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Workers to Collect $8M in Wage Case

Wednesday, June 19, 2013

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Thousands of workers who built a Hilton hotel in San Diego, CA, will receive more than $8 million owed to them in a prevailing-wage case, according to California’s Labor Commission.

The hotel project had been deemed a public work, because of millions of dollars in credits that the private developer received from the San Diego Port District.

The workers—employed by national contractor Hensel Phelps Construction Company and 172 subcontractors during construction of the 1,190-room Hilton San Diego Bayfront Hotel—will receive the full prevailing wages they earned on the public works project, the Commission announced in a news release Monday (June 17).

Hilton San Diego Bayfront Hotel
Bernard Gagnon / Wikimedia Commons

The Hilton San Diego Bayfront Hotel was declared a "public work" as it was paid for out of public funds due to a $46.5 million rent credit provided by the San Diego Port District, which leased the land to the hotel owner.

Labor Commissioner Julie A. Su said she had collected $8,072,273 in unpaid prevailing wages on behalf of 2,051 workers who built the hotel from 2006 to 2008.

The workers performed every aspect of the construction project, from concrete pouring to steel erection, the Commission said.

Hotel Considered ‘Public Work’

The director had determined that the project was a “public work” as it was paid for out of public funds due to a $46.5 million rent credit provided by the San Diego Port District, which leased the land to the hotel owner.

The Labor Commissioner’s office has made a commitment to enforcing public-works laws so that workers and legitimate businesses can thrive,” said Christine Baker, director of the Department of Industrial Relations.

The San Diego Superior Court issued a writ of mandate on Feb. 3, 2010, reversing the director’s determination and finding the project was not a public work.

Hensel Phelps Construction
Hensel Phelps Construction

The national contractor's portfolio includes projects across the country, including a new terminal ticket hall at Dallas Love Field in Texas. The company says it will pay a third-party administrator to process payments to the workers who built the Hilton in San Diego.

However, the California Court of Appeal for the Fourth Appellate District, Division One, reversed the trial court and affirmed the director's decision on July 26, 2011, according to the Commission.

Wages, Reimbursement Procedures

Following the ruling, Hensel Phelps Construction and the Commission negotiated the amount of wages due to the workers, according to the announcement.

The contractor said it will pay a third-party administrator to process payments to the workers.

The Labor Commission also said Hensel Phelps Construction would pay an additional $400,000 to the Commission as reimbursement for investigative costs.

The company did not respond to a request for comment Monday afternoon.

Hensel Phelps Construction, headquartered in Greeley, CO, provides design/build services throughout the United States and operates eight regional district offices.


Tagged categories: Commercial Construction; Contractors; Enforcement; General contractors; Good Technical Practice; Hotels; Labor

Comment from Kevin Dayton, (6/19/2013, 9:24 PM)

This article is based on the press release from the California Department of Industrial Relations. It's factual, but this needs to be considered in the context of the absurd and ambiguous definition of "public works" in California Labor Code 1720. Really, should a "rent credit" for land transform a private hotel into the equivalent of a courthouse or other government building? Even the Port of San Diego asserted in 2004 - in response to an inquiry from the contractor Hensel Phelps - that the hotel was not a public works project. A San Diego Superior Court judge decided it was not a public works project, but unions appealed and won at the appellate court level. Ifyou're interested in this perspective, read it in my blog post Contractor Has to Shell Out $8 Million After Unions Win Argument That Hilton San Diego Bayfront Hotel Was a “Public Works” Project.

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