Five years ago, Los Angeles agreed to provide $1.6 million in federal funding to help a Chinese-owned company that makes electric vehicles open a new headquarters downtown.
It was one in a string of government contracts and other investments in Build Your Dreams — known as BYD — that were meant to foster green technology and new jobs in Southern California. As part of the deal, BYD was supposed to create scores of jobs and make "good faith efforts" to hire Angelenos.
But the company is now in the crosshairs of labor activists who contend that it has flouted wage rules.
Jobs to Move America, a coalition of labor and community groups, recently lodged a complaint with the city, saying it believed BYD had violated its agreement with Los Angeles by failing to pay a living wage to employees at its downtown facility.
The coalition wants city officials to push to reimburse workers, take the company to court for damages and sue to get taxpayer money back if it fails to comply. City officials have asked the company to hand over documents detailing worker pay. If the complaints are proved, the dispute could jeopardize future government contracts.
BYD denies the allegations and has defended its pay levels. The firm asserts that the living wage rules don't apply to the L.A. agreement because of a city exemption. The company and its backers argue the real reason labor activists are attacking it is a dispute over the process of possibly unionizing its workers.
"This is just harassment," said L.A. County Supervisor
The clash marks the latest headache for the transportation and technology giant, which has previously battled accusations that it underpaid workers and fumbled a coveted contract with Long Beach Transit after failing to follow federal bidding rules. In both cases, the company eventually came out on top: The state labor commissioner dropped its minimum wage citations, and the firm won the Long Beach deal after a second round of bidding.
This time around, the city bureau of contract administration, which polices such agreements, says BYD failed to turn over payment records amid the allegations. John L. Reamer Jr., who heads the bureau, said the BYD contract is covered by L.A.'s living wage ordinance, which currently sets a minimum hourly wage of $12.42 without health insurance for companies that do business with the city.
But company officials say another city agency — the Community Development Department — exempted the firm from the living wage law. Because the agreement included refurbishing a vacant building downtown, a staffer in the Community Development Department designated it on a city form as a construction contract, which would be exempt.
Company President Stella Li told city officials in a letter that the contractors who refurbished the Figueroa Street building were nonetheless paid "much higher than the living wage." The company also says employees working in the building are making the living wage or more. And BYD officials say they already provided the city records for the construction work three years ago.
However, Reamer said that only his department can decide if a contract falls under the city wage rules, and that the Community Development Department had issued the city form "by mistake."
Jobs to Move America coalition director Madeline Janis said the contract was meant to create permanent jobs, not just refurbish a building.
"Public officials must hold BYD accountable to its commitments or claw back the millions in taxpayer dollars given to the company" for operations in both L.A. and Lancaster, Janis said.
Connie Llanos, a spokeswoman for Mayor
In a letter to city officials, Janis said she became concerned because the company signed a state agreement late last year saying it would pay at least $18,720 annually to its California employees — under the minimum for L.A. city contractors. She also mentioned that two years ago, the state labor commissioner accused the company of failing to pay the California minimum wage to several Chinese nationals working at its California facilities.
However, the state dropped those wage citations after the company provided documents showing that pay distributed in China appeared to meet the wage requirements, according to the state labor commissioner.
BYD says the Jobs to Move America complaints stem from a clash over possible unionization procedures. Union officials had sought a card check agreement that would ensure the company recognizes a union if the majority of workers sign cards asking to form one without a formal election.
"We're not opposed to being unionized," said Macy Neshati, the company's vice president of sales. But he said elections would be the proper framework.
Janis said an election process can drag out for months or years and could be used to intimidate workers. Last year, labor activists also sparred with Kinkisharyo International, which is building rail cars for the Metropolitan Transportation Authority, before it agreed to a card check agreement.
Labor unions focus on such big employers with government contracts because they can put political pressure on the companies, said Chris Tilly, director of the UCLA Institute for Research on Labor and Employment. In addition, he said, "these jobs historically have been a road to the middle class."
Some business leaders fear that such disputes could make foreign manufacturers reluctant to come to the area. If the region can't recruit companies like BYD and Kinkisharyo, "that will sadly work against our desire to create well-paying jobs for the people of L.A. County," said Bill Allen, chief executive of the L.A. County Economic Development Corp.
Neshati said wages at the Lancaster plant were at least $9 an hour, with an average rate of $13.70 per hour for factory workers.
In recent years, BYD also snagged a contract to build zero-emission buses for the Metropolitan Transportation Authority and won a $3-million state tax credit to expand its facilities. Metro officials said that if any contractors are proved to have violated local laws, their chances at future contracts could be harmed.
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Times staff writer David Zahniser contributed to this report.