LARGEST WAGE THEFT ALLEGED
Labor officials order drywall subcontractor to pay $11.9 million for cheating more than 1,000 workers.
In the largest wage-theft case ever brought by the state of California against a private company, the labor commissioner has cited a City of Industry drywall subcontractor for cheating more than 1,000 workers out of minimum wages, overtime and rest breaks on 35 construction sites across the Los Angeles region.
The subcontractor, RDV Construction, was ordered to pay the workers $11.94 million in back wages and penalties for violations from 2014 to 2017, the commissioner announced Monday. Workers were paid with checks that bounced and waited months to be reimbursed, only to receive less than what they were owed, according to labor officials.
Investigators found that RDV, under the direction of Chief Executive Rafael Rivas and project managers Juan Rivas and Nicolas Del Villar, also “habitually and illegally withheld 10% to 25% of earned wages from the workers.”
RDV’s phone is disconnected, and Rafael Rivas did not respond to messages left on his mobile phone or at the office of his sister company, RVR General Construction Inc. in Fontana. However, a labor commissioner spokesman said RDV has appealed the citation before a hearing officer.
The commissioner’s Bureau of Field Enforcement, established three decades ago, investigates violations affecting groups of workers in private industry and issues citations. The RDV citation, issued in December, “is the largest wage theft case in private construction,” said commissioner spokesman Frank Polizzi. “This is the largest citation the labor commissioner’s field enforcement unit has ever issued to a single employer in response to a report of a labor law violation.”
The RDV building sites included such high-profile, mixed-use projects as the
Mansfield at Miracle Mile, an Art Deco-style luxury apartment building at 5100 Wilshire Blvd., where apartments rent for $2,450 to $11,500 a month. The Automobile Club of Southern California is leasing a portion of the ground floor.
Other sites included hotels such as the Homewood Suites Irvine on Red Hill Avenue in Irvine; the Crown Apartments, a luxury building on Santa Monica Boulevard in West Hollywood; the Kenmore, a $22-million Koreatown development; the Altana, a 507-unit building in downtown Glendale, and Boardwalk by Windsor, a luxury complex in Huntington Beach.
“This case shows that employers who steal from their workers will end up paying for it in the end,” California Labor Secretary Julie Su said in a statement.
David Kersh, executive director of the Carpenters/ Contractors Cooperation Committee, a 30-year-old nonprofit watchdog group, said the case highlights the need for the state to hold general contractors responsible for wage theft by their subcontractors.
The carpenters group, also known as QuadC, is funded by the construction industry through collective bargaining agreements. According to the labor commissioner, QuadC brought the RDV case to the state’s attention after its field representatives, who are deployed across Southern California, interviewed cheated workers.
According to Kersh, “These workers would get their checks and run to the check-cashing places, but by the time they got there, there were no funds. A lot of these companies hire through labor brokers. It is a messy situation, and workers find money is deducted from their checks for no reason.”
Kersh said far less cheating occurs on public projects and on large commercial projects, which tend to employ union labor and where workers have access to grievance procedures. “But in the residential construction industry, there’s rampant exploitation,” he said. “A lot of workers are in the underground economy, paid in cash and on a piece-rate basis. They have no benefits.”
With the push to build more housing across California, “we have to clean up the industry,” he said.
The general contractors that hired RDV include some of the industry’s better-known players, including Westside Contractors Inc., R.D. Olson, Alpha Construction, Carmel Partners and Regis Contractors, according to QuadC’s database.
Andy Berthold, executive project manager of Westside Contractors, a general contractor on the Mansfield, acknowledged that his company had hired RDV.
Berthold said his company checks the reputation of subcontractors. “But it is very hard for us to verify that they pay all the wages. It would require a tremendous amount of labor on our part. We have dozens of subcontractors.”
Berthold said RDV and other drywall framers hire piece workers classified as independent contractors. “They make money by the square footage of lumber they install,” he said. “Some subcontractors hire one guy who brings his whole crew.”
Of the $11.94 million the labor commissioner has ordered RDV to pay, $5.4 million is in penalties for failing to pay 1,089 employees in a timely fashion; $1.62 million is for failing to pay 844 employees the minimum wage; $1.7 million is for minimum wage damages; $1.8 million is for failing to provide rest breaks to 1,125 employees; $566,897 is for failing to pay 1,111 workers overtime; and $882,981 is for failing to provide proper wage statements to 1,109 workers.
The RDV case is the second case brought by the labor commissioner for wage theft at the Mansfield site by a Westside Contractors subcontractor.
In August 2017, the commissioner filed a lawsuit against Calcrete Construction, a Glendale company, seeking $6.3 million for cheating 249 construction workers out of wages on the project.
Over two years, employees worked 10 to 12 hours Monday through Friday and eight hours on Saturday but were not paid overtime, the commissioner found. The company also forced 175 workers to sign contracts, under threat of termination, falsely stating they were independent contractors, according to labor investigators.
George Danoukh, president of Calcrete, did not respond to messages left at his office. A labor commissioner spokesman said the company is in settlement talks.
The cases against RDV and Calcrete covered violations on projects contracted before January 2018, when a new law, Assembly Bill 1701, took effect holding general contractors liable for violations by their subcontractors. The law requires subcontractors to share information on wages with general contractors who are allowed to withhold disputed sums from subcontractors who refuse to cooperate.
It authorizes both the labor commissioner and joint labor-management cooperation committees, such as QuadC, to file civil lawsuits against general contractors who oversee cheating subcontractors.
“Before this law, general contractors had no skin in the game,” Kersh said. “They could hire cheating subcontractors and then hire more. Now they will make sure they hire responsible subcontractors so workers get their money or they will be on the hook. That’s a radical change.”
Asked about AB 1701, Berthold at Westside Contractors said, “We are aware of that law. I don’t know if it’s being implemented or not.”
He added: “People don’t understand we have a housing shortage.” The new law “would add to cost of construction. It’s a way for lawyers to make more money to hold everyone responsible.”
Kersh said his 15 field representatives are monitoring compliance with the law at some 50 projects in the Los Angeles region.