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Workers Lost Millions to California's Worst Known Wage Thief. And He's Still in Business

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At their home in Anaheim, Maria Luisa (right) expressed little optimism in recuperating the wages owed to her husband, Saul Pedroza, by the firm RDV Construction. March 7, 2024. (Zaydee Sanchez for KQED)

California regulators have failed to compel the state’s worst cited wage theft offender to pay the millions of dollars his companies stole from workers, a KQED investigation found.

The California Labor Commissioner’s Office ordered Rafael Rivas’ RDV Construction Inc. and RVR General Construction Inc. to pay $16.2 million for defrauding more than 1,100 workers in Southern California. But the agency, which issued the citations for back wages and penalties in 2018 and 2019, had recovered just 2% as of last month, according to a department spokesman.

KQED reviewed hundreds of pages of state documents and court records, knocked on doors of properties linked to Rivas and interviewed workers the construction contractor cheated to piece together an accounting of the stunning labor violations — and how an understaffed agency was unsuccessful in collecting most of what Rivas and his companies owe.

California has some of the nation’s strongest employee protections on the books, including against wage theft. Yet, Rivas’ case signals that the state is not prioritizing restitution for workers when their earnings are withheld, according to workers’ rights advocates and employment attorneys.

“It’s outrageous. It’s infuriating,” said Benjamin Wood, a former organizer with the Pomona Economic Opportunity Center who has helped dozens of workers file wage complaints with regulators, including against RDV. “The state has so much power to enforce laws. But when it comes to massive wage theft, it seems like they’re powerless.”

The California Labor Commissioner’s Office ordered Rafael Rivas’ RDV Construction Inc. and RVR General Construction Inc. to pay $16.2 million for defrauding more than 1,100 workers in Southern California. ( Darren Tu/KQED)

From 2017 through 2023, the labor commissioner’s Bureau of Field Enforcement assessed $450.6 million in unpaid wages and penalties against thousands of employers statewide, including Rivas’ companies. The agency recovered as little as 16%, or $74.5 million, according to records it provided to KQED last month.

The database, however, may contain errors and omissions, according to a department statement. A state employee familiar with the bureau’s case management system said that’s because staff don’t consistently update it.

Beth Ross, an employment attorney, said the omissions point to a dysfunction at the Labor Commissioner’s Office, which has a critical role in protecting vulnerable workers from abuses and helping to level the playing field for law-abiding employers.

“If the agency is not capable of keeping the database updated, then what else is the agency not able to get to?” said Ross, an adjunct professor at UC Law San Francisco. “We know the agency has a very difficult time keeping up with the onslaught of complaints and tips it receives about wage theft and labor law abuse in the state.”

The job vacancy rate at the Labor Commissioner’s Office reached 42% last year, according to an analysis of staffing documents kept by the state Department of Finance. Dozens of wage theft investigators, attorneys and others at the agency implored state lawmakers in July to address a hemorrhaging of employees leaving for better-paid positions elsewhere.

The Labor Commissioner’s Office, also known as the Division of Labor Standards Enforcement, declined interview requests but said in a statement that collection efforts in Rivas’ case are ongoing.

“The Labor Commissioner’s Office will continue to explore all avenues towards restitution that are available to our agency,” said a department spokesperson in a March 14 email.

Rivas did not respond to requests for comment by email, phone and messages left in person with an employee at his office in Los Angeles County and on a note at his residential property in San Bernardino County.

Two family business associates named as co-defendants in one of the wage citations — his brother, Juan Rivas, and cousin, Nicolas Del Villar — also declined interview requests.

The state Attorney General’s Office, which can criminally prosecute wage theft cases, declined to answer whether it had taken any action against the employer.

“To protect its integrity, we’re unable to comment on, even to confirm or deny, a potential or ongoing investigation,” a spokesperson for the attorney general wrote in an email.

Spokespeople for district attorneys in San Bernardino and Orange counties said they had no records of cases against Rivas or his companies. The Los Angeles County District Attorney’s Office did not return requests for comment.

Victims struggled to pay rent, buy food

When Saul Pedroza is not working he finds solace gardening in his home in Anaheim. March 7, 2024. (Zaydee Sanchez for KQED)

Javier Gonzalez and Saul Pedroza installed steel rods and wooden frames for RDV Construction in 2016 at an apartment complex in Glendale, north of Los Angeles. The crewmates, both Mexican immigrants, said the company never paid them for about a month of full-time work.

Supervisors “started telling us that the paychecks were coming next week, and then next week,” Pedroza, 51, said in Spanish. “That’s how they strung us along.”

The carpenters were given paychecks that bounced due to insufficient funds. After they quit, Pedroza and Gonzalez said they went to the worksite and RDV’s offices to demand their earnings, and they both filed wage claims with the Labor Commissioner’s Office.

The agency determined RDV owes $11,000 to Gonzalez and $12,500 to Pedroza.

“I see it as a mockery of all the people they defrauded and of the government,” Gonzalez, 61, said. “It was a robbery in broad daylight what they did to us.”

Pedroza said the theft of his salary meant he couldn’t buy enough food for his four children or pay rent for the family’s mobile home in Anaheim. He said he borrowed money from friends and desperately scrambled for other jobs to avoid eviction.

“It was a long time that we were doing badly, without any money,” Pedroza told KQED. “It was wrong.”

Rivas’ companies underpaid workers at dozens of construction sites from 2014 through 2017, according to investigations by the Bureau of Field Enforcement. In 2018, the labor commissioner cited RDV for nearly $12 million in unpaid wages and penalties. It was the largest citation the agency ever issued. The following year, RVR was hit with a $4.3 million citation.

“Stealing earned wages from workers’ pockets is illegal in California, and this case shows that employers who steal from their workers will end up paying for it,” said California Labor Secretary Julie Su at the time, who now heads the U.S. Department of Labor.

