Pursuing a Level Playing Field in Public Works Contracting
The economy has been great for the construction industry. Unfortunately, with a shortage of skilled labor to do jobs, there are some unscrupulous contractors out there taking advantage of hard working employees. Illegal activity such as wage theft, kickback schemes and not paying the prevailing wage is being discovered. Those employers are facing fines and jail time for such actions.
The Southern California Partnership for Jobs has created a new video to raise awareness about these growing problems in the construction industry.
Why the video?
When workers receive a prevailing wage, employers aren’t just getting a construction project done, they’re also helping build a middle class lifestyle to provide home ownership, college opportunities, investment, pension, and security.
Contractors who withhold pay, exploit workers and try to game the system negatively impact their employees and also the community at large. Families have to go without. Bills don’t get paid. Great sacrifices have to be made by workers and money that might have been spent and channeled into the local economy, isn’t available because it’s instead gone into the pocket of an unscrupulous employer.
Operating engineers, laborers and carpenters fighting for the middle class know it is important to call out wage theft and other illegal activity.
Why prevailing wage is important
A prevailing wage creates a level playing field wherein the same wages are paid on public works projects so one contractor cannot unfairly lower his bid by paying his employees less than prevailing wage. Additionally, out-of-state contractors or out-of-area contractors cannot come in and pay a lower rate to workers.
Prevailing wage is a minimum wage for construction work that is publicly funded. The prevailing wage in California is the union wage set forth in a collective bargaining agreement.
Good contractors on prevailing wage public works projects are doing the right thing by paying workers good wages, providing benefits, and fulfilling apprenticeship requirements. When we have a high-wage earning society, we have the ability to improve our public buildings and build more schools, more hospitals or playgrounds. We can repair our roads. Operating honestly and paying employees the salary they should be paid means it all comes back around.
White collar crime doesn’t pay
As the video explains, union leaders, public officials and legislators are seeing a lot of wage theft via a number of different schemes that include:
- Employee misclassification: Not honoring contractor (1099) classification or creating false social security numbers.
- Cash pay: Payment under the table and no money is given to payroll taxes.
- Not honoring the Fair Labor Standards Act: Contractors working overtime and/or not allowed breaks.
- Kickback schemes: Contractors pay employees the prevailing rate on a check, then take workers to the bank and demand a kickback in cash to the employer.
Part of the reason for a lot of exploitation in construction is linked to the fact that the industry is a predominantly immigrant workforce. A lot of the workers are just trying to make a living and they’re nervous about their situation. Thus, they put up with conditions that they shouldn’t be putting up with. The prevalence of wage theft in California is enormous. Last year alone, the Center for Contract Compliance filed 400 complaints that recovered over $8 million in wages.
Unfortunately, these schemes aren’t just happening in the private industry, but also on state projects and in school districts. These are funds that are provided through taxpayers. Thus, by cheating employees, deceitful contractors cheat every member of the public because their tax dollar intended for public infrastructure projects is illegally pocketed instead.
While this is white-collar crime and it’s often hard to get people to take notice, The Southern California Partnership for Jobs, along with elected officials and the Orange County District Attorney’s office, is working to raise awareness because these dishonest contractors need to be punished for what they are doing.
Employers whose illegal actions are discovered face penalties such as fines of as much as $200 per worker per day. Additionally, some contractors have received a year to three years in jail. As Donde McCament, Senior Deputy District Attorney for Southern California’s Orange County notes in the video, “We had one foreman that was actually sentenced to seven years in jail.”
McCament fights for exploited workers because, as she explains, “I would rather have somebody stick a gun in my face and be robbed once than have my pension taken or my wages being stolen every week, which impacts my way of life, my family’s way of life every week.”
“We as Americans have come to expect a standard of living and we deserve that standard of living,” Jon Preciado with the Southern California District Council of Laborers adds, “But you can’t make it in this society working for minimum wages. Middle class, high wages, good benefits are what America’s based on.”
Learn more: Watch the video about Operating Engineers, Laborers and Carpenters fighting for the Middle Class.