San Jose leaders will withhold payment on a homeless housing project after a San José Spotlight article revealed widespread allegations of wage theft and safety violations. The city also launched an investigation.
The project, located at Monterey and Bernal Roads in San Jose, is one of three emergency housing sites citywide created for homeless residents during the COVID-19 pandemic. Mayor Sam Liccardo and Gov. Gavin Newsom used the site as the backdrop for a news conference, touting how quickly the project was built and how it would house up to 80 residents in need.
But an investigation by San José Spotlight found many workers on the project were not paid prevailing wages, the project was ripe with safety hazards, subcontractors flouted the city’s project labor agreements and contractors committed code violations.
While city officials cited the main contractor, Habitat for Humanity, for some infractions, many others went without notice. Meanwhile, Liccardo touted the project as the positive result of eliminating red tape.
Days after the article’s publication, Public Works Director Matt Cano released a memo insisting all workers were “required to be paid prevailing wages” set by the state and that the city “proactively” enforced labor compliance. He also said the city is withholding final payments on the contract until all violations are corrected.
But that’s not what happened, union representatives say.
“This is typical. We have lawsuits on other projects where they’ve done this,” said Mauricio Velarde, director of compliance at South Bay Piping Industry. “They have workers that have come forward that have been talking about (wage theft) and (this memo) tells the City Council, ‘Hey, this guy blew it out of proportion, there’s nothing to see here.'”
Velarde says contractors routinely violate labor laws in San Jose because the city does not have strong protections or penalties.
San Jose has a wage theft policy that could disqualify contractors who have committed wage theft from engaging with the city, but city officials confirmed it does not apply to public works projects. The Bernal project was a public works project with more than $11 million in city funding.MontereyBernal-NoticeofViolation-BayAreaProPaintingInc-ReviewResponse
Cano wrote that the department just learned about safety hazards identified in San José Spotlight’s article. Some of those issues include fall hazards, improper ladder placement, improper head protection and lax COVID safety precautions, including workers without face masks and not practicing social distancing.
“City inspectors were at the project worksite on a daily basis and did not note any serious safety issues,” Cano wrote.
Velarde filed a complaint in September with the state’s Department of Industrial Relations about the safety violations, but Cano said he was not aware of any complaints made until a few days ago. Cano added that no complaint has been filed with the city.
Cano said that the city would continue to investigate the allegations.
A letter posted at the work site shows the general contractor, Veev, was aware of safety complaints and had been notified by the state of the complaint. The letter says the state has not investigated the issue, but the builder is “required to investigate the alleged hazard(s) and notify…in writing” what corrective steps were being taken to prevent safety risks.
Cano said his team is tracking down the status of the complaint “to see if it turned into anything else.”
Not a priority
The allegations of wage theft and safety hazards come as San Jose declined to prioritize updating the city’s wage theft policies.
The San Jose City Council last week held a special meeting to determine its priorities for the next fiscal year—deciding what topics deserve limited staff time and resources. Councilmembers chose to prioritize items like homeless encampments and COVID-19 recovery.
In 2015, the city made wage theft policies a top priority and drafted its current policy that allows the city to reject engaging with contractors that have committed wage theft in the past.
Wage theft received seven votes from councilmembers last week, barely missing the cutoff to make the top of the priority list, and won’t be worked on in the upcoming fiscal year.