Delays Gave Rivas Time to Minimize Payments

Rivas appealed the citations. Disruptions during the pandemic further delayed attempts to recover any funds, providing Rivas years to take steps that would limit the labor commissioner’s ability to collect the fines.

By the time the agency dismissed Rivas’ appeals in May 2022, he had filed for federal bankruptcy protection for RVR. He also closed down RDV, with the company’s contractor license expiring in April 2022.

That meant state claims against RVR, which continues to operate, could not legally be collected outside of bankruptcy court, and obtaining funds from RDV would be very difficult, according to several legal experts.

“It’s next to impossible to collect from a company that’s closed unless they have real estate or other assets, which would be very rare, particularly for a small construction contractor,” said Greg Groeneveld, an attorney in San Francisco who specializes in enforcing wage judgments. “But you can sometimes pursue the owners of that company.”

The labor commissioner may still choose to target individual defendants cited, including Rivas.

When an employer doesn’t pay a wage fine that’s deemed final, the agency requests a state court to order payment. The civil judgment generally allows a creditor to use tools such as liens and levies to try to recover what is owed.

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Many employers agree to settle before a court issues a judgment against them. But others don’t have the money or try to dodge payments, including by closing their companies or transferring ownership of real estate as a way to hide assets.

The Orange County Superior Court awarded the labor commissioner a judgment against Rivas, Juan Rivas, Del Villar and RDV last year. However, investigating a debtor’s true ability to pay can be time-consuming and difficult, and it’s unclear what of the individuals’ personal assets the department has tracked as eligible for collections. The labor commissioner’s Judgment Enforcement Unit, tasked with recovering funds in thousands of unpaid judgments, had 16 out of 28 positions filled last year, according to the Department of Finance.

San Bernardino County Assessor’s records show Rivas transferred at least one commercial property in Fontana, which is listed as RVR’s official business address, to a family member, Rosa Rivas, months after filing for the company’s bankruptcy. Rivas also owns an adjacent vacant plot of land.

The commercial property, with a Zillow estimated market value of $1.4 million, has a barber shop and hair salon facing the street and a one-story home standing in the back. A woman who told KQED she was eating lunch at the home identified herself only as Rivas’ ex, adding that they no longer spoke to each other. She declined to give more information.

“I don’t want to hear anything else about him,” she said before closing the door.

Three miles away, no one opened the door at a residential property owned by Rivas. A reporter observed a luxury Maserati Grecale purchased last spring, according to a document taped to its windshield, and a Ford F-550 flatbed truck were parked on the driveway. KQED could not confirm that Rivas owns the vehicles.

Who is Rafael Rivas?

Rivas started working in construction as a teenager more than 45 years ago, according to documents filed by his attorney in the U.S. Bankruptcy Court in Riverside.

The former day laborer went on to grow businesses that earned millions of dollars per year, building private hotels, mixed-use buildings, luxury apartments and at least one affordable housing project near downtown Los Angeles.

Rivas, 61, co-founded RDV Construction in 2010 with Juan Rivas and Del Villar. The following year, Rivas launched RVR General Construction.

Years later, Rivas blamed his family business partners for the wage theft violations.

“Rivas was certain he had not violated any such regulations and later learned that the family partners were the source of problems,” according to filings by attorney Michael Jones, who represented RVR.

“Realizing that he was not compatible with the family partners as business associates, Rivas did venture out on his own and began doing business by himself through RVR,” Jones added. “However, a significant amount of damage had already been done.”

In a separate case, the labor commissioner determined RDV owed $314,500 for underpaying more than a dozen carpenters employed at a Los Angeles public housing project in 2015 and 2016. Rivas settled for an undisclosed amount after the Contractors State License Board suspended his companies’ licenses to operate until the judgment was resolved, said Katherine White, chief of public affairs at the license board.

Rivas’ companies repeatedly violated workplace standards, paying about $37,000 in back wages and damages to the U.S. Department of Labor in 2017, and additional fines to other regulators. The California Division of Occupational Safety and Health penalized RDV and RVR, including for safety violations related to the 2015 death of an employee who fell 40 feet from a roof opening.

How much is the labor commissioner set to recover in Rivas’ case?

So far, the labor commissioner has collected $277,000 towards the two multi-million citations, including through a mechanics lien and a payment plan for RVR to emerge from Chapter 11 bankruptcy, said Peter Melton, a spokesperson with the Department of Industrial Relations.

“We can confirm the Labor Commissioner’s Office (LCO) has received over $164,000 from Chapter 11 bankruptcy payments as part of our judgment enforcement efforts in this case,” said Melton in an email. “LCO also collected and disbursed $100,000 on a mechanics lien lawsuit against this employer.”

The bankruptcy payments appear to be the only restitution the agency is currently receiving.

RVR agreed to pay at least 10% of its total income until it fully covers or settles the labor commissioner’s $7.6 million claim, according to bankruptcy documents. The company projects installments of about $150,000 per year.

At that rate, it would take RVR 50 years to settle the debt.

“It’s really a shame,” said Ross, the employment attorney. “These workers are so unlikely to see any amounts of money that could remedy the wrong that they suffered. And that’s if you can find them. As time goes on, fewer and fewer of these workers will be found.”

Daniel Reiss, a bankruptcy lawyer who reviewed RVR’s case for KQED, said an important question now is how the labor commissioner is monitoring the company’s income to ensure their payments comply with the agreement.

Depending on RVR’s financial picture, the agency could still push for a shorter-term deal through a court mediation panel, he added.

“You can make a negotiation with respect to getting money now while everybody’s still alive, as opposed to having no idea if it will ever be paid off,” said Reiss, who is also a bankruptcy mediator for the Central District of California.

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