Newport Beach Construction Contractor Pays $470K to End Wage Claim

The federal  Fair Labor Standards Act (FLSA) requires that most employees be paid at least the federal minimum wage for all hours worked and overtime pay at not less than time and one-half their regular rate of pay for all hours worked over 40 in a workweek. The federal minimum wage remains $7.25 per hour. California labor law, however, sets a statewide minimum hourly wage of $16.90 for 2026.

But wage theft in the California construction industry is a complicated issue. The need for vigorous enforcement of existing federal and state labor laws is part of the solution. The story is incomplete, however, without a cold, hard look at the needs of undocumented workers.

Thirteen months of payroll violations

Investigators found that 137 construction workers were denied proper pay between Nov. 1, 2024, and Nov. 30, 2025. Specifically, SCA General Contracting Inc and its operators:

• repeatedly missed payroll entirely;
• failed to pay workers minimum wage for hours worked;
• did not pay overtime premiums for hours worked over 40 in a workweek; and
• retaliated against at least one employee who complained about not getting paid.

The back wages and damages totaled roughly $3,418 per employee. In addition, the court ordered the company to reinstate the employee who was fired after raising pay concerns. Finally, the DOL assessed a civil penalty for willful violations – a finding that reflects repeated, ongoing payroll violations for more than a year.

Escalating enforcement

Across the US, workers and their communities are confronting historic levels of inequality, according to the Rutgers University School of Management and Labor Relations. Increased state and national enforcement is part of the response.

Nationally, the DOL recovered more back wages in 2025 than in any year since 2019. The state’s Bureau of Field Enforcement has cited roughly 2,100 employers and recovered more than $43.7 million in wages, penalties, and interest since 2022.

California state legislators have also moved to sharpen the consequences further. Assembly Bill 1002, signed by Governor Newsom in October 2025, gives the state Attorney General new authority under California Labor Law to seek the suspension or revocation of contractor licenses for wage theft violations. The state penalty goes well beyond penalties federal courts impose.

Widespread wage theft in the California construction industry

According to Jenn Round, of the School of Management and Labor Relations, “Wage theft persists in construction and in a number of other low-wage industries because work is often pushed through layers of subcontractors, where intense price competition and thin margins create strong incentives to cut corners on pay.”

Although larger firms often set the terms of projects, they are not the direct employers. This leaves smaller subcontractors responsible for payroll. Cash payments and poor recordkeeping can make violations of federal and state law very difficult to uncover. Furthermore, small subcontractors may misclassify workers at the bottom of these complicated contracting chains as independent contractors.

The companies at the top of the chain are not the ones directly employing the workers. They can often avoid liability, shifting it instead to the lower-tier subcontractors. The little fish get caught in the net; the big fish escape, and wage theft continues.

In the shadow of immigration enforcement

The elephant in the room is immigration enforcement. Misclassified employees often are denied access to critical benefits and protections under federal law, such as the minimum wage, overtime compensation, family and medical leave and safe workplaces. They may also lose out on state unemployment insurance and workers compensation coverage, forms of protection acutely important in dangerous and volatile construction work. Overall, workers misclassified as independent contractors have lower incomes and little economic security.

Employers offer the work that way to save on taxes and other costs. Workers accept it because that’s the way the work is offered, and cash has its advantages. Reliable statistics are hard to find, but some estimate that 5 percent of the US workforce, and 14 to 25 percent of construction workers, are undocumented. Undocumented workers generally have the same wage and hour rights as other workers, including the right to minimum wage and overtime pay. But they may be reluctant to seek legal help.