IR #2010-22
July 22, 2010

Krisann Chasarik
Erika Monterroza


CA Labor Commissioner Reaches Deal for over $2 Million in Wages Owed to Construction Workers

San Diego, CA – More than 700 construction employees who are building a new tower at San Diego’s Rady Children’s Hospital will be receiving $2.1 million in owed wages after officials with the Labor Commissioner’s Office came to an agreement with the Hospital and its general contractor.  The wage settlement comes after the California Department of Industrial Relations (DIR) determined the project was a public works project and was subject to prevailing wage requirements.

The employees are working for McCarthy Construction Companies on the Acute Care Pavilion, a four-story, 154-bed pediatric tower adjacent to the existing Rady Children’s Hospital.  The project received $62 million in funding from a 2004 state bond.  

A public works project is defined in Labor Code Sections 1720 through 1720.3 and generally means construction, alteration, demolition or repair work done under contract and paid for in whole or in part out of public funds.
“We believe the wage violation in this case was not intentional. In this case the hospital and the contractors have agreed that the project is public works and will work with us to pay appropriate wages,” said DIR Director John C. Duncan, “The state conducts outreach and education seminars to inform contractors and awarding agencies about projects that fall under prevailing wage requirements. We are happy to work with employers and awarding agencies that are unsure of their obligations.”    

DIR reviewed the funding source at the request of the non-profit group CAN DO Contract Compliance.  The Labor Commissioner’s Office then stepped in to enforce prevailing wage on the project in August of 2009.  A total of 749 employees will receive back wages.  Rady Children’s Hospital has also agreed to pay $250,000 in interest. 

“This is an example of an awarding agency taking responsibility and stepping up to its obligations,” said Labor Commissioner Angela Bradstreet.  “When the hard-working people of California are getting short-changed by their employers, the Labor Commissioner’s Office will not hesitate to fight for them.  This is the best possible outcome which has avoided protracted and costly litigation and gets the employees all their wages owed plus interest.”

Rady Children’s Hospital and McCarthy Construction agreed to allow the Labor Commissioner’s Office to review and verify self-audits completed by the general and sub-contractors on the project in order to determine the wages owed.  The audit covered work performed from the beginning of the project in 2008 through December 2009.  The parties also agreed to pay prevailing wage on continuing construction work on the hospital tower. 

The California Department of Industrial Relations’ Division of Labor Standards Enforcement (Labor Commissioner’s Office) adjudicates wage claims, investigates discrimination and public works complaints, and enforces state labor law and Industrial Welfare Commission wage orders. To learn more about the functions of the California Labor Commissioner, visit our web site at Employees with work-related questions or complaints, including heat illness, may call the California Workers’ Information Hotline at (866) 924-9757.

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