The Sun
Sunnyvale's Newspaper

B-1 Enterprise under investigation for labor violations

By Justin Berton

The Sunnyvale City Council awarded a Southern California contractor a $350,000 project even though the company is currently being sued by a state agency for worker's rights violations and faulty bookkeeping practices.

The council voted 5-2 at its April 21 meeting to hire B-1 Enterprise Corp. of Rancho Cucamonga for the city's annual reconstruction of curbs, gutters and sidewalks.

The awarding of the contract drew moral and legal lines between councilmembers as to whether they should factor the laundry list of allegations levied against B-1 into their decision to hire the company.

Legal problems for B-1 began in June 1997 after an inspector for the city of Oxnard reported that B-1 employees worked 12-hour shifts without overtime pay and lived on work sites in trailers in substandard conditions.

The inspector's report also stated that workers were forced to cash inflated paychecks of $800 at liquor stores and return all but $250 to B-1 president Neil Dilello. Construction companies that contract for cities have to prove they pay employees prevailing wages--about $25 per hour for B-1's type of work. B-1 workers, after allegedly returning a large portion of their paychecks to their employer, made $5.26 per hour, according to the report.

B-l countered the allegations by filing a lawsuit against the city of Oxnard that is set for trial in August. State law requires Sunnyvale to choose the lowest responsible bidder--which B-1 was by $30,000--or face potential legal problems down the road.

"We don't want to make decisions based on allegations; we want to make them based on facts," Mayor Jim Roberts said before voting with the majority to hire B-1.

But Councilmembers Fred Fowler and Julia Miller thought otherwise, saying the city should refrain from doing business with the company.

"This is one of the votes I almost wish I didn't have to make," Fowler said. "It comes down to what I believe in my heart of hearts, and I think I believe the inspector."

Miller said the pending lawsuit could reflect poorly on Sunnyvale.

"I would like our city to remain squeaky-clean," she said before casting the second dissenting vote.

Dilello told council members he would probably bring 10 employees with him to Sunnyvale to work on the project and provide housing at a nearby affordable hotel.

The city's public works department recommended B-1 in January after the contractor turned in the lowest bid and received strong letters of recommendation from previous clients.

The recommendation was quickly protested by the Santa Clara & San Benito Counties Building & Construction Trades Council in a letter written to the mayor by Chief Executive Officer John E. Neece, who stated, "It is the Building Trades Council's opinion that we do not need a contractor with such a bad record coming into our community to repeat their abuses to workers. Their strategy obviously was to go to a city where nobody knows them and start again."

At a Feb. 24 meeting, the council originally voted against the B-1 contract, pending an opportunity for B-1 to appear before them to defend its ability to be a "responsible" contractor.

In a one-hour presentation by Dilello and his attorney, Barry Jensen, at the April 21 meeting, the two provided check stubs, written interviews with employees and other documents that persuaded councilmembers to reverse their February decision.

Jensen argued B-1 was the victim of an "overzealous" independent city inspector and a powerful union that was harassing Dilello for disbanding the union from his business eight years ago.

Jensen argued that if Sunnyvale denied the contract on the basis of the lawsuit, that would unfairly bias future projects from other cities the business could attain.

After the city inspector's report was filed in Oxnard, the city commissioned an independent labor-compliance firm to follow up on the allegations. The firm, Equality Consulting, backed the claims of the city inspector.

On Oct. 24, the state Division of Labor Standards Enforcement sued B-1 in a Ventura County Municipal Court, alleging that the company owes workers $88,873 in back wages and faces $39,300 in penalties.

Councilmember Stan Kawczynski suggested the city create legislation to prevent the city from being forced to weigh in allegations lobbed at a potential contractor, saying that to do so was unfair to the contractor and to the city.

"The motive is to punish them for not being a union contractor," Jensen alleged. "Mr. Dilello will lose his livelihood all because of these allegations."

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This article appeared in the Sunnyvale Sun, April 29, 1998.
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