San Jose wage theft proposal considered after Silvery Towers scandal

A San Jose wage theft rule years in the making after a scandalous residential development was linked to human trafficking and slave labor in the late 2010s is being championed by local labor leaders as a way to ensure that construction workers aren’t cheated out of their earnings.

If passed, the ordinance would prevent developers and contractors from moving forward on San Jose construction projects if they have unresolved violations regarding unpaid wages. The rule will go before the City Council on Jan. 23.

“The construction industry is plagued with wage theft more than some other industries,” said David Bini, executive director of Santa Clara and San Benito counties’ Building and Construction Trades Council, which represents over 35,000 workers. “It’s almost expected it will happen to you.”

At center, David Bini, Santa Clara & San Benito Counties Building and Construction Trades Council Executive Director, speaks during a union construction workers protest in front of the Silvery Towers construction site in San Jose on Thursday, August 9, 2018. (LiPo Ching/Bay Area News Group)
At center, David Bini, Santa Clara & San Benito Counties Building and Construction Trades Council Executive Director, speaks during a union construction workers protest in front of the Silvery Towers construction site in San Jose on Thursday, August 9, 2018. (LiPo Ching/Bay Area News Group) 

Wage theft covers a variety of employer rule-breaking, including paying less than minimum wage or not allowing workers to take breaks, according to the state’s Department of Industrial Relations. Violations can be appealed or resolved by paying out the wages in question. The state’s labor commissioner oversees enforcement.

In Santa Clara County, over 12,000 construction workers have seen their paychecks cut short by $46 million since 2001, according to data cited by the city.

The issue was thrust into the public spotlight in 2017 with accusations of wage theft at Silvery Towers, a pair of downtown San Jose high-rises. The contractor was later sent to prison after overseeing forced labor conditions at the project site.

The ordinance would prohibit wage violators from receiving certificates of occupancy, which certify that properties are safe to live in and compliant with city laws. It won’t apply to developers and contractors who enter into an agreement with a union over the project site’s working conditions.

Exemptions are also available for companies offering prevailing wages under state law and those working on projects of under 10,000 square feet, with city staff claiming that the rule would be too onerous for companies working on small renovations or remodeling.

A number of South Bay cities already have passed similar ordinances since 2021, including Milpitas, Sunnyvale and Mountain View.

But the new rule is also facing fierce resistance from some developers and contractors who contend that it wouldn’t target the area’s most egregious violators of wage laws, could stifle development in an area that’s already expensive to build in, and is a power grab by labor forces.

Its critics contend that many of the unpaid-wage judgments come from smaller companies that would be exempt from the rule. But labor leaders say the ordinance is necessary to protect workers on large-scale projects.

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