Stock photo of construction workers in California with palm trees

A large number of California construction workers are getting a well-deserved payday: A December 16, 2021, press release from the California Department of Industrial Relations announced that the California Labor Commissioner’s Office collected $2,631,876 in wages and $37,672 in apprenticeship training funds to compensate 100 workers for unpaid wages.

The funds are connected to a project at El Camino Community College in Torrance, California. The community college hired TOBO Construction Inc. as the prime contractor for the college’s $35 million Student Services Center project, with the company then being responsible for the hiring of bricklayers, carpenters, drywall installers, laborers, ironworkers, and steel framers.

However, according to the California Labor Commissioner, TOBO Construction failed to properly pay the project’s workers.

Types of Subcontractors in Construction: Knowing the Differences

The ruling is actually the result of a process that began in May 2018, which was spurred by reports of wrongdoing from the Carpenters Contractors Cooperation Committee and the Painters and Allied Trades Compliance Administrative Trust.

“Contractors on publicly funded construction projects must pay workers a prevailing wage,” said California Labor Commissioner Lilia García-Brower. “TOBO Construction, Inc. cheated these workers out of millions of dollars in pay and benefits.”

Prevailing wage is a serious issue in California. According to state law, pay to workers on public works projects must be equal to “the general prevailing rate of per diem wages for work of a similar character in the locality in which the public work is performed, and not less than the general prevailing rate.” 

Learn more: How Do Prevailing Wage Laws Work in Construction?

As per attorney Wynton Yates, the financial penalties for contractors who fail to pay the proper wage on public projects is really significant: “If an action against an employer is successful, a court will award the employee back wages, plus interest, from the date that the wages were due. Those interest payments can really stack up quickly.”

According to the California Labor Commission report, the company spent significant time and energy trying to keep its wage theft quiet, saying that “The investigation determined that TOBO Construction had maintained false payroll records over a 31-month period to cover up the wage theft” and adding that “[TOBO Construction] hired brokers to provide staffing for the construction project, and those brokers paid the workers in cash or personal checks $100 to $160 per day.”

The investigation took a major toll on the company in the end. After originally being cited for unpaid wage assessments, civil penalties, and training funds in September 2018, TOBO Construction filed for bankruptcy in February 2020, with their state contractors license and public works contractor registration both expiring the same year. 

The wage collection ended up coming from a settlement between the company and its bonding companies, International Fidelity Insurance Company and Allegheny Casualty Company.

This is not the first time that TOBO Construction had dealt with prevailing wage issues, either. According to the press release, before the $2.6 million judgment against them, the California Labor Commissioner had previously collected $542,872 in unpaid prevailing wages related to different public projects in Los Angeles County. 

Contractors would do well to keep an eye on their requirements for any public works projects in California — state resources for contractors include its Public Works Manual and an overview of the state’s prevailing wage requirements.

Illustration of LegalGuard on laptop

On-demand legal help you can afford

Legal Guard gives you access to a team of lawyers for contract review or legal advice when you need it.