Wage Theft

Posted January 26, 2024

https://www.bizjournals.com/sanjose/news/2024/01/24/san-jose-wage-theft-construction-worker-ordinance.html

San Jose considers construction ordinance protecting workers that are victims of wage theft


More than six years ago, workers at a then-under-construction set of twin residential
towers in Downtown San Jose were victims of one of the worst wage theft crimes the
region had ever seen.

It was so egregious that the project, which at the time carried the name Silvery
Towers, was nicknamed “Slavery Towers.”

While other neighboring cities passed protections for workers, efforts in San Jose
stagnated despite the city being the location that spurred municipal action.

However, after soliciting input from labor leaders and developers, San Jose is close to
developing an ordinance that would allow the city to withhold a certificate of occupancy on
development projects with confirmed unpaid wage theft judgments.

“There are other bad actors in the construction industry and we still need to ensure that
construction can continue or at least in many cases resume in San Jose as market conditions
allow, especially to address our housing shortage,” District 6 councilmember Dev Davis said
during a City Council meeting Tuesday.

The proposed ordinance would only apply to developments of 10,000 square feet or more,
essentially exempting the majority of small business and single-family residential projects.

The Silvery Towesr project — now called 188 West St. James after its street address — sparked
outrage after an investigation found that upwards of 20 workers were forced into labor and kept
in abhorrent living conditions. In 2018, one construction worker committed suicide after jumping
from one of the towers.

The investigation resulted in federal authorities arresting Job Torres Hernandez, a Hayward
resident who owned construction companies that recruited workers from Mexico. In 2019, he
was convicted of forced labor and harboring undocumented workers for commercial advantage
or private financial gain. Hernandez sentenced to 103 months in prison and ordered to repay
$919,738.64 in unpaid wages.

Hernandez supplied workers to Full Power Properties LLC, a contractor that worked on the
Silvery Towers project. Full Power agreed to pay $250,000 to 22 employees to resolve Fair
Labor Standards Act violations.

The worker abuse shed light on wage theft, which remains prevalent in California.

“Slavery Towers was not an outlier in the construction industry but rather just the tip of the
iceberg,” said Dominic Torreano, a member of Sheet Metal Workers 104.

Data from the California Labor Commissioner’s Office showed that there had been 5,000 claims
statewide between 2018 and 2023, including 939 in Santa Clara County.

Of the claims 1,257 claims awarded, more than half remain unpaid. This includes 23 unpaid
claims out of 36 judgments in San Jose.

Davis said that the city has targeted occupancy certificates to put some teeth behind the
ordinance and to ensure that developers and contractors follow the law.

Doug Bloch, a labor organizer, said that companies that partner with labor unions to create good-
paying jobs can’t compete against those that cheat workers.

“We want to make sure companies like that, the worst of the worst, are not working in San Jose
unless they fix their ways,” Bloch said.

He added that those who follow the rules wouldn’t have anything to worry about if the ordinance
is eventually passed.

The city initially scheduled a discussion about the ordinance in December but decided to table
any action after the development community expressed concerns about how the initial drafts
were written without their input.

But on Tuesday, developers lauded the city for hearing their concerns and asked for continued
collaboration as the ordinance comes forward at a future council meeting.

“We wholeheartedly support it as a balanced approach to curbing wage theft without hindering development and construction jobs,” said Todd Trekell, a development manager at Cupertino-
based Hunter Properties.

District 5 councilmember Peter Ortiz said the support from both sides was a milestone for San
Jose, a sign that “everyone deserves to be paid a fair wage and a timely wage.”

“It’s reassuring to know that we’re here with industry leaders and labor standing together against
this injustice,” Ortiz said.

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