Nearly $3 Million in Fines for Violations of California Overtime Pay Laws

Sacramento, CAA general contractor caught up in overtime pay violations—among others—on the part of subcontractors for a university housing project is again bidding on a subsequent housing initiative at the University of California Davis (UC Davis). The Sacramento Business Journal reports that four subcontractors working on the so-called "Tercero II" student housing project were fined $2.8 million.

The university, in turn, is withholding $3.25 million in fees from general contractor Brown Construction. The latter is appealing.

The violations to overtime laws and other violations came to the attention of authorities after a local union organized a picket of the job site and marched through a university building. It should be noted that Brown Construction is a non-union contractor. The rift is symptomatic of the competition between union and non-union "shops" for what has been described as increasingly scarce construction contracts.

In the end, some of the workers involved came forward to report irregularities to investigators from the Labor Department.

One of the sub-contractors fined by the Labor Commissioner was not even hired by the general contractor. Russell/Thompson Inc. was hired by sub-contractor 84 Lumber Inc. in a practice known as bid-shopping. Both companies were ultimately fined by the Labor Commissioner $1.5 million in penalties for falsifying payroll records, failure to provide overtime pay and failure to compensate workers sufficiently for the work they were performing due to improper classification.

Two other sub-contractors were fined $1.3 million for a series of violations involving 149 workers.

California overtime law requires, as it is implied, that workers are entitled to overtime pay for all hours worked beyond the standard work week for hourly-paid workers. Brown Construction—which was not actually fined by the Labor Commissioner—noted that the violations were committed by sub-contractors and that it cannot be held responsible for violations committed by other companies. Brown also noted that Russell/Thompson was hired by 84 Lumber Inc., not by them.

However, the CEO for the California Professional Association of Specialty Contractors noted that general contractors should be held accountable. "General contractors are responsible for the job site and the subcontractors they hire," Cees Molenaar said, in comments published May 27 in the Business Journal. For its part, Brown noted there was nothing in the bids submitted by any of its subcontractors that would have been cause to arouse suspicion. Still, a spokesperson for the Department of Industrial Relations said that both the general contractor and subcontractors are liable for circumventions of California overtime law, among other violations.

The Business Journal reports that new rules should help provide better oversight going forward, in an effort to uphold overtime pay laws.