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San Jose expands investigation of labor violations at emergency housing sites

San Jose is expanding its investigation of illegal labor practices, including wage theft, at emergency housing projects handled by Habitat for Humanity, but there’s no set date for when workers will get paid.

The city’s Public Works Department is demanding $319,631.46 in restitution for workers from Veev Build, a subcontractor, for various alleged labor violations reported by San Jose Spotlight at the Monterey/Bernal Emergency Housing Project earlier this year. The amount due is nearly six times what the city initially demanded from Veev in its first notice of violation in April.

The city increased the restitution after Veev turned over additional information revealing more violations, including failing to pay workers for all hours and misclassifying workers, according to a city memo.

San Jose is also reviewing two other emergency housing projects — Evans Lane and Rue Ferrari– after discovering potential underpayments of workers. City documents published earlier this month indicate subcontractor Suarez & Munoz Construction is potentially on the hook for more than $100,000 in restitution and more than $23,000 in penalties.

Ongoing investigations

The city has not yet assigned penalties for Veev and it’s unclear when workers from the Monterey/Bernal project will be paid. Public Works Director Matt Cano told San Jose Spotlight he couldn’t answer this question because the investigation is still pending.

Cano wrote in a memo to lawmakers:

“Due to the complexities of this investigation it has not yet been completed. However, staff is actively engaged with the contractor to ensure that all workers are paid the proper wages as expeditiously as possible.”

Workers waiting for their due wages are frustrated by the delay. Francisco Lara, a plumber at the Monterey/Bernal project, told San Jose Spotlight he worked 12-hour days at the site and cut his arm on a pipe, requiring 12 stitches. According to city records, Lara worked at least one week that wasn’t reported on Veev’s certified payroll.

Lara said:

“It’s stressful. … I’ve got to pretty much struggle for things that I worked hard for and never got.”

Molly L. Kaban, an attorney for Veev, said the company discovered errors in the city’s calculation of restitution after reviewing its records with help from an external consultant. She did not immediately provide any examples. Veev said it’s working with the city to answer questions.

Mauricio Velarde The site of a homeless housing project on Bernal Road in San Jose, Calif. touted by Mayor Sam Liccardo and Gov. Gavin Newsom was ripe with hazardous conditions, including construction debris, no fall protection for workers, no social distancing or face masks. (Photo courtesy of Mauricio Velarde)

Veev said:

“We believe that once the review process is completed the notice will be revised or revoked entirely. If anything is owed at the completion of the process, of course Veev will abide by any obligation.”

Habitat for Humanity East Bay/Silicon Valley is working to rectify the issues and has a compliance consultant working with the company’s subcontractors, spokesperson Patti Wang told San Jose Spotlight.

Missing payroll

Habitat for Humanity was assigned a public works project worth approximately $6 million to build emergency interim housing for homeless people during the Covid-19 pandemic. Mayor Sam Liccardo and Gov. Gavin Newsom used the Monterey/Bernal site as a backdrop for a televised press conference in October 2020, boasting that units were built quickly and cheaply.

Earlier this year, San Jose Spotlight reported on rampant wage theft and hazardous work conditions at the site. Numerous workers were not paid money owed under a citywide union contract, and one subcontractor hired non-union labor for less than what prevailing wage laws allow.

Veev has argued that it’s not responsible for misclassifying workers because the workers were supposed to record the correct classification for themselves. The city rejected this argument in its October memo, stating California Labor Code dictates contractors and subcontractors must keep accurate payroll records, and misclassification by a worker doesn’t let an employer off the hook.

The city also dinged Veev for allegedly failing to report on its certified payroll records five employees hired through a staffing company, Aerotek Temp Agency. San Jose claims Veev also failed to provide certified payroll records for the last 72 days of work.

The memo said:

“As a result, (the Office of Equal Opportunity) is unable to determine whether Veev owes additional restitution to workers.” 

There is a pending lawsuit in Santa Clara County against Veev brought by two carpenters who claim the company failed to pay them all wages or provide meal breaks at the proper times while they were employed at the housing project.

South Bay Piping Industry Compliance Director Mauricio Velarde says he contacted the city about potential wage violations and safety problems at the Monterey/Bernal site months ago.

Adding he believes Cano downplayed the severity of violations, he said:

“I had been informing them of violations in the summer of 2020, which they ignored.” 

This story was originally published by San Jose Spotlight. 

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