State fines NGC Construction more than $7 million for failing to pay 724 workers for rest breaks, travel time
VISALIA – A Visalia drywall company fined millions of dollars for underpaying employees says it has fully cooperated with state regulators since it became aware of the issue.
“Despite the public release of an investigation and citation by the California Department of Industrial Relations, NGC Construction has been diligent in its pursuit to comply with all California labor standards,” NGC Construction wrote in a released statement earlier this month.
Late last month, the California Labor Commissioner’s Office cited Visalia-based NGC Construction more than $7 million for violations affecting 724 workers. An investigation by the California Department of Industrial Relations found that NGC paid workers a fixed amount per project known as piece-rate. The workers, who put up drywall, provided painting services and stucco application, were not paid for nonproductive time, resulting in workers earning less than minimum wage and less than the contract wages promised by the employer. Some of the company’s truck drivers were also not paid overtime.
“The law is clear: Workers earning piece rate must be paid for their rest periods and other nonproductive time while under the control of the employer,” Labor Commissioner Lilia García-Brower said. “The law ensures workers can take their required rest breaks and are paid for travel time from one worksite to another.”
In its statement, NGC said piece-rate payment structures are common in the construction industry and once the company was made aware of the unpaid rest and travel periods, the company immediately initiated an internal audit of its processes.
“Since the initiation of this internal audit, NGC Construction officials have cooperated with regulators at the California Department of Industrial Relations to resolve any and all potential issues,” NGC Construction stated.
An audit of the company’s payroll from July 22, 2016 to July 22, 2019 confirmed the findings that employees were not paid for all of their work.
The citations issued total $4,858,072 payable to workers in unpaid wages, damages and premiums. The Labor Commissioner also cited company and CEO Julio C. Mendoza for a total of $2,351,800, which included violations for failing to pay minimum wages, overtime pay, meal period premiums and failure to issue proper itemized wage statements and associated civil penalties.
When workers are paid less than minimum wage, they are entitled to liquidated damages that equal the amount of underpaid minimum wages plus interest. Enforcement investigations typically include a payroll audit of the previous three years to determine minimum wage, overtime and other labor law violations, and to calculate payments owed and penalties due. Civil penalties collected are transferred to the state’s general fund as required by law.
“Our vision is to create a better life for as many people as possible, including members of our team,” NGC owner Julio Mendoza said. “All employees will be compensated appropriately in a timely fashion, and with interest. This is a family business and our employees are part of our extended family. We are and have been working closely with the California Department of Industrial Relations to resolve any outstanding issues.”
In 2016, the year NGC Construction was established, Assembly Bill 1513 updated piece-rate compensation requirements requiring employers to compensate piece-rate workers for mandated rest and recovery periods and other work time that does not generate piece-rate earnings, including related pay stub requirements.
NGC Construction is owned and operated by Julio and his wife Veronica who have four children. Mendoza came from a small town in Mexico with very humble beginnings. NGC Construction was start-up company in 2016 and has experienced rapid growth since its inception. Since its founding, NGC Construction has focused on a simple vision: that building quality homes and other assets are the cornerstone to building strong communities.
“Since its earliest days, NGC Construction has adopted the core values of being an employee first-company focused on giving back to the community, investing in families, capturing opportunities, and giving respect,” the company said in the statement. “These values have allowed NGC Construction to stand apart and set a higher bar for the industry and our community.”
This is also not the first time Mendoza has had legal issues. In 2016, Tri-Valley Plastering and NGC Construction filed countersuits against each other in Fresno County Superior Court. Tri-Valley claimed Mendoza embezzled money and stole scaffolding and materials from them. They accused Mendoza of buying material while an employee at Tri-Valley, housing it at a location in Visalia, and then selling the company back its own material at a profit. Mendoza was also accused or creating fake invoices and issuing checks for those invoices and then cashing the checks while he was an employee.
NGC claimed the scaffolding was owned by a third-party company that gifted it to NGC owner Mendoza when the former owner of the company closed it down and went to work for NGC. Mendoza also claimed Tri-Valley made baseless accusations about him stealing the materials and customers and that they harassed him at his place of business, causing him to lose the materials and contracts with other companies. The case was dismissed and settled out of court in May 2018.
Earlier this year, NGC was sued in Fresno County Superior Court by a man claiming one of the company’s work trucks caused an accident in August 2019 allegedly injuring the driver of a 2001 Dodge Caravan.
NGC received a $2 million Paycheck Protection Program loan in May 2020 claiming all of the money went for payroll expenses.