IR #2005-13
Tuesday March 15, 2005

Dean Fryer
Renée Bacchini

$1.6 million settlement secured by DIR in prevailing wage dispute

SAN FRANCISCO-- The Department of Industrial Relations (DIR) has reached a settlement with developer EQR/Legacy Partners (2000) Concord LLC (Legacy), and contractors Daniel Silverie III, Inc., Beutler Corporation, Helix Electric, Inc. and Paragon Ventures, Inc. regarding prevailing wage liabilities on a residential project in Concord, California. Under a provision of the settlement, Legacy will pay $ 1.6 million to the Division of Labor Standards Enforcement (DLSE), and an undetermined amount to a labor organization for the express purpose of paying prevailing wages owed to employees of the contractors on the project and for any penalties related to infractions of the Labor Code. The agreement also requires that contractors continue to cooperate with DLSE to locate employees who worked on the project so that they may receive their wage payments.

"We are particularly appreciative of the full cooperation DIR received from Legacy, which came to the table early on in an effort to resolve its liabilities on this project rather than spend years incurring legal fees to dispute the public works coverage determination and deny the affected workers prevailing wages," stated John Rea, acting director of DIR, which oversees DLSE. "This settlement also represents a commendable, cooperative effort among the various interested parties - government, labor organizations, contractors and developers - who have an interest in a successful economic environment in California."

Under California law, employees who work on publicly financed construction projects are entitled to the payment of prevailing wages established by DIR.

On November 14, 2000, Legacy entered into an agreement with the Concord Redevelopment Agency to construct two, four-story buildings in downtown Concord for residential use. The agency agreed to provide financial assistance for off-site construction improvements, land acquisition and relocation expenses. During the course of construction, DIR was asked to determine the public works status of the project under Labor Code section 1720. The director determined that the project was a public work on the principal basis that the financial assistance from the agency funded the construction.

Legacy challenged the director's determination by filing a lawsuit against DIR in Contra Costa Superior Court. At the same time DLSE filed a civil wage and penalty assessments against the contractors. Various construction unions filed civil actions for prevailing wages under Business and Professions Code section 17200. This settlement resolves all pending actions.

"Prevailing wages must be paid on all public work projects in order to create a level playing field among contractors who bid on them," added Rea.

For more information on prevailing wage visit DIR Web site at: