Contractor Pays Employees After Wage Theft Uncovered at Luxury Apartments In Oregon

Eugene, OR- (WorkersCompensaiton.com) An investigation by the U.S. Department of Labor has led to a settlement by the general contractor of Essex Construction on charges of wage theft. The company paid $88,000 to settle wage for five employees who had worked on a project from March to December, 2019, and deducted the amount from final payments that were owed to ODP Systems.

ODP, a nonunion plaster subcontractor based in Sherwood Oregon and named after its owner Oscar D. Palacios, won the job in Eugene after underbidding at least 20 percent on the $1 million-plus subcontract, according to a spokesperson for Western Partitions Inc., another bidder on the project.

The investigation by OSHA stemmed from a complaint by an OPD employee who had been working on the project and spoke with Union representatives from the Operative Plasterers and Cement Masons International Association (OPCMIA).

In March of 2019, ODP instructed a crew of 9 to 12 employees to apply exterior stucco and interior plaster, in addition to installing weather-proofing foam around windows and doors at the 100-unit luxury apartment building, 35 Club Apartments in Eugene, OR. The worker who came forward spoke only Spanish, so the union brought in José Avalos, an organizer for a sister union Local. He talked to the worker and two other employees about the work culture at OPD. 

Skipped rest breaks, employees not being paid for overtime work, illegal charges to workers for housing, and a breach of and violation of the requirement to pay the prevailing wage were the allegations from the employees. Avalos shared this information with a Seattle-based specialist employed by OPCMIA to examine cases of wage theft throughout the Pacific Northwest.

The employees on the 35 Club Apartment project were eligible to be paid the prevailing wage because the U.S. Department of Housing and Urban (HUD) had ensured a 40-year $26.5 million loan on the project. ODP employers who did the plastering were to be paid $32.22 an hour plus $16.58 an hour in fringe benefits, and since ODP did not provide these benefits, they were supposed to be paid a total of a$48.80 per hour.

Avalos said the workers from ODP also told him they never saw wages anywhere close to that amount.  One employee was being paid $34.45, and another, according to his pay, stub was only being paid $25.99. The men also noted that for previous projects for the company, they had only been paid $15 an hour.

Also, workers were never paid overtime and had to pay cash for hotel rooms where they would sleep five people to a room, and they were given only one 30-minute break during a 10-hour workday. Avalos assisted the employees with filling out complaint forms and turned over the information to an investigator at the Wage and Hour Division of the U.S. Department of Labor located in San Francisco.

The Wage and Hour Division and HUD also investigated Palacious, and alleged that OPS was misclassifying its employees, paying them at the rate for laborers instead of the wage for plasterers.

Palacios had been contacted about wage theft. He told the media that he did not document what his workers were doing every hour on the job. He did pay some of them at the laborers' rate, but since many of them were not qualified to do stucco work without supervision, they were not paid the same amount.

In a media release, Victor Roach, president of Western Partitions Inc, stated "Wage theft doesn't just harm workers, it also cheats the state of tax revenue and workers' comp contributions, and it's unfair to competitors who play by the rules.  When contractors get away with cheating, it's kind of a race to the bottom. If that happened everywhere, it would put us out of business."

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