The Broken Promise

Report from

Legislative leaders pushed through a law to cut local construction workers’ wages dramatically claiming the action would save money and create more jobs.

Despite overwhelming evidence to the contrary, Republican legislative leaders quickly passed a bill to eliminate the state’s prevailing wage law.

The legislative leadership promised taxpayers would see a savings of 25 to 30 percent on public works projects.

There hasn’t been the promised savings based on examination of the award of bids since July 1 when the law went into effect and during a three-month period in 2015 when the Legislature suspended the prevailing wage law.

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Linking Public Works to Local Hiring Faces a Trump Challenge

AUG. 3, 2017

Over the last decade, more and more cities, on the coasts and in the heartland, have tried to leverage their buying power to fuel economic development through local hiring provisions on public projects that favor veterans, residents and low-income workers. But these efforts have been bedeviled by political, economic and legal challenges that have divided business, union and political allies.

Now the Trump administration may rescind an Obama-era initiative that allows hiring preferences on transportation and construction projects in states like New York, California, Texas, Virginia and Illinois, a prospect that has alarmed advocates of such programs.

“Why not let cities and states innovate to create the good American jobs that the administration has been clamoring for?” said Madeline Janis, the executive director of Jobs to Move America, a coalition of faith, labor and other groups that want transportation funding to benefit local communities. “I don’t understand why they would want to cancel the program.”

Legal and regulatory hurdles have long frustrated officials trying to create job opportunities that favor local residents. The Supreme Court has ruled it is unconstitutional for employers in one state to discriminate against residents of another. Federal agencies, through Republican and Democratic administrations, have maintained that restrictions like competitive bidding prevent them from contributing a cent to public projects with hiring preferences. And state lawmakers, complaining that employers and workers outside the target city are at a disadvantage, have outlawed such preferences.

Jobs to Move America was one of several groups that spent years working with transportation officials in the Obama administration on a pilot project to test whether local hiring preferences reduced competition or drove up prices. In January, days before President Trump was sworn in, the Transportation Department extended the experiment, taking place in more than a dozen cities, for five years so that research could be completed.

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Contractors worry repeal of prevailing wage would decimate industry

May 7th, 2017
by Philip Joens

Currently, workers on public projects are required to be paid a minimum wage set by the state. Created in 1959, the law is similar to the Federal 1931 Davis-Bacon Act, which requires workers be paid minimum wages on federal construction projects.

If approved, House Bill 104 will repeal the state law while still mandating contractors pay workers at least federal or state minimum wage, whichever is higher. If they choose to, contractors may still pay employees more than that amount. It would take effect Aug. 28. Thirty-one states have prevailing wage laws. Some, like Arkansas, Kentucky and Tennessee, have a minimum amount that must be spent on a project before the prevailing wage law guarantees workers certain wages. Others, like Missouri, Illinois and Nebraska, cover public works projects no matter the contract amount.

Pay differs by skill set and county. In Cole County, carpenters make $25.16 and iron workers make $28.96 per hour. In rural Benton County, carpenters also make $25.16 while iron workers make $29 per hour.

Each year, all contractors, both union and non-union, are required to turn in the hours they worked to the Missouri Department of Labor and Industrial Relations. Because local unions collectively bargain wages in each county, all union contractors are lumped into the same pool.

To determine the prevailing wage in each county, the state compares the number of hours worked in each county at the collectively bargained rate and the rate non-union contractors pay. The rate with the most hours worked each year prevails and becomes the wage for each skill set in each county.

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Justice for Irvine employees: Owner gets jail for shorting pay

OCTOBER 7, 2016

The owner of an Irvine-based heating and air conditioning company was sentenced Friday to a year in jail and five years of formal probation for failing to pay employees a prevailing wage on public works projects and pocketing the difference.

Shamseddin Hashemi-Mousavi, who was convicted exactly a year ago Friday, could have faced up to 26 years and eight months in prison.

Orange County Superior Court Judge Steven Bromberg prohibited him from working on any public works contracts through the end of his probation, according to Deputy District Attorney Donde McCament.

Hashemi-Mousavi placed $58,000 in a trust fund to be used to pay for restitution at a later date, McCament said. Bromberg will hold a hearing later to determine what restitution the defendant owes.

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Case # 16CF0765
Date: April 13, 2016

SANTA ANA, Calif. – Five defendants were arraigned yesterday April 12, 2016, for committing over $635,000 in tax and insurance fraud and failing to pay employees prevailing wage on public works contracts. Babak Brian Abghari, 36, Newport Coast, Homayoun Harry Abghari, 57, Huntington Beach, Julio Roberto Alvarado, 47, San Pedro, Cody Lawson, 34, Long Beach, Phyllis Martinez, 51, Anaheim, are each charged with eight felony counts of taking and receiving a portion of a worker’s wage on a public work, 56 felony counts of recording a false or forged instrument, six felony counts of making a false statement to discourage an injured worker from claiming benefits, and seven felony counts of willful failure to pay taxes, with sentencing enhancement allegations for property loss over $200,000. Babak Aghari and Homayoun Aghari are also charged with three felony counts of misrepresenting facts to a workers’ compensation insurance company. If convicted, the defendants face a maximum sentence of 49 years and six months in state prison. The defendants are scheduled for a pre-trial hearing on May 12, 2016, at 8:30 a.m. in Department C-55, Central Justice Center, Santa Ana.

