Adam Crisp was done. Finished. He’d spliced cables for Harris Electric for more than four years. Here he was, in late 2011, still making between $20 and $25 an hour, still occasionally taking his eight-year-old daughter out for a dinner of free samples at the Costco in Tracy, Calif. He’d known for a while that he wasn’t making as much as he should, but at the height of the Great Recession he just felt lucky to have work. He’d kept his head down and his mouth shut. But now, finally, he was ready to leave.
Sam Kharufeh is an organizer with IBEW Local 595, which serves three counties east of the San Francisco Bay area. So when Crisp called and said he was interested in joining the union, Kharufeh told him to come on in. Construction was booming again, and the union could always use more capable electricians. Crisp would need to take a written exam and complete a hands-on test before officially becoming a member, but, for the time being, all he needed to bring was enough paystubs to prove that he had 8,000 hours of electrical work under his belt.
The pair met in 595’s office in Stockton, Calif., less than 30 minutes north of Tracy on I-5. They started by discussing Crisp’s experience in the trade, which dated back to 2006, when he’d landed a job doing residential work for a small contractor in Livermore. He had no formal training at the time, but he’d learned on the job. Then, a year later, on the recommendation of a friend, he’d moved on to Harris Electric, a slightly larger shop closer to the bay. And he’d been there ever since.
As Crisp went over his resume, Kharufeh leafed through his paystubs and grew increasingly confused. Much of the wiring Crisp had done for the past four years took place on public projects. There was an indoor firing range for the Fremont Police Department. There were several jobs at the Santa Rita Jail. There was an ongoing maintenance contract with the Port of Oakland. Because they were publicly bid jobs, in each case, Harris Electric’s inside wiremen were required by law to earn the prevailing wage set by the state of California’s Department of Industrial Relations, which, at the time, was just north of $40 an hour. (And that doesn’t even include fringe benefits like health care and pension, which could add another $30 to the total hourly compensation.) Crisp had only been pulling down half that. In fact, most of the time he’d made the prevailing wage for a general laborer.
But the strangest part — and what really got Kharufeh’s dander up — was the fact that Crisp was here asking to join the union in the first place. See Harris Electric, founded in 1989 by the now 60-year-old Calvin Harris, had been a union shop since becoming an IBEW 595 signatory contractor in June 1997 — which meant Crisp should have already been a member. And if he wasn’t, it was safe to assume that at least some of the other electricians on Harris’ payroll weren’t either. So not only was Harris underpaying his employees, but he was also in direct violation of the union’s collective bargaining agreement, which required him to pull electricians from the hall.
Kharufeh’s focus shifted from the papers spread out on his desk to Crisp and then back to his desk again. His eyes narrowed and his blood pressure rose as his confusion gave way to anger. Then he asked Crisp the only question that came to mind: “Adam, what the hell is going on at Harris Electric?”
A costly issue
Wage theft is an all-too-common offense in the construction trades, and the electrical industry is far from immune. In the past year, nearly half a dozen contractors have either been charged with or convicted of paying employees less than the prevailing wage on public projects (see In the News). In April, Honolulu-based electrical contractor Lighting Services was ordered to return more than $1.2 million in back wages to its employees after investigators found that it had shortchanged 38 electricians and technicians on federal work. In January, the U.S Department of Labor charged LRE Electrical Contractors, of Little Rock, Ark., with underpaying 61 employees to the tune of nearly $350,000. And last September, the owners of New York-based R3 Electrical, Inc. pleaded guilty to falsifying payroll records and shorting its workers more than a quarter-million dollars on two federal projects.
Most of the violators were nonunion shops. (Representatives from the national office of the Independent Electrical Contractors did not respond to multiple requests for comment on this story.) But the IBEW has seen its share of wage theft as well. And the example most frequently cited by California contractors is the case of Monica Ung and NBC General Contractors. In 2009, the Alameda County district attorney charged Ung with failing to pay more than 40 employees prevailing wages and legally required benefits like overtime, health care, and sick leave for almost a decade. Ung pled guilty to a handful of labor law felonies two years later and received a suspended sentence of four years in state prison and was ordered to pay her employees $350,000 in restitution. At the time of her arrest, though, investigators estimated that she’d defrauded workers — most of whom were Chinese and spoke little to no English — out of millions.
