of legislation for combating wage theft since it was made a felony in 2019.

The bill (HF 3255), which is awaiting Gov. Tim Walz’s signature, gives the Commerce Fraud Bureau new powers to criminally investigate financial crimes along with more than $800,000 a year to hire five more investigators.

“This is a very big deal,” said state Rep. Zack Stephenson, DFL-Coon Rapids, who authored the bill in the House. “All across the state, white collar crimes are in desperate need of more enforcement.”

Until now, the Commerce Fraud Bureau has been restricted by law to insurance fraud investigations — a function of the department being entirely funded by a tax on insurance companies.

The new law maintains that at least 70% of the department’s work must continue to focus on insurance fraud, but allows the department to investigate all financial crimes with money appropriated from the general fund.

That puts new power behind the state’s ability to criminally investigate labor violations that are rampant in construction and hospitality — yet seldom prosecuted. Payroll fraud in the construction industry alone costs the state upwards of $136 million a year in lost tax revenue, according to one estimate by the Midwest Economic Policy Institute.

“Wage theft and tax fraud are business models,” said Adam Duininck, director of governmental affairs for the North Central States Regional Council of Carpenters. “When we see it in such a concerted manner, the only way to patrol that is with aggressive enforcement.”

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Union accuses contractors, owners of Amazon buildings of labor violations (VA)

Posted by National Alliance for Fair Contracting on

By Patricia Sullivan
Dec. 12, 2019 at 2:10 p.m. EST

A union is charging that employers at six construction projects that will house Amazon employees or operations in Northern Virginia have evaded federal and state taxes by misclassifying workers, failing to carry workers’ compensation coverage and avoiding overtime pay.

In a 24-page report based on its own investigation, the Eastern Atlantic States Regional Council of Carpenters alleges multiple violations of federal labor law by general contractors, subcontractors and labor brokers who supply workers for projects owned and managed by four development companies and intended for Amazon.

(Amazon founder and chief executive Jeff Bezos owns The Washington Post.)

If true, the allegations would raise the profile of the issue of labor law violations in Virginia, a right-to-work state, just as Amazon is seeking approval before the Arlington County Board for building its own headquarters on property it has purchased in the Pentagon City neighborhood.

The board is scheduled to vote on that proposal on Saturday.

JBG Smith Properties, which owns three of the six properties that the union cites, said in a statement Thursday that it cannot respond to specific claims since it has not seen the union’s report.

“That said, when JBG Smith is made aware of these types of claims, it works closely with its general contracting partners to ensure they are rectified,” the statement said.

Owners of the other locations could not be reached for comment.

Three of the structures under renovation are temporary space for Amazon employees in Arlington until their permanent headquarters is built. A warehouse in Springfield and data centers in Manassas and Sterling are also cited.

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Officials, activists fight wage theft on the border (TX)

Posted by National Alliance for Fair Contracting on

Mexican consulate and U.S. Labor Department seek to end workplace exploitation

by: Julian Resendiz

Posted:
Aug 23, 2019 / 03:01 PM CDT

EL PASO, Texas (Border Report) – The Mexican consulate and the U.S. Labor Department office in El Paso on Friday signed a cooperation agreement to fight wage theft and other labor violations committed against immigrants.

The consulate said it will begin a weeklong labor-rights education campaign on Monday and encourage Mexican citizens who experience workplace exploitation to file a complaint with the local Wage and Hour Division of the Labor Department.

“Everyone who works in the United States, regardless of immigration status, has rights in the workplace that are guaranteed by law,” said Mauricio Ibarra Ponce de Leon, Mexican consul general in El Paso. “We will support our community and ensure that their labor rights are being respected. This agreement allows us to send people who come to us to the appropriate (U.S.) authority.”

Jacobo Valenzuela, a representative of the Wage and Hour Division in El Paso, said his office receives some 600 labor-related complaints a year. Most complaints come from workers in the restaurant, construction and agricultural industries, he said.

Ibarra said wage-theft – which occurs when an employer short-changes an employee for hours worked, refuses to pay overtime already performed or withholds payment altogether – isn’t the only issue faced by immigrant workers on the border. The weeklong Spanish-language education campaign known as “Labor Rights Week” will also include information on filing workplace injury claims, sexual harassment and human-trafficking complaints, as well as workplace safety issues.

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Nearly $10 million in fines, penalties issued against Massachusetts employers accused of wage theft in 2018 (MA)

Posted by National Alliance for Fair Contracting on

Updated Sep 4; Posted Sep 4
By Kristin LaFratta

In Massachusetts, state officials found $9.6 million in restitution and penalties against businesses and employers who stole wages and exploited workers.

Attorney General Maura Healey released a 2018 Labor Day report this week that explores the findings of wage theft and other means of exploiting workers. Investigations were performed by the AG’s Fair Labor Division, or those who enforce wage laws and the fair bidding of construction projects.

The report revealed wage theft and labor violations occurred across industries, and many by contractors based outside of Massachusetts. In fiscal year 2018, Fair Labor conducted 247 “field visits” across Massachusetts to investigate unfair pay practices, which found both civil and criminal violations in various businesses.

Healey said her office chose to prioritize wage theft in the construction industry last fiscal year, which resulted in nearly $1.5 million in penalties and restitution, according to the report. In that time Fair Labor issued citations or other assessments against 61 different employers in the construction industry.

Methuen’s E.J. Paving Company, Florida-based contractor Southern Road and Bridge, LLC and J. Donlon & Sons Inc., which worked on a public works project in Medford, were among the “notable cases” listed in the report, all of which failed to pay workers properly in overtime pay or minimum wage.

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Fair Pay and Safe Workplaces Executive Order makes contracting system more accountable

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Posted August 24, 2016 at 4:40 pm
by Ross Eisenbrey

The final rule implementing President Obama’s executive order on fair pay and safe workplaces has been issued, along with guidance from the Department of Labor. This is a big deal, affecting as many as 28 million employees in the workforce of hundreds of thousands of government contractors.

The executive order puts in place a commonsense principle: when choosing which companies to do business with, choose the ones that follow the rules rather than the law breakers. Tax dollars should go to contractors with a record of integrity and business ethics, and should not be spent on bad actors. The executive order makes it clear that violations of labor law are an indication of bad ethics and a lack of integrity that must be considered when contracts are awarded.

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