A labor watchdog claims to have found a third company that committed labor violations on a costly San Jose public project, raising questions about what the city is doing to monitor these practices.
Mauricio Velarde, compliance director for the South Bay Piping Industry, emailed city officials last week about alleged illegal labor practices at the San Jose-Santa Clara Regional Wastewater Facility—the largest plant of its kind on the West Coast, serving more than 1.4 million residents in the South Bay.
The general contractor Walsh Construction hired subcontractor G&G Welding for the project. According to Velarde, G&G briefly operated without workers’ compensation, failed to file certified payroll for six months, did not send out notices to hire apprentices and did not hire any while working on the project. Velarde said these are all requirements that should have been met to work on the project.
G&G is one of many subcontractors employed on the project, known as the Digester and Thickener Facilities Upgrade. San Jose awarded the contract for the project to Walsh in May 2016 for $107.9 million. Construction costs have ballooned over the last few years, and as of last fall the project’s total estimate is over $175 million.
This is the third subcontractor at the upgrade project Velarde has accused of illegal business practices. Last August, Velarde discovered Walsh had an unlicensed subcontractor on payroll for several months, and another subcontractor that claimed an exemption from workers’ compensation insurance for more than a year even though it reported employees on its certified payroll.
Velarde vented his frustration in an email to San Jose’s Department of Public Works and Office of Equality Assurance, saying law-abiding contractors can’t compete with these tactics, which harm local workers and apprentices. Velarde claims the city is stonewalling him from receiving public records that would shed light on more wrongdoings. He sued the city last September—and later expanded the suit—to force it to turn over records related to the upgrade. That case is pending.
“I have to believe that (San Jose) City Council, taxpayers and some staff must be very embarrassed and outraged by these ongoing issues,” Velarde told San José Spotlight.
Blake Adams, owner G&G Welding, told San José Spotlight he spoke briefly with Velarde, who he accused of going “straight to the throat” by accusing him of wrongdoing. Adams, who was still on payroll for the upgrade project as of the end of January, said he submits everything in compliance with the city and primary contractor regarding his insurance and payroll.
He said Velarde was wrong about the issue with apprentices, noting he spoke with an official with Laborers International Union of North America Local 270 who said he didn’t need any apprentices because he doesn’t have any employees.
“I am doing everything legit on my end, to my knowledge, and to the general contractor’s knowledge,” Adams said.
Public Works Director Matt Cano told San José Spotlight the upgrade project is extremely large and complicated, involving nearly 100 subcontractors with lots of worker changeover. He said the concerns raised about G&G are new and his department hasn’t had a chance to delve into them deeply.
Cano noted his department did reach out to Walsh Construction about the unlicensed contractor on the project and worked on protocols to ensure it doesn’t happen again. He said after hearing complaints from Velarde about the two companies, the city did find $1,900 in incorrectly calculated overtime pay owed to two workers, some unpaid apprentice training fees and some errors on apprentice forms.
Cano said mistakes on apprenticeship forms are a common occurrence. He added the city doesn’t typically proactively investigate compliance with certain issues, such as workers’ compensation.
“Our priority is making sure workers are paid,” Cano said.
Walsh Construction did not respond to a request for comment.
According to records reviewed by San José Spotlight, Adams started working on the project on Nov. 23, 2020, but didn’t submit certified payroll until May 2021. According to the Contractors State License Board, Adams obtained workers’ compensation insurance in January 2021, a little over a month after he started working.
According to state records, Adams sent apprenticeship related forms to the Associated Builders & Contractors Northern California and the Northern California District Council of Laborers. The forms indicated he did not have apprentices.
Velarde said some violations may seem small, but they speak to larger patterns of behavior. He cited the instances of wage theft and unsafe working conditions he caught at a San Jose homeless housing project as an example of what can happen when regulators don’t take stronger enforcement against bad actors.
“There are no consequences by not enforcing these things,” Velarde said. “It’s really bad.”