Wage and Hour Division (WHD)

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SAN FRANCISCO -- 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 owners of CTS Fire Protection used a kickback scheme to avoid paying employees the correct prevailing wage rate required by the Davis-Bacon Act (DBA), according to an investigation by the department's Wage and Hour Division. After receiving their paychecks, employees returned a portion of their money to the foreman. This "kicked back" money was used to pay the salaries of other employees not listed on the payroll. In addition, 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 Department of Labor is committed to vigorous enforcement of the law to ensure that all workers are paid the full wages and any overtime they are entitled to receive," said U.S. Secretary of Labor Elaine L. Chao. "The Labor Department has restored $155,950 in back wages to these Los Angeles wage earners. This Administration has set new records for protecting workers' pay, benefits and safety, and we will continue to pursue employers that engage in unfair practices."

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.

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.

The Wage and Hour Division (WHD) recovered more than $212 million in back wages in fiscal year (FY) 2003 -- a 21 percent increase over the record setting amount in FY 2002. Average days to resolve a complaint decreased in FY 2003 from 129 days to 108 days. WHD assessed employers nearly $10 million in civil money penalties in FY 2003.

For more information about the DBA and the FLSA, call the Los Angeles Wage and Hour office at (213) 894-6375 or the Department of Labor's toll-free helpline at 1-866-4USWAGE (1-866-487-9243). Information is also available on the Internet at www.wagehour.dol.gov.

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U.S. Department of Labor releases are accessible on the Internet at www.dol.gov. The information in this news release will be made available in alternate format (large print, Braille, audio tape or disc) from the COAST office upon request. Please specify which news release when placing your request at (202) 693-7828 or TTY (202) 693-7755. The Labor Department is committed to providing America’s employers and employees with easy access to understandable information on how to comply with its laws and regulations. For more information, please visit www.dol.gov/compliance.