Wage Theft and Payroll Fraud on HISD Construction Sites – Next Steps

Last week we told you about Marvin Mundo and Marciano Cruz, two construction workers who are owed over $11,000 in unpaid wages by a subcontracting company which did renovation work on schools in the Houston Independent School District (HISD) last year.

HISD Taking Steps Towards Improving Standards in Construction

After affected workers and concerned parents spoke at January and February public Board meetings, HISD trustees have started talking about wage theft and payroll fraud.  The HISD Construction and Facility Services Department and HISD Business Assistance Department have convened stakeholders to begin working on restoring confidence and raising standards and accountability in the bidding and construction process.

Specifically, HISD expressed intent to make improvements in the following areas:

• Reporting mechanisms: Create a hotline for employees and contractors to call for assistance and to report issues on the job
• Dispute resolution: HISD plans to release a request for proposals to establish a third-party ombudsman approach to construction and building disputes
• Accountability for Subcontractors: General Contractors will be limited to a short list of approved reasons for switching out subs after the bid has been approved, and HISD will not accept bids containing “pass-through” expenses – project dollars paid to companies who do not actually do any of the work on the project.

Systemic Problem, Requiring a Systemic Solution

Despite the steps that HISD is taking towards developing and implementing an improved bidding process, many individuals, including construction company owners, workers and parents, are asking for more comprehensive solutions and swifter action.  They would like to see HISD re-evaluate its bidding process, and create a clear and transparent process that asks contractors how they intend to comply with the law at the price they are presenting.

Mundo and Cruz, in concert with a coalition called “Our Communities, Our Schools” of non-profit community organizations, are asking HISD to speak out against the crime of wage theft and help to create a process to weed it out from the HISD bidding process.  With lead organizations which include the Houston Interfaith Worker Justice Center, the Texas Organizing Project, and Good Jobs Great Houston, the coalition has formed a vision around the following values which HISD could use to address the problem:

• Opportunity – HISD should award bids to responsible contractors who hire from local communities, pay fair wages, give HISD graduates first shot at jobs, train their employees and offer a pathway to career advancement.  Conversely, unscrupulous companies who steal from workers, whose track record shows they have not and likely will not comply with set wage rates should be penalized and/or banned from getting contracts. HISD should have a mechanism to monitor wage compliance on an ongoing basis to ensure wage theft is not occurring.
• Safety – HISD should require that school construction companies regularly train their workers on safety protocol.  Upon making a bid, companies will need to demonstrate their capacity to keep young students and school faculty away from potential hazards.
• Security – The HISD bond oversight office should check certified payroll records to monitor who is on our campus jobsites, to verify whether workers are being paid hourly, to ensure that they are trained and meet the necessary certification in their craft, and to ensure that they have cleared a background check.
• Ethics – HISD should implement a ban on trustees having direct communication between current and potential vendors and contractors, and impose a limit on donations from vendors and contractors to existing trustees and staff, so that the public can be assured that companies are awarded contracts on their qualifications and on not their campaign contributions.

Leaders in the construction industry have developed a campaign called the Construction Career Collaborative (C³), whose vision stems from an effort to revitalize the construction industry.  C³ parallels many of the same points listed above regarding hourly wage, industry training, and occupational safety and health training.  An invitation to sign on to C³ has been extended to HISD, and may become part of the solution for the issues HISD is addressing.

Mundo and Cruz still Waiting on Payment

Regarding the specific case of wage theft and misclassification at Jane Long Middle and Sharpstown High, Cruz and Mundo have not been paid as of this writing.  HISD has not officially stated that they will not do business with Lawman Construction, but it seemed to be implied at the board meetings.  It remains to be seen what systems will be put in place to prevent and address wage theft and payroll fraud in future HISD construction and renovation projects.