Houmayoun Abghari and Babak Abghari are accused of owning and operating PCN3, a general contracting company that mainly conducts public works projects.

Between Jan. 1, 2000, and March 30, 2015, the defendants are accused of fraudulently paying PCN3’s employees less than the prevailing wage in cash, and keeping the extra money owed to their employees. The defendants are accused of “shorting” the victims’ hours on certified payroll reports and/or requiring their victims’ to give cash back.

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School Construction Authority General Contractor Sentenced To 96 Months In Prison For Long-Running Scheme To Deprive Workers Of The Prevailing Wage

Department of Justice
U.S. Attorney’s Office
Eastern District of New York

Friday, April 1, 2016

Earlier today in Brooklyn federal court, Muzaffar Nadeem, the owner of SM&B Construction Co., Inc. (SM&B), was sentenced to 96 months’ imprisonment, ordered to pay more than $1.3 million in restitution to the IRS, and ordered to forfeit to the government over $7.1 million in criminal proceeds, following his convictions on May 8, 2015, after a four-week jury trial, for mail and wire fraud, structuring financial transactions, federal programs bribery, making illegal cash payments to a union official, money laundering, unlawful monetary transactions over $10,000, subscribing to false tax returns, and multiple related conspiracy charges.

The convictions arose out of Nadeem’s leadership role in a long-running scheme to pay SM&B’s workers a fraction of the prevailing wage on projects funded by the New York City School Construction Authority (SCA), as SM&B was legally and contractually required to do. Nadeem’s co-conspirators Zainul Syed, Afzaal Chaudry and Irfan Muzaffar were also convicted at trial of various crimes for their participation in this scheme. Muzaffar was previously sentenced to 18 months’ imprisonment, and Chaudry was previously sentenced time served, following approximately ten months of imprisonment. Syed is awaiting sentencing. The sentencing proceedings were held before U.S. District Judge Brian M. Cogan.

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California has a Right to Withhold Funds from Charter Cities that Refuse to Apply Prevailing Wages on Public Work Projects; Court Upholds SB 7


In recent years, a number of cities have become “charter cities,” in some cases because they believed it would “free” them from state laws requiring they pay prevailing wages on all public projects. Prevailing wages typically are what the prevalent pay is in a region.

In response, Senate Bill 7 (SB 7) passed into law, which allows the state to withhold discretionary funding from charter cities that refuse to require prevailing wage to be paid to workers on public projects.

Six charter cities (City of El Centro, City of Carlsbad, City of El Cajon, City of Fresno, City of Oceanside, and City of Vista) filed a lawsuit challenging SB 7 arguing the law is unconstitutional. In City of El Centro v. David Lanier, decided in August 2014, a judge ruled against the cities and upheld the legality of SB 7. The Court also upheld SB 922 (2011) and SB 829 (2012), which allow the state to restrict discretionary state funding to charter cities that refuse to consider adoption of Project Labor Agreements (PLAs).

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Michael F. Sabitoni: I’m thrilled to see crackdown on bad R.I. businesses

By Michael F. Sabitoni

Posted Sep. 18, 2015 at 2:01 AM

A $730,000 fine! That is what a construction subcontractor hanging drywall recently voluntarily agreed to pay to Rhode Island for misclassification and wage and hour violations on just one public works project.
According to the Sept. 1 news story “R.I. construction firm settles with DLT to pay more than $730,000 in back wages, penalties,” the subcontractor’s lawyer actually commended the owner of the company for coming “to the plate” and working “to make things right” rather than fleeing the country and/or filing bankruptcy. Wow, what an upstanding citizen!

When someone blatantly exploits workers in such an egregious way, we in the trades do not know how anyone could commend the perpetrator in any respect. The fact of the matter is the only reason this contractor is coming “to the plate” is not because of character, it is because of money and/or profits. It goes to show you how lucrative cheating is in the construction industry.

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 *Co-defendant in this case is scheduled for a preliminary hearing tomorrow

Date: March 23, 2015            Case # 13CF3959

SANTA ANA – A construction company foreman was convicted and sentenced Friday for defrauding employees of $330,000 in wages and keeping the money for himself from two public works contract. Antonio Naranjo Jr., 41, Costa Mesa, pleaded guilty Friday, March 20, 2015, to 11 felony counts of taking and receiving a portion of a worker’s wage on public works project and two felony counts of recording a false and forged instrument. He was sentenced to four years and six months in state prison. Naranjo Jr. is currently serving two years and eight months in state prison for a residential burglary conviction in 2012 (Case #12HF3186) and will now serve seven years and four months in state prison.

What is a “Public Work” Under California Law?

Monday, February 16, 2015

by Richard E. Donahoo



Often workers are unsure whether the California project where they are working is a “public work” that requires their employer to pay them a minimum “prevailing wage” rate set by the State of California.

California Labor Code section 1720 defines a public work as:

“Construction, alteration, demolition, installation, or repair work done under contract and paid for in whole or in part out of public funds . . . For purposes of this paragraph, “construction” includes work performed during the design and preconstruction phases of construction, including, but not limited to, inspection and land surveying work. For purposes of this paragraph, “installation” includes, but is not limited to, the assembly and disassembly of freestanding and affixed modular office systems.”

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