By Matt Coker
By R. Scott Moxley
By Charles Lam
By Nick Schou
By Gustavo Arellano
By Gustavo Arellano
By Steve Lowery
By R. Scott Moxley
* * *
Los Angeles began investigating Prudential's contracts with Los Angeles World Airports last fall, after Peña filed her complaint. Through the contracts, the Ontario International Airport uniforms were cleaned at Prudential's Riverside facility. Prudential signed an agreement to abide by Los Angeles' living-wage ordinance; the company's bid on the contract would have factored in the additional costs to the city for those higher wages, says Mario Interiano, acting supervisor of enforcement for the city's Bureau of Contract Administration.
"One of our questions to Prudential [during the investigation] was: Were they able to identify or isolate employees who would be working on the city contract?" Interiano says, "They said, no, because the nature of the operation would make it difficult for them to isolate those employees and determine how much time they're spending on the contract."
After trolling through payroll documents, Interiano and his small staff determined that since there was no way for Prudential to show they were paying the living wage to their workers, they were still liable for those wages. After conducting a several-months'-long investigation, the city determined late last year that Prudential owed its Riverside employees tens of thousands of dollars in back wages, but did not have an exact amount at that time.
On Dec. 14, 2007, the Bureau of Contract Administration issued its first letter of demand, requesting the company determine how much it owed its workers in living wages for the five-year duration of the city contract and pay them immediately (within 10 days) or request a hearing or an extension. Prudential spokesman Martin says he has never seen the letter sent by Interiano to Prudential's vice president of finance, John Thompson.
When the company did not respond to Interiano's request for corrective action, the city began the tedious task of trying to determine the amount owed. When asked why the city had continued to renew contracts without ever verifying whether Prudential was complying with the ordinance, Interiano said the small staff assigned to manage city contracts could not afford to audit companies it held contracts with. "We've switched over to a complaint-based system," he says.
Interiano has determined that Prudential now owes its Riverside workers $509,105.25. On June 13, the city sent another demand letter, giving Prudential 10 days to pay the back wages. If the company fails to respond by June 26, says Interiano, the city will consider one or all of the following options: filing suit, fining Prudential $100 per employee for every day that person was not paid the correct amount, and/or barring Prudential from bidding on future city contracts for three years.
"Part of the reason we're asking them to pay the employees is it guarantees the city that the contractor doesn't pocket the money and that it goes to the rightful owners," says Interiano. Prudential, he says, has not yet responded to the city's demand letter.
Martin said he could not comment whether the company would pay the back wages. "We will respond in a timely manner," he says. "And we believe the dispute can be amicably resolved."
LA's demand for back wages is the third in less than a year. Oakland asked for a total of $124,000 late last year. San Diego sued Prudential last fall for violating its living-wage ordinance; the case is currently in litigation.
* * *
Prudential signed a two-year, $400,000 contract with Oakland in May 2005, agreeing to comply with the city's living-wage ordinance. Prudential's Milpitas plant in Northern California handled the city's soiled garments. The city independently investigated the complaint filed last July by the union and found that Prudential could not provide proof of how it had documented or segregated the work done specifically for Oakland's contract. Since there was no way to identify who had worked on the contract, city officials decided all employees needed to be compensated for time spent on the contract.
Oddly, when asked about the company's living-wage policy, spokesperson Martin told the Weekly, "When there's a side agreement, you have to segment that work. When you're not able to properly segment that work, it can get complicated when executing the contract. That's why Prudential would not enter into these types of contracts in the first place. . . . Prudential's charter is not to enter into living-wage contracts."
But Prudential did enter into these contracts, signing specific agreements that outlined the provisions for the three cities' living-wage rules, according to documents obtained by the Weekly.
Martin says employees were actually segregated at the Milpitas plant, but he could not explain specifically how or when. "Local operators handle how they segregate the laundry," he says. "I don't get that micro." Requests to speak with the plant manager were denied. The Weeklywas told questions for the plant manager would need to go through Martin. When pressed for responses from the plant manager, Martin said, "It's just not our policy to comment on further pending or past litigation."
Oakland says Prudential could not provide proof that it had indeed segregated employees in the past. "In November 2007, Prudential submitted documentation for the first time showing they were segregating employees," says Oakland deputy city attorney Doryanna Moreno. "Prudential documents indicate that the segregation effort started after the city notified Prudential of living-wage violations."