City audit finds prevailing‑wage shortfalls at America's Cup World Series; contractors, event authority agree to repayment plan

The Office of Labor Standards Enforcement told a San Francisco Board of Supervisors subcommittee on March 13 that an audit of temporary construction for last year's America's Cup World Series found widespread noncompliance with the city's prevailing‑wage rules and related recordkeeping requirements.

Donna Levitt, deputy director of OLSE, said the office audited eight first‑ and second‑tier subcontractors who performed covered work such as bleacher installation, staging and tent erection. The audit found certified payroll records were not kept and that many subcontractors were unfamiliar with California prevailing‑wage rules. OLSE calculated back wages owed to 113 employees totaling $400,455.03 and an apprenticeship‑training contribution of $3,690.29.

"None of the subcontractors had maintained or kept certified payroll records or hired apprentices for the work," Levitt said in presenting her office's findings. OLSE concluded the workforce development plan attached to the lease and venue agreement required prevailing wages for vertical temporary installations and related work.

Levitt said the audit followed a complaint from Carpenters Local 22 and noted particular wage shortfalls: for example, she said the prevailing wage for a carpenter who installed bleachers is about $64 per hour, while three contractors paid no more than $27 per hour on the tasks audited.

Hartman Studios, the prime contractor identified in the OLSE audit, accepted responsibility and "promptly accepted responsibility for ensuring the payment of all back wages owed by each subcontractor," Levitt said. The parties signed a memorandum of understanding (MOU) dated March 6 that establishes a framework and timelines for payment and monitoring; OLSE will monitor the MOU's implementation.

Supervisor questions at the March 13 hearing focused on whether the city would also seek penalties and on how to avoid similar violations on future events. Levitt said OLSE used labor‑code penalty provisions in its calculations but that assessment of penalties remains ongoing; she said the office is working with the City Attorney to craft enforceable language for future agreements.

Representatives of the America's Cup event authority and its insurance/procurement partners disputed suggestions of bad faith. Steve Barclay of the event authority argued that the authority voluntarily agreed to be bound to prevailing‑wage conditions and that some provisions were the product of shifting arrangements between the event authority, the Port of San Francisco and other parties. He nonetheless welcomed the MOU and said the authority was working to ensure compliance going forward.

The subcommittee did not take a vote on penalties at the March 13 meeting; supervisors said they want stronger front‑end notification, clearer contract language, and closer preconstruction review so that contractors and subcontractors understand prevailing‑wage obligations before work begins. The subcommittee continued the America's Cup items for further follow‑up.