Out-of-State Contractors Hit with California Overtime Lawsuit

May 20, 2010, 1:00PM. By Gordon Gibb

Pacifica, CAA California overtime case involving out-of-state contractors has recently been pursued by the Office of the Labor Commissioner. "Out-of-state contractors need to understand they cannot come to California, violate state law and take advantage of California employees," Angela Bradstreet said in a statement. "California workers are the backbone of our economy and this case is our latest battle in support of their rights."

The issue involves renovation projects at two existing buildings in Pacifica. Both facilities, located at 380 Esplanade and 365 Talbot Avenue, are owned by AIMCO Esplanade Avenue Apartments LLC and AIMCO Horizons West Apartments LLC, respectively. The general contractor for the renovations, ZMG Construction, as well as the two subcontractors involved, Lake's Construction and EQ Master Construction, are all based in Florida. Two of the three contractors are not licensed in California.

David Balter, acting chief counsel for the labor Commissioner's office, said they were tipped off when "workers came to the department after they were no longer working and hadn't been paid. They filed claims, which put us on notice. We investigated and determined that people were not being paid. What's important about this is the liability of the general contractor for the unlicensed subs. They really need to protect themselves. They need to make sure the subs they are dealing with are licensed and that the employees are being paid. If that had happened in this instance, we wouldn't be at the junction we are at. We hope through a combination of legal theories that we will be able to recover for these workers all the wages owed to them."

According to the 5/13/10 edition of the San Jose Mercury News, an investigation by the California Department of Industrial Relations (DIR) began following the filing of wage claims by employees for work performed between January and October of last year. DIR's investigation subsequently found that the subcontractors failed to pay more than $121,000 in minimum wage and overtime pay for 30 workers.

A lawsuit filed on May 4 in San Mateo Country Superior Court seeks nearly $400,000 in damages from the defendants. In addition to back wages and unpaid California overtime, the lawsuit seeks $275,000 in penalties, liquidated damages and attorney's fees.

The defendants named are ZMG Construction, Lake's Construction and EQ Master Construction. AIMCO, based in Colorado, was not named in the lawsuit as AIMCO filed a bond.

"This case highlights the importance of ensuring the companies you hire and work with are following all state labor regulations," said DIR Director John C. Duncan "Businesses that refuse to play by the rules and are a part of the underground economy deprive the state and legitimate businesses of millions of dollars each year. We won't hesitate to take action when the laws are not being followed or when workers are being mistreated."

Balter said that while mechanics' liens in the amount of $65,000 has been filed against the property, the amount of unpaid California labor overtime and other unpaid wages equates to about twice that amount.