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February 16, 2004
Construction Workers Recover 'Kicked Back' Wages

California Technology Systems, doing business as CTS Fire Protection, has paid $155,950 in back wages to 19 fire alarm and sprinkler installers after an investigation by the U.S. Department of Labor (DOL).

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The department alleges owners of CTS Fire Protection used a "kickback scheme" to avoid paying employees in California the correct prevailing wage rate required by the Davis-Bacon Act (DBA). After receiving their paychecks, employees returned a portion of their money to the foreman, according to department investigators. The department alleges "kicked back" money was used to pay the salaries of other employees not listed on the payroll. In addition, the investigators say employees signed blank time cards that were later filled out by the foreman or office staff in violation of the Fair Labor Standards Act (FLSA).

The firm was involved in seismic upgrades and interior renovations of buildings in the Los Angeles Old Bank District. The U.S. Department of Housing and Urban Development (HUD) financially assisted the renovation. The DBA requires that every federal contract in excess of $2000 contain a clause setting the minimum prevailing wages to be paid to various classes of workers employed under the contract. Under the FLSA, employees must receive one- and one-half times their regular rate of pay for work hours in excess of 40 hours in a workweek, and employers must keep accurate payroll records.

The department says all back wages have been paid and the firm has agreed to voluntary debarment from future government contract work for three years for violating the DBA.

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