California Labor Commissioner Citation of General Contractor for Subcontractor’s Wage Theft Affirmed

SOURCE California Department of Industrial Relations, California Labor Commissioner’s Office
Jun 29, 2017, 17:32 ET

LOS ANGELES, June 29, 2017 /PRNewswire-USNewswire/ — California Labor Commissioner Julie A. Su issued citations of $249,879 against Irvine-based general contractor Deacon Corporation, along with its subcontractor, Lafayette-based Champion Constructions, Inc.

This is the first time that the Labor Commissioner has held a general contractor responsible for wage theft by its subcontractor by issuing citations under AB 1897 (section 2810.3 of the Labor Code), signed by Governor Brown in 2014, which took effect on January 1, 2015.

Champion, a drywall and framing contractor hired by Deacon for the Cambria Hotel construction project in El Segundo, shorted 47 workers. The Champion employees worked an average of 10 hours a day, five days a week and were unpaid for four weeks.

“This case addresses the pervasive problem of wage theft in subcontracted industries,” said Labor Commissioner Julie A. Su. “Businesses at the top of the contracting chain that profit from workplace violations can no longer escape legal liability by hiding behind their subcontractors, even if they did not control the work performed or know about the violations.”

The wage theft came to light after several of Champion’s workers walked off the job on June 16, 2016, and filed wage claims at the Labor Commissioner’s Office in Long Beach for nonpayment of wages.

The Labor Commissioner’s investigation revealed that Champion paid the workers from an account with insufficient funds and then skipped several pay periods for the majority of the workers. Investigators also learned that Champion failed to pay overtime wages to many of the workers, who worked up to 2 hours overtime a day.

The Labor Commissioner’s Office last August issued citations against both Deacon and Champion totaling $279,151 in unpaid overtime and minimum wages, waiting time penalties, rest period premiums and civil penalties for work performed from May 8, 2016 to June 16, 2016. A demand letter was also issued in August for $50,466 to request payment of the contract wages, which is the difference between minimum wage and the wages promised to the workers when contracted for the job.

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