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Related Gets Free Ride from City While Their Subsidiaries and Subcontractors Cheat Employees

Santa Clara developer Related Companies’ — which hasn’t paid a dime in rent for the 240 acres of City land it’s had a development contract on for seven years — luxury fitness subsidiary Equinox, and its subcontractor Power Design have collectively paid about $15 million in wage theft penalties in California and Washington D.C. since 2013.

Related wasn’t a party to any of these lawsuits, and no wage theft claims have been made against the company directly, according to U.S. Dept. of Labor records.

Related came to Santa Clara in 2012 with a plan to develop the City’s 240-acre golf course. The development agreement the City approved in 2013 deferred Related’s rent payments until groundbreaking — now forecast for next year. Mayor Lisa Gillmor was instrumental in promoting the project, which is now named Related Santa Clara.

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Related is the major backer of Gillmor’s, Police Chief Pat Nikolai’s and the Santa Clara police union PAC’s ugly smear campaign to elect Gillmor’s all-white slate a week from now. Gillmor has tried to make alleged wage theft by 49ers’ subcontractors a campaign issue, but has never had any discussions about treatment of wage theft by subcontractors of other City business partners.

 

Cheating Equinox Employees 

Equinox has paid $14.5 million in penalties for labor violations that include systematic wage theft, OSHA violations and discrimination.

In 2013, Equinox settled a California wage theft class action lawsuit with personal trainers for $5 million.

The violations include a per-session pay plan that didn’t comply with California labor laws, wage statements that didn’t include all hours worked, and failure to pay all wages.

A year later Equinox was back in California court settling another wage theft case with employees,  this time for $2.9 million.  The violation included failing to pay overtime, minimum wage and meal period pay; inaccurate pay statements; and unfair competition — unlawful, unfair or fraudulent business act or practice.

In 2015, Equinox settled another California class action lawsuit from employees for $4.1 million.

The same illegal practices were cited: “knowing and intentional failure to provide itemized wage statements;” not paying minimum wage, overtime and wages owed at termination; violating unfair competition laws; and failing to provide rest and meal breaks.

Equinox has been the subject of controversy in other ways.

Equinox also withheld rent when COVID-19 hit, while Related, at the same time, wasn’t giving its tenants a blanket rent holiday, according to a New York real estate news site.

A $250,000-a-plate fundraiser for Donald Trump held last year by Related owner Steven Ross provoked outrage and membership cancellations by Equinox and Equinox-owned SoulCycle customers.

 

Related Subcontractor’s Wage Theft Racket

Related’s electrical subcontractor Power Design, and Power Design’s labor broker subcontractor JVA Services, collectively paid $2.75 million in a 2018 settlement in Washington D.C. in a wage theft scheme that involved misclassifying employees as contractors. [Power-Design-Consent-Order] Related wasn’t named in any of these lawsuits and had no involvement in the wage theft scheme.

Power Design was employed on Related’s 909 Half St. SE Washington D.C. project.

Power Design contracted with JVA to provide workers for construction sites. JVA put the workers on its books as independent contractors and they didn’t show up on Power Design’s books, even though they were effectively Power Design employees. As a result, Power Design was more competitive than companies that followed the law.

“Power Design …intentionally recruited individuals to become labor brokers to establish the payroll practices that would perpetuate the worker misclassification scheme,” wrote District of Columbia DA Karl Racine in the City’s complaint. [Power_Design_Complaint]

“Power Design’s projects in the District [of Columbia] depends on misclassified workers…The labor broker is nothing more than a shell entity through which Power Design maintains a shadow payroll.”

There was no documentation proving the workers’ independent contract classification, and Power Design made JVA’s hiring decisions.

The fraudsters evaded paying minimum wage and overtime, failed to provide sick leave and other benefits like unemployment mandated for employees, and kept sloppy records on a spreadsheet, using sign-in sheets instead of time clock systems. The companies also evaded payroll taxes.

“These suppressed costs are instrumental to Power Design’s success,” wrote DA Racine, and lead to a “race to the bottom” where workers ultimately pay the price.

 

Correction: The original version of this story may have implied that Related Companies was directly involved in any of these cases. The company wasn’t named in these cases and wasn’t involved in any way. We regret the error.

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4 Comments
  1. Davy L. 1 month ago
    Reply

    An interesting Fact: The San Jose Mercury News, having no connections whatever to either Jed York or the 49ers or the Related Companies, after interviewing all available candidates, made the following recommendations:
    District 1: Harbir Bhatia
    District 4: Kevin Park
    District 5: Suds Jain
    District 6: Anthony Becker
    Coincidentally and independently, The Santa Clara Weekly also conducted interviews on the candidates and recommended all 4 of the same identical above names. Please notice that Robert Mezzetti failed to make either list.

  2. Jean 1 month ago
    Reply

    Wait! Didn’t the Mayor, City Manager, Police Department and City Attorney hold a press conference reporting that the 49ers had violated wage laws? Why hasn’t City Hall been looking at Related and their wage practices? And the million dollars in fines? Where’s that press conference?

    • Tami Chaves 4 weeks ago
      Reply

      I totally agree with you. It’s because the mayor is more than likely getting her pockets lined.

    • Tami Chaves 4 weeks ago
      Reply

      I totally agree with you. It’s because the mayor is more than likely getting her pockets lined. She and her cronies need to go.

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