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News » US » Main contractor to pay out $1.1m over subbie's theft of wages » published 10 Jul 2018

Main contractor to pay out $1.1m over subbie's theft of wages

A main contractor has to pay out more than US$1.1m after being held jointly liable for wage theft carried out by a subcontractor.

Labor commissioner Julie Su, her staff and David Kersh of CCCC handed out checks to some of the workers owed wages Above: Labor commissioner Julie Su, her staff and David Kersh of CCCC handed out checks to some of the workers owed wages

California’s labor commissioner Julie A Su has secured the settlement in a wage-theft case involving more than 100 construction workers.

The payment covers wages and penalties relating to a wage assessment issued against San Diego-based general contractor TB Penick & Sons, Inc and its subcontractor, Newport Beach-based Champion Construction, Inc.

Champion, a drywall and framing contractor hired by TB Penick for the Browning High School construction project in Long Beach, maintained false payroll records over a six-month period. The falsified records were used to cover up wage theft affecting the 103 workers, who were not paid prevailing wage and fringe benefits.

California’s wage laws hold general contractor TB Penick jointly liable for the violations of its subcontractor Champion.

“Prevailing wages create a level playing field for all contractors bidding on public construction projects,” said Su. “This case clearly demonstrates that general contractors who select contractors that don't play by the rules will pay a heavy price. Under the law, they are responsible for the wage theft of their subcontractors.”

The Labor Commissioner’s Office opened its investigation after receiving a report of public works violations from the Carpenters Contractors Cooperation Committee (CCCC) in March 2016. The investigation included interviews with over 30 workers, site visits and an audit of pay records for the dozens of workers involved in the project.

The investigation led to civil wage and penalty assessments of US$1,735,784. Penick entered into a settlement agreement to pay US$1,187,078 of the penalties and wages owed.

The group of 103 workers received US$744,533, or an average of US$7,228 each last week when the employer delivered its final payment. The settlement also included US$8,080 for required apprenticeship training funds and US$434,465 in civil penalties.

Subcontractor Champion was also found at fault for wage theft violations affecting 47 workers on a project in El Segundo last year. Champion’s state contractor license expired in July 2016 and its public works contractor registration expired in 2017.

All workers employed on public works projects must be paid the prevailing wage determined by the Director of the Department of Industrial Relations (DIR), according to the type of work and location of the project. Failure to comply with public works requirements can result in civil penalties, criminal prosecution, or both.


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This article was published on 10 Jul 2018 (last updated on 10 Jul 2018).

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