Labor Commissioner’s Office files $6.3 million misclassification and wage theft lawsuit against contractor

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wage theft is a crime
An image from the Wage Theft is a Crime multilingual public awareness campaign

California’s state Labor Commissioner’s Office (LCO) has filed a lawsuit against Calcrete Construction, Inc. seeking $6,300,338 for multiple wage theft violations affecting a group of 249 construction workers and the willful misclassification of 175 workers as independent contractors.

The agency says an investigation launched in October 2016 uncovered the Glendale-based company’s failure to pay the workers for overtime hours, allocate pay for sick leave and provide proper wage statements. The lawsuit, filed in Los Angeles Superior Court, also seeks civil damages and penalties.

The LCO asserts that beginning in Aug. 2016, Calcrete forced its workers under threat of termination to sign contracts stating they were independent contractors. The company then used staffing agencies Dominion Staffing and Southeast Personnel Leasing to pay the workers.

“It is illegal for employers to use subcontractors to distance themselves from the obligation to pay workers, and we will use every tool to dissuade employers from this scheme,” Labor Commissioner Julie A. Su said in a statement. “This lawsuit aims to recover the money these misclassified workers should have been paid after years of wage theft.”

Calcrete employees typically worked 10-12 hours Monday through Friday and eight hours on Saturday, the LCO statement said. They were paid only their regular hourly rate and not for the 18-28 hours of overtime they regularly worked, the LCO asserts. This underpayment occurred for a nearly two- year period from 2014-16, the lawsuit specifies.

The lawsuit seeks:

  • Wages and damages of approximately $2,596,438 payable to the workers including $352,000 in overtime wages and $1,244,438 in waiting time penalties;
  • More than $1 million (specific amount to be determined at trial) for unpaid sick leave and liquidated damages;
  • Penalties of approximately $3,703,900 payable to the state including $2,625,000 in statuary penalties for willful misclassification and $78,900 in civil penalties; and
  • More than $1 million (specific amount to be determined at trial) for failure to provide proper wage statements.

The Carpenters/Contractors Cooperation Committee, a union-affiliated, non-profit organization that advocates for workplace compliance within the construction industry, referred the case to the LCO.

When a worker is misclassified as an independent contractor, they are not protected by minimum wage, overtime and retaliation laws, the LCO says in its news release.

The worker is not guaranteed workers’ compensation coverage if injured on the job and has no right to paid rest and meal breaks or sick leave. Many factors go into determining if a worker is misclassified, including a review of who decides what tasks the worker does, who dictates how tasks should be done and who controls customer relations. Worker misclassification results in an estimated loss of $7 billion each year in payroll tax revenue to the state.

When workers are paid less than minimum wage, they are entitled to liquidated damages that equal the amount of underpaid wages plus interest. Waiting time penalties are imposed when the employer fails to provide workers their final paycheck after separation. This penalty is calculated by taking the employee’s daily rate of pay and multiplying it by the number of days the employee was not paid, up to a maximum of 30 days.

The Labor Commissioner’s Office, officially known as the Department of Industrial Relations’ Division of Labor Standards Enforcement, inspects workplaces for wage and hour violations, adjudicates wage claims, investigates retaliation complaints, issues licenses and registrations for businesses, enforces prevailing wage rates and apprenticeship standards in public works projects and educates the public on labor laws. The division’s Bureau of Field Enforcement is responsible for investigating and enforcing certain statutes including those that cover group claims of unpaid minimum wage and overtime.

In 2014, Commissioner Su launched the Wage Theft is a Crime multilingual public awareness campaign. The campaign defines wage theft and informs workers of their rights and the resources available to them to recover unpaid wages or report other labor law violations.

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