09/04/2013 // Keller Grover LLP // Eric Grover // (press release)
Complaints of back wages and other labor law violations have landed the owner of a Southern California construction company in jail, after an investigation by the state labor commissioner’s office alleged that he embezzled over $350,000 in employee wages, reports San Francisco wage and hour lawyer Eric Grover.
According to the California Labor Commission’s press release on July 26, Reza Mohammedi, the owner of Southland Construction in Irvine, was sentenced to two years in prison by Orange County Superior Court Jude R. Fitzgerald after he pleaded guilty to embezzlement and filing false tax returns.
Mohammedi pleaded guilty to 15 felony counts of failing to file a return with the intent to evade tax, 15 felony counts of willful failure to pay tax, seven felony counts of taking and receiving a portion of a worker’s wage on public work, six felony counts of recording false and forged instruments, and three felony counts of filing false tax returns. In addition, he admitted to the sentencing enhancement allegations for loss exceeding $100,000 and property damage over $200,000 and a prior strike conviction for criminal threats in 1999, according to the Labor Commissioner’s office.
“This case sends a clear message to those scofflaws who steal wages from workers, cheat honest contractors, and violate the public trust, that we will not only pursue civil remedies against you but seek criminal prosecution as well,” stated State Labor Commissioner Julie A. Su in the press release. “Wage theft is a crime and it will be prosecuted as such in the State of California. In addition, this case should serve as a deterrent to contractors who think they can get away with doctoring certified payroll records to hide the truth.”
The Labor Commissioner’s office launched an investigation in December 2010, when they received several complaints from the Center for Contract Compliance, which had collected the complaints from Southland’s workers. Twenty-five construction workers maintained that Southland did not properly compensate them by failing to pay prevailing and overtime wages at “The Tracks at Brea” project, which was commissioned by the City of Brea.
Following an investigation, Southland was assessed $121,163 in unpaid wages and $128,300 in penalties on January 10, 2012.
Two days later, the Orange County District Attorneys office received the Labor Commissioner’s findings and proceeded with their prosecution of Mohammedi. The DLSE and Orange County District Attorney’s investigations showed that Mohammdi had instructed his workers about what they should say if they were approached by an investigator regarding their wages, as well as falsifying payroll records.
It was determined that instead of paying workers the appropriate wage of $42 to $53 per hour; Mohammedi compensated his workers $120 to $150 per day with no overtime wages. Mohammedi also required his workers to rebate a portion of their paycheck to him, or pay another employee’s wages. In all, Mohammedi embezzled over $396,000.
In addition, Southland was also found guilty of failing to compensate five workers through employer payment contributions. The Labor Commissioner’s office, who jointly investigated Southland with the Orange County District Attorney’s, issued an additional Civil Wage and Penalty Assessment in the amount of $96,652 unpaid wages and $15,450 in penalties on September 11, 2012.
“Employers, particularly in the construction industry where many workers will work for cash and know there are many others who want their position, need to understand that there are laws to protect workers and that the laws have teeth to ensure they are properly compensated, says San Francisco wage and hour lawyer Eric Grover. “It’s important to not just assume that your employer is following the law, knowing the labor laws and being vigilant are the best ways to protect yourself against wage theft.”
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