“The underground economy and workers not being paid according to the statutes — those are a big concern for us,” says Victor Uno, an international representative for IBEW’s 9th District in San Francisco. “Because when workers aren’t paid the proper wage, that means there’s not only less money going into their family income, but it also means that less money is circulating within the communities where they live.”
Rooting out wage theft is literally a full-time job. Through a joint partnership, IBEW and NECA employ dozens of people across the country whose sole responsibility is visiting state and federal construction sites, chatting with electrical workers there to find out how much they make and what their job classification is, and educating them on prevailing wage laws. If everything’s on the up and up, they move on to the next site. But if anything seems amiss, those NECA reps will gather what evidence they can — like, say, a paystub volunteered by an electrician — and turn it over to the local department of labor, which will then decide whether to investigate. “It’s hard to put your finger on it, but it’s happening,” says Geary Higgins, vice president of labor relations for NECA. “And it does affect contractors’ competitiveness, so if you’re going to have rules and laws, they should be policed.”
Don Campbell, who today manages the Southern Nevada Chapter of NECA but was in charge of NECA’s Northern California chapter in 2011 when the alleged improprieties at Harris Electric caught Sam Kharufeh’s attention, puts a much finer point on the issue. “There is a massive amount of abuse,” he says. “I can’t tell you if we find 5%, 10%, 20%, or 90%. But what I do know is that there are a lot of contractors out there who will cheat their workers. There are all kinds of reasons they do it. They can rationalize it all they want, but it’s still illegal.”
Crooked books
As soon as Kharufeh started asking questions and laying out the severity of the situation, Adam Crisp got nervous. The only reason he came to the union in the first place was that he wanted to make what he considered a fair wage. Now not only was he being asked to blow the whistle on his former employer, but he was also coming to the realization that he’d unwittingly taken away jobs from the union members he wanted to work alongside. “Imagine high school,” he says now, in an attempt to explain the dynamic within the union. “You had seven or eight different classes throughout the day, right? Think about each one of those classes being an outside job. So you’re going to go from job to job to job, and sometimes you might see the same guys, and sometimes you won’t. But everybody’s all still cliqued up. So if I joined the union, it was going to be very important for me to just lay low and cable splice and do whatever I had to do.”
Kharufeh wasn’t nearly so conflicted. Almost immediately after the meeting he, along with Local 595’s counsel, began contacting the agencies that had awarded Harris Electric the public jobs to request copies of the contractor’s certified payroll records. And Kharufeh went to the Alameda County district attorney’s office and spoke with Deputy DA Jill Nerone. If what Crisp’s statements indicated were true, Kharufeh wanted a full investigation of Harris’ operation — and he wanted Harris to pay.
It was those certified payroll records, or CPRs, that provided the Alameda County DA’s its biggest break in the case. CPRs must be signed under penalty of perjury by the contractor’s owner or a bookkeeper, and incorrectly reporting any information — including the hours and days worked, the employees who worked, or the amount that the employees are paid — is a felony. For two years, Candace Kochendorfer had been signing those reports, and so it was on her that investigator Tom Haselton focused. Rather than prosecute, though, the DA offered Kochendorfer immunity in exchange for what she knew about Harris’ creative accounting.
What she revealed was shocking, even in light of what Kharufeh already knew. Harris Electric employed between 10 and 12 electricians at any given time. Yet, despite California law, which as of Jan. 1, 2007, requires all electrical workers to be certified through the state, only three of Harris’s employees had that certification. While Harris paid those men the full prevailing wage for electricians on public projects, but he instructed Kochendorfer to classify others (like Crisp) as laborers, allowing him to pay them the much lower wage. (After completing a four-year, nonunion apprenticeship program, Crisp received his certification in July 2011.)
In most cases, Harris would review the reports personally before having Kochendorfer sign them. Other times — as when Harris was on the lavish vacations that Crisp says he would often brag about to the crew — he would discuss the documents with his office staff over the phone. Kochendorfer told the DA’s investigator she knew what she was doing was wrong and that she’d tried to refuse to sign the CPRs but was forced to nonetheless.
