DIR Assesses $110k Fine for Misclassification of Workers

Read the entire DIR Civil Wage Assessment against Solar Blue West, Inc. 6/20/16 here.

Affected contractor Solar Blue West, Inc. (Solar Blue) requested review of a Civil Wage and Penalty Assessment (Assessment) issued by the Division of Labor Standards Enforcement (DLSE) with respect to the work of improvement known as the Design, Installation and Commissioning of Solar/Photovoltaic Systems (Project) performed for the Culver City Unified School District (CCUSD) in the County of Los Angeles. The Assessment determined that $56,002.76 was due in unpaid prevailing wages and training funds and $54,700.00 was due as statutory penalties under Labor Code sections 1775 and 1813. 1 The Assessment also sought liquidated damages in the amount of $56,002.76.

The issues for decision are:

- Whether the Assessment correctly found that Solar Blue failed to pay the required prevailing wages for all straight time and overtime worked on the Project by its workers;

- Whether the Assessment correctly found that Solar Blue failed to contribute to the training fund for its workers on the Project;

- Whether DLSE abused its discretion in assessing penalties under section 1775 at the rate of $120.00 per violation;

- Whether Solar Blue failed to pay the required prevailing wage rate for overtime work and was therefore liable for penalty under section 1813.

Since Solar Blue failed to appear at the Hearing on the Merits, the Hearing Officer proceeded with the hearing in Solar Blue's absence under California Code of Regulations, title 8, section 17246, subdivision (a). 3 The Director finds that Solar Blue has failed to carry its burden of proving that the basis of the Assessment was incorrect. Based on the unrebutted evidence showing that Solar Blue failed to pay the required prevailing wages, the Director affirms the Assessment in its entirety, with the exception of the request for liquidated damages.

Facts

Failure to Appear: Solar Blue's Request for Review was filed on or about April 3, 2014. Solar Blue's mailing address on file is 7505 W. Sand Lake Road, Orlando, FL 32819. Solar Blue, through its corporate officer Jeffrey Cain, participated in two Prehearing Conferences, one on February 6, 2015, and the other on April 6, 2015. Solar Blue participated in selecting June 18, 2015, as the date for Hearing on the Merits and had personal notice of the hearing date. Moreover, Notice for the Hearing on the Merits was served on Solar Blue. On June 18, 2015, the Hearing Officer called Solar Blue's phone number on file, (407) 996-8999, but was only able to leave a message.

The Hearing Officer then proceeded to conduct the Hearing on the Merits pursuant to the Notice for the purpose of formulating a recommended decision as warranted by the evidence pursuant to California Code of Regulations, title 8, section 17246, subdivision (a). DLSE's evidentiary exhibits were admitted into evidence without objections and the matter was submitted on the evidentiary record based on the testimony of DLSE's Deputy Labor Commissioner, Kristina Abadjian (Abadjian).

Assessment: The facts stated below are based on the testimony of Abadjian, Exhibits I through 48 submitted by DLSE, including the Assessment, and other documents in the Hearing Officer's file.

DLSE submitted evidence showing that twenty-four (24) workers performed work for Solar Blue under the contract at various times between August 15, 2013, and October 20, 2013. The applicable prevailing wage determination in effect on the contract date between the CCUSD and the general contractor is lnside Wireman, pursuant to Determination LOS-2012-1.

Based on certified payroll records, pay stubs, employee questionnaires, and phone interviews with employees, the Assessment found that Solar Blue failed to pay the required prevailing wages to the affected workers identified in the audit summary by one or more of the following: (1) underpayment of prevailing wages through misclassification and for all overtime hours worked; and (2) failure to make contributions to the applicable training fund. The Assessment found a total of $56,002.76 in unpaid prevailing wages (including training fund contributions) and $54,700.00 in sections 1775 and 1813 statutory penalties ($120.00 per violation for 445 violations under section 1775 and $25.00 per violation for 52 violations under section 1813).

Deputy Labor Commissioner Abadjian testified as to the preparation of the Assessment and the supporting audit worksheets. She testified regarding her investigation and identified the applicable prevailing wage determination, the misclassification of the affected workers by Solar Blue, and the proper job classification for work performed by the affected workers. Abadjian further testified that the Assessment was properly served on Solar Blue on March 18, 2014. Solar Blue, which thereafter submitted a timely request for review on or about April 3, 2014. She also testified that DLSE provided Solar Blue with a reasonable opportunity to review DLSE's evidence.

Outcome

In this case, the record established the basis for the Assessment. DLSE presented evidence that the Assessment was properly served on Solar Blue and that DLSE provided Solar Blue with a reasonable opportunity to review the evidence to be used at the hearing. DLSE presented evidence that the affected workers performed work in the classification of Electrician-lnside Wiremen instead of Laborer, as misclassified by Solar Blue. DLSE presented evidence that Solar Blue did not contribute to the training fund for the affected workers in the proper job classification and failed to pay 13 workers for all overtime hours worked.

Accordingly, DLSE's evidence constitutes prima facie support for the Assessment. Solar Blue, in turn, presented no evidence to disprove the basis for, or accuracy of, the Assessment.

FINDINGS AND ORDER

1. Affected contractor Solar Blue West, Inc. filed a timely Request for Review from a Civil Wage and Penalty Assessment issued by the Division of Labor Standards Enforcement.

2. Solar Blue West, Inc. underpaid 24 employees on the Project in the aggregate amount of $54, 118.64.

3. Solar Blue West, Inc. failed to contribute to the applicable training fund in the aggregate amount of $1,884.12 for 24 employees on the Project.

4. Penalties under section 1775 are due in the amount of $53,400.00 for 445 violations at the rate of $120.00 per violation.

5. Penalties under section 1813 are due in the amount of $1,300.00 at the rate of $25.00 per calendar day for 52 violations.

The amounts found due in the Assessment affirmed and modified by this Decision are as follows:

Wages: $ 54,118.64
Training Fund Contributions: $ 1,884.12
Penalties under section 1775, subdivision (a): $ 53,400.00
Penalties under section 1813: $ 1,300.00
TOTAL $110,702.76

Interest shall accrue on unpaid wages in accordance with section 1741, subdivision (b).


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