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).
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
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.