Federally funded affordable housing project in Los Angeles for veterans, homeless plagued with wage violations

LOS ANGELES – In downtown Los Angeles, as dozens of workers constructed a new affordable housing complex for veterans and chronically homeless individuals in MacArthur Park, their employers were cheating them out of lawfully earned wages in 2015.

Funded in part by the city of Los Angeles and the U.S. Department of Housing and Urban Development, the “Six Apartments” project, awarded to The Six Veterans Housing LP, the project’s contractors are subject the requirements of the federal Davis-Bacon and Related Acts. The law requires all federal contractors and subcontractors to pay their workers prevailing wage rates and fringe benefits, and to certify payrolls for all work on the job.

Investigators from the U.S. Department of Labor’s Wage and Hour Division found that general contractor G.B. Construction, Inc. doing business as Golden Bear Construction, and six subcontractors on the project violated the DBRA’s prevailing wage, fringe benefit and recordkeeping requirements. As a result, federal investigators recovered $190,161 in unpaid wages for 53 workers. Division officials and inspectors from the city’s Housing Community Investment Department worked together to hold the contractors accountable. 

“Taxpayers have a right to expect that federal contractors paid with our tax dollars will comply with the law. The U.S. Department of Labor will not allow companies to abuse that trust,” said Eduardo Huerta, assistant district director for the Wage and Hour Division in Los Angeles. “Golden Bear Construction and their subcontractors put vulnerable, low-wage workers and their families in serious jeopardy. Employers enter into federal contracts knowing they must pay prevailing wages and benefits. When they ignore their responsibilities, they cheat their employees and gain an unfair advantage over those employers who obey the law.”

The Six Veterans Housing LP is a nonperforming prime contractor and subcontracted all construction work to G.B Construction, Inc. that managed the project and hired all subcontractors. The firms found in violation include G.B. Construction and subcontractors G.S. Electrical, Inc., Line Tech Plumbing, Inc., Duracon Development, Inc., DLE Construction, KSM Construction and Best Merit. The department is currently considering debarment action against most of these contractors. Debarment would prohibit them for three years from bidding on federally funded construction contracts.

The Six Apartments investigation found the following violations:

• Paying workers less than the prevailing wage rates for the work they performed.
• Failing to pay required fringe benefits.
• Falsifying certified payrolls to give the appearance of compliance with the law.
• Failing to report some workers on the project at all, instead paying them a fraction of the actual wages due, in cash. For example, one contractor paid workers employed as plumbers less than 20 percent of the hourly wage required on this federally funded contract, and falsified their certified payrolls, which they are required to submit weekly, to claim that they paid the required amounts in full.

For more information about the DBRA and other federal laws, contact the division’s toll-free helpline at 866-4US-WAGE (487-9243). Information also is available at http://www.dol.gov/whd/.