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Schemes to Avoid Paying Prevailing Wage Payments

Contractors who bid on public works jobs in California must be willing to pay prevailing wages to all employees who work on those projects. Prevailing wages are considerably higher than the minimum wage. Workers on a prevailing wage job typically earn more than $30 per hour.

Many contractors gain an advantage in the bidding process by cutting their labor costs through illegal schemes to deny paying prevailing wages. Often, this involves hiring undocumented workers or inexperienced, but documented, workers who don't know that their $10 per hour pay is unlawfully low. Public works contractors are required by law to regularly submit certified payroll reports, verified under penalty of perjury, to show their compliance with prevailing wage laws.

One of several schemes we've seen to get around prevailing wage laws is the "in-house check cashing" scheme. In this scheme, workers might be shown paychecks, with proper pay rates and deductions, and told to endorse them back to the employer, or, often, to the project manager. The employer or the manager then cashes the checks and returns to the work site with cash. The employees are then paid, in cash, the lower amount that they were promised -- often as little as $10-12 per hour. In other instances, the employees know their true rate of pay, but are told that money has been deducted for taxes, insurance, retirement, tools or other expenses. The money deducted from the check is then pocketed by the contractor.

These prevailing wage violations often go on for years without detection, because the companies who engage in these practices frequently hire only the least sophisticated, Spanish-speaking, undocumented workers they can find. But, from time to time, a worker speaks out or a union-related investigator happens upon a violation.

This week in Temecula, California, a construction company foreman was charged with 102 counts of accepting kickbacks and embezzling hundreds of thousands of dollars from undocumented immigrant employees in an alleged "in-house check cashing" scheme. Juan Gonzalez Valdovinos, a 53-year-old foreman for Four Point Builders, is accused of cashing his workers' paychecks and giving the employees only a small percentage of the money. Riverside County prosecutors claim that he would tell them he was "taking it for tools" or "putting it in a savings account" for the workers.

Valdovinos was busted because of an investigation by Peter Rodriguez, a representative of the Carpenters/Contractors Cooperation Committee, which sends him to visit work sites to educate workers about their rights and, of course, make sure that contractors are not competing unfairly by winning bids that they can only perform by cheating their employees. If convicted of all charges, Valdovinos could be sentenced to 70 years in prison.

We have represented, and will continue to represent, workers who are victimized by such schemes. They often have claims not only against the crooked contractor, but also its payment bond, contractor's license bond and sometimes even the construction funds held by the school district or other public agency contracting for the work. If you know workers who have been victimized by such a scheme, let us know.


John and Ken Fan

And people say these guys are taking jobs that Americans won't do. I WOULD HAMMER NAILS INTO WOOD FOR THIRTY BUCKS AN HOUR.

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