In a major win for the city’s labor faction, San Jose’s City Council on Tuesday unanimously approved a new ordinance that aims to prevent wage theft at construction sites, despite pushback from some in the industry.
An effort years in the making, contractors and developers who have unpaid wage judgments will no longer be able to move forward with a construction project, though buildings under 10,000 square-feet are exempt from the rule. Labor groups have been pushing the issue ever since the construction of Silvery Towers, a pair of downtown high-rises that were linked to human trafficking and slave labor in the late 2010s, and whose contractor is now in prison.
“Everybody could agree that we want workers to be paid fairly,” said Councilmember Dev Davis, who led efforts on the ordinance, in an interview on Wednesday. “We want unpaid judgments to be satisfied.”
Violators won’t be able to obtain a certificate of occupancy, which ensures a property is safe to live in and complies with local laws. Wage theft can include a variety of violations, from not allowing workers to take breaks to paying less than minimum wage. The ordinance allows violators to pay the wages in question, or appeal the issue to the city.
Several compromises were made on the ordinance over the last few weeks between the city’s labor and business blocs, negotiated by Councilmember Davis, including the removal of exemptions that would have allowed contractors and developers under union agreements to not be impacted by the rule.
“The passing of the ordinance is significant and important for workers in San Jose,” said Jean Cohen, who oversees the South Bay Labor Council, in an interview. “And it’s going to really elevate our city’s ability to ensure that people can live here and work here safely.”
According to city data, workers in Santa Clara County have lost $46 million from wage theft-related violations since 2001. Mountain View, Milpitas, and Sunnyvale have all passed their own versions of a wage theft ordinance. California’s labor commissioner oversees enforcement.
In recent weeks, the new rule has sparked consternation from some developers and contractors who claimed it would stifle an already difficult construction environment hindered by high interest rates and expensive materials costs. They also said many of the violators who have unpaid wage judgments fall under the 10,000 square-foot threshold. Industry leaders signed onto a Jan. 5 letter that said the basis for the ordinance — the Silvery Towers controversy — was a unique incident whose perpetrator faced consequences.
On Wednesday, construction executive Jim Salata, one of the letter’s signatories, called the new rule “totally unnecessary and a colossal waste of time.”
“The facts don’t warrant that this was on the table at all,” he said in an interview.
On Tuesday, city staff explained that the ordinance needed to have a narrow scope initially- citing the square footage exemption- but signaled it could eventually evolve to cover all projects regardless of size.
“The type of work we’re looking at below 10,000 square-feet could impact small businesses and residential modifications that would trigger a lot more permit breadth,” said Public Works Director Matt Loesch during Tuesday’s meeting. “”And if we’re going to develop the system to monitor it, we should built it at the 10,000 square-foot level, understand it, review it, see if it is effective — and if need be, modify it in the future.