LOS ANGELES (CN) - The City Attorney has attacked an underground system that employs more than 800,000 workers where "unscrupulous business enterprises" routinely violate labor and tax laws, in a Superior Court filing that names a developer of $12-million homes, Niemann Properties, as a principal defendant.
Niemann Properties cheated 100 day laborers by paying "far less than their lawful wages, if at all," to build the $12 million Holly Townhomes, the State of California claims in Superior Court.
Niemann's subcontractor, Otoniel Ferreira, worked them 9 to 12 hours a day six days a week, bounced their paychecks, shorted them or didn't pay them at all, then "eventually Niemann dispensed with Ferreira's services and engaged in such exploitation directly," the state says.
"Unscrupulous business enterprises that routinely violate labor, tax, licensing and other laws employ approximately 811,000 workers in Los Angeles County, primarily in low-wage industries, including construction," the state says in its complaint. "These predatory employers cost Los Angeles County $1.1 billion in unpaid payroll taxes and worker insurance benefits annually. Statewide, California loses an estimated $4 billion annually in income taxes alone due to these unlawful employment practices."
The state cites the 2002 paper, "Workers Without Rights: The Informal Economy in Los Angeles," by Pascale Joassart-Marcelli and Daniel Flaming, Economic Roundtable Briefing Paper, online at www.economicrt.org/publications.html#Labor_Market_Pub.
(The state's estimate of "811,000 workers in Los Angeles County" appears to be a typo, as it cites another study that estimates there are 117,600 day laborers in the United States, 22,000 of them in Los Angeles.)
The state claims Ferreira promised workers $10 to $28 an hour, but cheated them of some or all of their wages. He does business as Alpha Fence, Alpha Co. and Alpha Construction.
The City Attorney's Office demands fines, lost wages, and disgorgement of unjust profits.
Subscribe to Closing Arguments
Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.