So on March 22, 2012, the Alameda County Sheriff’s Office — with which Harris had contracted to wire the Santa Rita Jail — executed a search warrant on the Harris Electric offices. Investigators walked away with vanloads of evidence, including computer terminals, dozens of banker’s boxes, and the shotgun Harris kept under his desk.
Coming forward
While NECA and IBEW have their task force to investigate wage theft, the sheer number of job sites active around the country at any given time makes it virtually impossible to keep tabs on every contractor who might hope to cheat the system. So, says Victor Uno of the IBEW’s 9th District, the union relies in large part on the workers themselves to come forward if they suspect they’re being taken advantage of. “And that requires the workers to be made aware of what the law is,” he says. “Public works distributes information to make sure that workers are made aware of their rights and what the laws are.”
When in doubt, he points out an electrician’s best recourse may be to check with the local department of labor for an updated list of prevailing wage rates. In other words, peace of mind is just a Google search away.
Suggesting that workers come forward and expecting them to actually do it are two completely different things, however — a reality that both Uno and Kharufeh acknowledge. And Adam Crisp’s situation was unique. Because while, as Kharufeh says, “no one wants to be a snitch,” he wasn’t just ratting out his boss. He was a nonunion electrician admitting to taking work that, at least according to the collective bargaining agreement, should have gone to workers in the hall. Assuming the employees are acting in good faith in coming forward, though, Uno insists that the union will do what it can to ensure a smooth transition into the organized labor pool. “We want to encourage people to be transparent and truthful,” he says. “And honestly, most workers don’t even know what the union really does or what a CBA is. So all we can do is just try to be honest with them and offer whatever help we can.”
“It’s scary,” Kharufeh says. “But this is what it takes. It takes workers brave enough to speak up and demand justice.”
Paying the piper
Things just kept getting worse for Calvin Harris. Because just as the DA’s investigation was ramping up, NECA and IBEW were moving forward with a grievance against Harris for using nonunion electricians despite being a 595 signatory. Their argument was even more severe than it might seem at first glance, though.
Not only were they claiming that all work conducted by Crisp and one other employee who came forward, Jason Less — not to mention their resultant wages — should have gone to electricians in the hall, but they also argued that Harris had shorted the union hundreds of thousands of dollars for its health care and pension funds. For the years in question, Crisp had worked 7,700 straight time hours and 380 overtime hours — for a total of more than $560,000 in potential wages and benefits. Lee had worked 8,300 straight time hours and 560 overtime hours — for $620,000 in potential wages and benefits. (Of course, in reality, the pair didn’t even take home half that much.) Harris, the union claimed, owed $1.2 million, although the two sides would later agree — grudgingly — on a figure just north of $300,000.
Meanwhile, the Alameda County DA’s office continued to put together its case against Harris, a process that took nearly a year. But once it was finished with its investigation, it came down hard. In March 2013, Harris was charged with more than 50 counts of wage fraud and falsifying payroll documents. Bail was set at $250,000. And although the DA had years’ worth of payroll documents to work from, it chose to focus on just four jobs, during which it determined Harris had underpaid employees by almost $400,000.
The case never made it to trial, though. On Feb. 14, 2015 — roughly eight months after attempting to circumvent a court order preventing him from engaging in electrical work by obtaining a license for a new firm, Montrose Electric — Calvin Harris pled no contest to eight counts of the indictment. He was sentenced to just 60 days in county jail and 200 hours of community service and ordered to pay $359,000 in restitution to Crisp, Lee, and a handful of other employees. In addition, he would never again be allowed to work as a contractor. According to those in the court when Harris’ plea deal was read in Alameda County Superior Court, even the judge noted that given the seriousness of the indictment, Harris had received a remarkably light sentence.
Kharufeh is torn on whether Harris got the punishment he deserved. He agrees with the judge that 60 days is a light sentence, but he’s seen enough white collar criminals go free that he’ll take what he can get. “I don’t know that I was completely satisfied,” he says. “But his inability to contract in the future is the important part. If he’s unable to contract or perform on public works project, I’m pretty satisfied with that.”
