Executive Director James Reed and Chief Investigator Brandon Lopez from the Center for Contract Compliance (CCC) recently spoke with Sean Reynolds of Energy Independence Magazine. In our continuing series on contractor fraud, the two representatives discuss the issue and the CCC whose mission is, in part, “to protect law-abiding employers from those who would attempt to gain an unfair advantage by failing to comply with minimum labor standards.”
The Center for Contract Compliance (CCC) is a non-profit organization founded in 1985. They advocate compliance with prevailing wage and apprenticeship standards for public works projects assisting several public agencies including the Labor Commissioner’s Office, local district attorneys, the Employment Development Department and the Division of Workers’ Compensation.
Executive Director James Reed explained that workers’ compensation abuses are usually discovered later in the investigation process after determining a contractor has underpaid prevailing wage. All workers employed on public works projects must be paid the prevailing wage determined by the director of the Department of Industrial Relations according to the type of work and location. “We turn that over to the district attorney’s office, and then they will typically find violations in the workers’ comp law,” Reed said. Before accepting a bid he recommends doing an initial inquiry, and says their website, http://socalccc.org/, is a great initial resource.
However, he adds that a fraudulent contractor can make a payroll look good. “The violations really happen out in the field. When you talk to workers, that’s when you realize what’s happening.” Fear of reprisal may keep some workers from speaking with his office, but the CCC can assist them in a number of ways. Sometimes it’s as simple as contacting the contractor and getting a settlement. The CCC can also help file a claim with the Labor Commissioner’s Office, or, in egregious cases, where there are a lot of workers involved, the CCC will help with private action and refer them to an attorney.
Employing 17 investigators that cover all of Southern California, Chief Investigator Brandon Lopez explained that the CCC will build a case and then take it to the district attorney for prosecution. Lopez thinks contractor fraud within the public works sector will always be an issue, but added, “In the last couple of years the state of California has made a lot of advancements … and the district attorneys are prosecuting these cases. Five years ago that was really unheard of.”
The stakes are higher in choosing the best contractor. Assembly Bill 1897 passed the California legislature this month and requires employers to share, with the labor contractor, all civil legal responsibility and civil liability for all workers supplied by that contractor for the payment of wages and the failure to obtain valid workers’ compensation coverage. Lopez says cities are already responsible for assuring workers are compensated at prevailing wage. Recently, the CCC has had two determinations where cities were improperly bidding jobs out at the non-prevailing wage rate.
Reed says there is a lot of objection to prevailing wage determinations, but recent studies show that for every dollar invested in public works projects, the return to the local economy is $1.50. A fair wage allows workers to spend more of their income in the community. “You’re building up that all important middle-class,” he says.
The CCC also examines training and apprenticeship programs. Reed agrees that the National Electrical Contractors Association (NECA), along with the International Brotherhood of Electrical Workers (IBEW) offer stellar programs. Lopez underscores the importance of these programs. The contractor cutting corners on safety can be a life threatening issue. He says, if a contractor’s bid is 20 percent lower than all the other bids it is a red flag, and sometimes the low bid comes at the expense of worker safety. In one case a contractor, whose bid was 25 percent lower, laid a pipeline with no shoring and it collapsed killing a worker. Reed says it is apparent there is a lot at stake when hiring an unethical contractor. “If I was a city engineer, or public utilities director, and I was making bad choices, obviously it’s going to reflect on me with members of the community.”