The California Labor Commissioner’s Office fined a drywall company $2 million for wage theft—specifically failing to properly compensate workers for rest periods, overtime and some workers for not paying minimum wage.
Los AngelesAfter workers at Fullerton Pacific Interiors Inc., complained about California labor law violations to the non-profit Carpenters Contractors Cooperation Committee, the California Labor Commissioner’s Office stepped in. Investigators found that the drywall company paid a daily rate that didn’t include overtime hours or rest breaks and 28 workers were not even paid minimum wage. Fullerton was fined nearly $2million for wage theft violations.
The work included taping and drywall installation at hotels, recreation centers and casino projects in Los Angeles, Orange and San Bernardino counties between August 2014 and June 2016. According to the citation, Fullerton failed to properly compensate 472 workers for rest periods and 289 workers were not paid for overtime, along with other wage violations. California state Labor Commissioner Julie Su said in a statement that, “In construction, unscrupulous contractors attempt to obscure their wage theft by paying workers a flat rate rather than for all hours worked. But a daily or other flat rate system does not take the place of minimum wage and overtime obligations.”
The $2 Million Fine
This is how the wage theft fine was calculated. $1,892,279 payable to the workers was broken down as follows:
• $798,664 for rest period violations. Most workers in California are entitled to a paid 10-minute break for every four hours worked, or paid for an extra hour at their regular rate. Fullerton’s workers were allowed a 30-minute lunch “hour” but did not receive rest breaks.
• $14,431 for the unpaid wages, liquidated damages and waiting time penalties. Workers paid less than minimum wage are entitled to liquidated damages that equal the unpaid wage plus interest. There are also penalties for waiting times that are calculated based on taking the employees wages and multiplying it by the days they waited for compensation, at a maximum of 30 days.
• $72,400 civil penalty: The company would also be on the hook for civil penalties of $50 per work day for the initial violation, which increases to $100 for subsequent pay periods.
Drywall Wage Theft Rampant
According to Constructiondive.com, "Wage theft" is the umbrella term for when contractors intentionally underpay their employees, and it is not uncommon in California.
Just last month a San Diego drywall contractor was fined for wage theft violations. And in January 2018 West Coast Drywall and Company Inc., in Riverside was fined almost $1 million for overtime violations. The Wage and Hour Division of the California Labor Commissioner's Office found that the drywall company paid the employees only piece rates when they worked beyond 40 hours in a week. (Employees paid on a piece rate are compensated per unit they produce and are eligible for overtime when they work more than 40 hours per week.) The company also failed to pay employees for time spent attending required monthly safety.
It would seem that not much has changed with drywall contractors since the Southern California drywall strike back in 1992. Mexican drywall employees petitioned for fair wages and health insurance, despite the threat of deportation and arrest. The workers aligned with the United Brotherhood of Carpenters and Joiners and contractors were forced to pay their Mexican workers with wages and benefits closer to that of the white workers. Wages increased from $300 a week upwards of $500 a week, but after the strike “employers made it clear that while they were signing contracts the industry remained an open shop where non-union workers could still participate,” according to Wikipedia.
California Wage Theft Increasing
Labor activist organizations Good Jobs First and Jobs With Justice in June 2018 reported that more than half of the wage-theft cases brought against U.S. corporations since 2000 originated in California. In that time, corporations paid $8.8 million to settle these disputes.
The report, titled “Grand Theft Paycheck: The Large Corporations Shortchanging Their Workers' Wages” includes detailed analysis of court records concerning wage and hour lawsuits as well as federal and selected state enforcement data shows that a wide range of large corporations have paid out billions of dollars in wage theft settlements, verdicts and fines. Many of the large corporations are repeat offenders, and 450 firms have each paid out $1 million or more in settlements and/or judgments.
In another study conducted by the University of California, researchers found that rates of wage theft are higher in California than in other urban centers like Chicago and New York, possibly because California companies tend to rely on complicated nets of contractors and subcontractors to evade detection. And smartcitiesprevail.org reports that wage theft impacts one in six California construction workers.
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