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.”
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.
“This would be, if passed, just another obstacle,” said Jon Ball, a retired local construction executive. “Already there are so many obstacles in place for someone getting a project going.”
Ball, along with a group of developers and contractors, signed onto a Jan. 5 letter that criticized the ordinance and even raised the specter of a possible lawsuit if the City Council adopts the new rules. The letter also described the “Silvery Towers” incident as not reflective of the construction industry as a whole and one that resulted in punishment for those connected to it.
Since 2018, there have been 59 unpaid-wage judgments in Santa Clara County, with 23 of those located in San Jose amounting to over $1 million, according to state data.
The rule has enjoyed general support among councilmembers, though questions have been raised about the amount of outreach conducted to contractors and developers.
“The Silvery Towers issue really made it clear that there can be egregious wage theft and they can happen without anyone knowing and the city having a direct possibility of recourse,” said District 6 Councilmember Dev Davis. “It made us more aware that wage theft is something that can and does happen in our city — and what can we do to send a clear statement that we want workers to get paid for the work that they do.”