Don Campbell of NECA thinks 60 days in jail is more than sufficient and points out Harris put Adam Crisp and other employees through an apprenticeship program that improved their skills as electricians. “But in the process, he cheated,” Campbell says. “So this sent a message to other contractors that if you cheat — even as a union contractor — you’re going to find yourself in trouble and go to jail.”
Crisp is much more difficult to read. He says that when he went to the IBEW back in 2011 he had no intention of turning Harris in or putting him out of business. (Although he repeatedly refers to his former boss in terms that can’t be printed here.) Instead, he talks more about how his life has changed in the last three-and-a-half years. Within days of joining 595 in March 2012, Crisp had a new job working at a power plant for Collins Electric. Even better, he’d gone from making $20 an hour to nearly $50. Today, he works for the federal government, making well over $100,000 a year. The days of eating samples at Costco are far behind him now.
Predictably unpredictable
And yet Calvin Harris still isn’t done. This May, he fired his counsel and petitioned the court to have his plea thrown out, claiming he’d been given bad legal advice. To those involved in the case, Harris’ abrupt course correction was yet another example of his erratic behavior. Says one source — who fears retribution, pointing to the fact that authorities confiscated dozens of guns when they arrested Harris — “He’s the kind of guy who does things wrong but has no conscience, you know? Like a sociopath. You never know what he’s going to do.”
As of press time, the judge was expected to rule in late July on whether to allow Harris’ case to go trial. Even if the request is denied, Harris will be out of jail in two months. And those who helped put him away may always be looking over their shoulder. “I’ll be honest with you,” says the source, “I always look under my car before I get into it.”
Halverson is a contributing writer based in Seattle. He can be reached at [email protected].
SIDEBAR: In the News
EC&M has reported on several stories recently that relate to wage theft issues and electrical contracting firms. Read the news reports exclusively at ecmweb.com.
Contractor Ordered to Pay $125,000 for Violating Wage Laws
A New Bedford, Mass.-based solar energy company was ordered to pay more than $125,000 in restitution and penalties for violating the state’s prevailing wage and hindrance laws. The attorney general’s office ordered Cavallo-Cavallo, Inc., doing business as Beaumont Solar Co., and owner Phillip V. Cavallo to pay nearly $83,000 in restitution and $42,500 in penalties, including a $10,000 penalty for hindrance of the AG’s investigation.
Honolulu Electrical Contractor to Pay Workers $1.2M in Back Wages
Lighting Services, Inc., was ordered to pay 38 electricians and technicians more than $1.2 million in back wages and was barred from doing work for the federal government for three years after investigators from the U.S. Department of Labor’s Wage and Hour Division (WHD) determined that the company did not pay required prevailing wages to workers at Marine Corps Base Hawaii in Kaneohe Bay. The division also found the employer submitted falsified payrolls and told workers to provide false information to investigators.
Labor Department Sues Arkansas Electrical Contractor for Failing to Pay Workers Properly
The U.S. Department of Labor filed a lawsuit with the Office of Administrative Law Judges against LRE Royal Electrical Contractors, Inc. and its owner, George E. Smith, to recover $345,077 in back wages for 61 electrical workers. The action also seeks to prevent the company and Smith from obtaining federal contracts for three years. The filing alleges Smith and his company, doing business as both LRE Electrical Contractors and LRE Electrical, violated the Davis-Bacon and Contract Work Hours and Safety Standards Acts when they paid electrical workers less than the applicable prevailing wage rates for work performed as part of four government contracts.
Electrical Contractors Stiffed Workers Out of $273,000
Two owners of R3 Electrical Inc. pleaded guilty of underpaying workers by more than $250,000 on two New York city projects. Ronald Bartiromo and Raymond D’Auria stiffed electricians who worked on projects for CUNY and NYCHA out of wages that are legally required. While working on renovation projects, Bartiromo, with the help of project manager D’Auria, paid workers an hourly wage a fraction of what they were required by law. To avoid getting caught, Bartiromo allegedly filed false payroll reports that showed he paid the workers the proper wages. Under their plea deal, Bartiromo and R3 Electrical agreed to pay back $273,943.66 in restitution to the underpaid workers, and the company cannot work on public projects for five years.
