Corbett bill would end independent union audits

June 12, 2013

By Katy Grimes

A bill written and sponsored by the union labor group State Building and Construction Trades Council of California, appears to be an effort to eliminate from monitoring and enforcing prevailing wage laws through independent compliance audits and enforcement of building contractors.

SB 776 by Sen. Ellen Corbett, D-San Leandro, will be heard today in the Assembly Labor and Employment Committee. This should be interesting.

According to the non-union California Construction Compliance Group, the audits always find labor violations, and particularly those involving employee prevailing wage requirements. It’s ironic that the prevailing wage is supported entirely by unions, but it’s usually union contractors which violate this rule and do not pay prevailing wage to construction workers.

Once an audit is completed, employees receive substantial amounts of back wages they were cheated out of through fraudulent labor practices, or just sheer incompetence by the contractor employers.

If the wages were underpaid due to fraud, the State of California Labor Commissioner assesses fines and penalties on the employer commensurate with the level of fraud or illegal activity. But if the underpayment to employees was oversight, chances are only back wages will be required as payment.

“Contractors on public works projects are obligated to pay their employees the prevailing wage for the craft and locality in which the work is performed,” the bill analysis explains. “A portion of that obligation can be satisfied by paying fringe benefits, which include payments to ‘monitor and enforce’ worker protection laws. In the case of union contractors, those payments are made to joint labor management compliance committees in which workers have a voice, as defined in the federal Joint Labor Management Cooperation Act of 1978.”

“SBCTC Legislative Director Cesar Diaz states that SB 776 closes this unfair loophole by clarifying that contractor payments for monitoring and enforcing laws related to public works cannot count as a credit toward a contractor’s obligation to pay prevailing wages, if those payments are not made to a joint program or committee established by the federal Labor Management Cooperation Act of 1978,” the State Building and Trades Council said on its website. “This will guarantee that workers have a say in how their own money is used on their behalf, and will protect them from ABC-style phony labor compliance committees that actually work against all workers’ best interests.”

Click here to see the floor alert that went to every Democratic Senator before the vote, prepared by the State Building and Trades Council.

A recent case

A recent CCCG labor compliance audit of the Los Angeles Unified School District uncovered more than $91,000 in unpaid wages owed to construction workers for work on the Valley Region High School Number 5 project. The beneficiaries of the settlement include more than 70 workers of the now defunct Masonry Group California, Inc, a company that is currently in Chapter 7 Bankruptcy.

“In 2010, the non-union Associated Building and Contractors California, now doing business as California Construction Compliance Group, performed a construction contractor compliance audit for the Los Angeles Unified School District’s Valley Region High School Number 5 project,” John Loudon, Executive Director of the California Construction Compliance Group, told me.

“A number of violations were discovered and reported to LAUSD’s labor compliance program and the Division of Labor Standards Enforcement,” Loudon said.

“After months of inactivity by both entities, CCCG took dramatic action and requested revocation of LAUSD’s labor compliance program. The revocation request got LAUSD’s labor compliance program moving and CCCG’s complaints and audits were properly investigated.”

According to Loudon, after investigation of The Masonry Group’s practices and years of litigation, LAUSD was able to recover $91,688.98 in back wages, $2,181.27 in training fees and $28,950.00 in penalties. Because The Masonry Group seemingly disappeared through the bankruptcy, Turner Construction, the general on the project, was the party that ultimately made things right for the underpaid employees.

Yet on the same day the CCCG heard of their victory, and the massive win for employees, SB 776 was passed out of the state

The hearing today on SB 776 will be in the Assembly Labor and Employment Committee at 1:30, Room 447 in the Capitol.