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Contractors with Labor Violations Should be Excluded from Public Works Projects

Celina Flores

Earlier this year, the Northwest Labor Press reported that Oregon's Bureau of Labor and Industries (BOLI) recorded one of the biggest wage theft payouts in the department's history. The case concerned general contractor, R&H Construction and subcontractor, Portland Drywall Systems- and work done on a drug treatment center project in which the subcontractor fell into arrears. The company not only failed to comply with the requirement to pay workers the area prevailing wage and benefits, in some cases they had stopped payment altogether.

The outcome came after an extensive period of delays and back and forth between workers, labor activists, the employers, and BOLI, before the case was finally reconciled. Worker advocates celebrated the victory but believe the penalties must be more severe.

Portland Drywall Systems

In February, Oregon's deputy labor commissioner distributed long awaited checks totaling $192,979.47 to 26 workers. The case marked the largest wage theft payout in 10 months for the Bureau of Labor and Industries.

The investigation was initiated shortly after Portland Drywall Systems started construction on the De Paul Drug Treatment Center project. Funding for the project came from public works money which comes with certain stipulations. Contractors are required to pay workers the area prevailing wage and grant them benefits.

De Paul Drug Treatment Center

Victor Anguiano, an organizer for Painters District Council 5, tells the NW Labor Press that he was suspicious from the outset as he personally had history with Portland Drywall Systems owner, Abelardo "Abe" Chavez Aguilar. The two had known each other since childhood. “We would call him ‘verbo’ in Spanish” — a sweet talker, Anguiano recalled. “He would ask for money. To this day, I have friends that he owes money to.”

In the beginning, Anguiano tried to persuade Chavez Aguilar to work with the union, but Aguilar refused. Anguiano began hearing from workers that Chavez Aguilar was mistreating them and holding pay. For Anguiano, it came as no surprise that Portland Drywall Systems were violating various labor standards on the Treatment Center job, including not paying the prevailing wage and highly irregular and inconsistent payment practices. Workers walked off the job, called Anguiano to the site and he stepped in to help them file wage claims with BOLI. After months of back-and-forth, BOLI collected the unpaid wages and penalties from the general contractor, R&H Construction.

R & H Construction

Ultimately, general contractor, R&H construction, had to pay for the labor violations. Anguiano had repeatedly warned R&H that Portland Drywall was a problem only to be dismissed over and over. The foreman came out to question why the workers had walked off, “I was like, ‘well, you know, I warned you about this,’” Anguiano told the foreman. “‘These guys haven’t gotten paid.’”

After the walkout, Portland Drywall Systems abandoned the project and its owner left the State leaving R&H on the hook for paying the fines. The general contractor is now suing Chavez to recoup the loss. BDN spoke with Portland Labor representative, Doug Hicks, who has had run ins with R&H before. "They always do this. R&H hires shady subs to cut costs and most of the time they get away with it. Or the meager penalties don't outweigh the contract. The question is how do we hurt their bottom line enough to make them stop this as a business practice, It's as crooked as crooked gets. Hiring bad players is just as bad as being one of them."

Not Enough

In the Portland Drywall case, the fight isn't over as Anguiano demands further actions against Chavez. He wants to see Chavez criminally prosecuted. “This guy should be in jail,” Anguiano said. “This was 100% fraud" The lack of criminal prosecutions for prevailing wage violations remains a challenge, but the Multnomah County District Attorney's office is reviewing potential cases, including the Portland Drywall Systems incident.

Beyond criminal prosecution, labor watch dogs want bad players like Chavez, and sometimes those who hire them, barred from working on future public works projects. Many consider this should be the rule not an exception, that the precedent needs to be set, and is a long time coming. This is arguably the most glaring loophole in what many consider a broken system, how companies can still be considered for publicly funded projects when they have been found guilty of criminality. Without this kind of accountability, contractors will continue these business practices, knowing that the possibility of getting caught only temporarily hits them in the pocket with no other repercussions.

"Investigations need to be more efficient and much like convicted felons are denied certain privileges, contractors should be similarly accountable once they have broken the law; at the very least, they should be barred from being able to bid on public works projects." says Hicks.

The Way Forward

Public works projects shape our communities by improving infrastructure and increasing community wealth. As a rule, taxpayers' money should be utilized responsibly and ethically. "Contractors must be held to the highest labor standards," continued Hicks, "We have to consistently safeguard worker rights, promote fair competition, and weed out the bad players. How is that possible if they can keep throwing their hat into the ring even after getting busted for egregious behavior? Criminals can’t vote, why should they bid for millions of dollars in contracts?"

Allowing contractors with histories of underpayment, wage theft, and unsafe working conditions bidding on public works projects undermines the principles of fair labor practices and erodes the communities in which the workers ply their trades- and live. With no repercussions, responsible contractors who prioritize labor standards lose to those securing contracts that are willing to cut corners after the fact. By excluding violators, contractors can continually improve their practices without fear of being undercut by unscrupulous operators.

Fair Play

The Portland Drywall and R&H Construction case exemplifies what is wrong with a system that is not evolving fast enough. These are unprecedented times, with increased infrastructure projects on the horizon and federal money pouring in, contractors and their subs must be held accountable and given no second chances.

The decision to exclude contractors like R&H with histories of labor violations from bidding on public works projects is a matter of ethical responsibility and a huge step towards ensuring fair play across the board. "The Infrastructure and Jobs act is bringing so much work to Americans. And with it there are rules to implement. The old way of doing things can't continue." Hicks says. "These cases need to be resolved expeditiously and the repercussions for these criminal business practices must be enough of a deterrence that there is no way to operate other than by the rules- or you get left behind, plain and simple."

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