US contractor found liable for subcontractor's wage failings

12 July 2018

A San Diego contractor carrying out work on a school has been forced to pay a $1.1m settlement after a subcontractor committed wage violations.

An investigation by California’s labor commisioner’s found 103 workers in Long Beach were underpaid by TB Penick & Sons and its subcontractor, Champion Construction.

Champion was a drywall and framing contractor hired by TB Penick to do construction work on a construction project at Browning High School in Long Beach.

Investigators found the subcontractor maintained false payroll records over a six-month period to cover up the fact that the 103 workers were not paid prevailing wage and fringe benefits.

California’s wage laws mean general contractor TB Penick is jointly liable for the violations of its subcontractor.

“Prevailing wages create a level playing field for all contractors bidding on public construction projects,” said labor commissioner Julie Su.

“This case clearly demonstrates that general contractors who select contractors that don't play by the rules will pay a heavy price. Under the law, they are responsible for the wage theft of their subcontractors.”

The investigation was launched when the labor commisioner was tipped off about violations by the Carpenters Contractors Cooperation Committee (CCCC) in March 2016.

As part of the probe more than 30 workers were interviewed and pay records for dozens of workers involved in the project were audited.

Workers have already received $744,533 compensation, or an average of $7,228 each.

Champion was also found to have committed wage theft violations affecting 47 workers on another project in California. Its state contractor license and public works contractor registration have expired.

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