San Jose labor leader questions strength of city’s wage theft rules

San Jose officials have gotten stricter about labor protections over the last year, disqualifying companies with a history of wage theft from winning city contracts. But labor advocates say the city still isn’t doing enough to protect workers.

South Bay labor leaders question whether companies with a history of lower level infractions and no state record are skirting the system. This can occur when city labor inspectors notify companies of wage theft infractions. Oftentimes, this is resolved quickly, the city’s top labor inspector said. This means it doesn’t escalate to state level, which could disqualify a contract bidder.

City officials said they’re after the worst actors, while advocates note that doesn’t go far enough to address issues such as wage theft.

“How is there supposed to be a penalty issued against repeat offenders in San Jose if the city does not send a complaint to the state?” Mauricio Velarde, director of compliance for the South Bay Piping Industry, told San José Spotlight.

Last April, the San Jose City Council approved revisions to the city’s wage theft prevention policy, originally enacted in 2016, after realizing the prior version was unenforceable. The revisions rule that if a company has two or more state fines within a five-year period — or one unpaid judgment — they’re disqualified from bidding on city projects.

City labor violation data shows San Jose contractors owed a total $1 million to workers over the last five years, but only $238,000 in stricter state fines. Last year saw the largest number of labor violations, 75, out of any other.

Velarde said most of the cases the city flagged for the state pertained to worker issues that San José Spotlight reported on, including Habitat for Humanity’s Bernal Monterey emergency temporary housing site and illegal labor practices at the San Jose-Santa Clara Regional Wastewater Facility.

Since 2018, San Jose officials discovered at least 177 labor violations by city contractors paid with public money, according to data that city inspectors collected, which Velarde obtained through a public records request. Just 23 of those cases have been referred to the state for stronger penalties, Velarde told San José Spotlight.

Office of Equality Assessment Director Christopher Hickey disagrees that relying on state penalties to disqualify contractors undermines San Jose’s goal of supporting workers rights. He said the city is most worried about companies that continually refuse to pay the fines.

“There are many companies that, at the first time they’ve been notified, they go, ‘We did not know that, it was a failure on our part, here is a check to the workers and for any fines.’ The only time we notify the state, and the state issues a judgment, is when a company — after all the due process — still does not pay,” Hickey told San José Spotlight. “The mayor and city council — they do not want to contract with those most egregious companies.”

Hickey said not every issue warrants being reported to the California Labor Commissioner’s Office, since the state collects the same records. San Jose is one of three Bay Area cities with an office like Hickey’s, set up to scan mountains of contractor payroll records for compliance with state labor laws. The purpose is to not only shoulder some of the state’s burden, but resolve worker issues faster at a local level.

“We are still in more of an archaic system in how we collect this information. In 2018, we were collecting hard copies, printed documents of certified payrolls,” Hickey told San José Spotlight.

While the most effective role of his office is to make visits to contractor sites and interview workers about their issues directly, Hickey said the task of reviewing payrolls for compliance is a job in and of itself. Hickey’s department is short staffed. But he said things are changing.

State labor penalties on San Jose contractors have recently rolled in at larger amounts, starting in the year 2020, according to city data.

“You’ll notice there is a transition all the way up to 2023 in which we have started notifying the state a lot more,” Hickey told San José Spotlight. “As we’ve increased our staffing by three full-time positions, it will allow us to submit documents to the state in a very quick manner and provide that coordination that I think South Bay Piping Industry is looking for.”

Contact Brandon Pho at [email protected] or @brandonphooo on X, formerly known as Twitter.