Missed Payroll: Construction Company Ordered to Pay $468K in DOL Action

Missed payroll is a federal wage violation. A Newport Beach construction contractor learned that the hard way; it was ordered to pay $468,505 after the DOL found 137 workers went without pay and overtime. 

The case broadens the usual wage and hour conversation beyond overtime math to a more fundamental question: Did workers get paid on time – or even at all?

Wage and Hour Violations Lead to Federal Court Judgment

Following an investigation by the DOL’s Wage and Hour Division, the U.S. District Court for the Central District of California approved a consent judgment against SCA General Contracting Inc. and operators Sundeep Pandhoh and Gary Tetone.

Federal investigators found that 137 construction workers were denied proper pay between Nov. 1, 2024, and Nov. 30, 2025. Specifically, the employer:

• Repeatedly missed payroll entirely
• Failed to pay workers minimum wage for hours worked
• Did not pay overtime premiums for hours worked over 40 in a workweek, and
• Retaliated against at least one employee who complained about not getting paid.

The court order requires SCA to pay $468,505 in back wages and damages to the 137 affected workers – an average of approximately $3,418 per employee. That last violation – retaliation – resulted in additional relief: The court ordered the company to reinstate the employee who was fired after raising pay concerns.

The DOL assessed a civil penalty for willful violations – a finding that reflects the repeated, ongoing nature of the missed payroll across more than a year.

“Employers will be held accountable by the Wage and Hour Division if they commit wage violations or retaliate against workers who exercise their rights,” said Acting Western Regional Administrator Cesar Avila.

The DOL’s Regional Solicitor echoed that position, stating the agency will take swift legal action against any employer that fails to pay employees timely or retaliates against them for asking to be paid. 

The Cost of Waiting

Under the FLSA, liquidated damages equal the back wage amount, so the $468,505 judgment likely represents approximately $234,000 in back wages and an additional $234,000 in damages. That second $234,000 may have been avoidable.

A DOL policy change effective June 27, 2025 – Field Assistance Bulletin No. 2025-3 – bars the Wage and Hour Division from seeking liquidated damages during administrative investigations. The window to resolve this case without damages existed. SCA let it close. 

Guidance for Payroll, Finance and HR

When payroll is missed, the consequences hit all three departments: Payroll teams run off-cycle corrections and reconcile affected pay periods; finance teams absorb a bill that compounds the longer it goes unaddressed; and HR teams field complaints and manage the employee-relations damage.

Next Steps for Payroll

• Confirm every payroll run is on time, every cycle. Missed payroll is not an operational hiccup – it’s an FLSA violation. If cash flow is creating a risk of a missed payroll, that conversation needs to happen with finance before a pay date is missed.
• Reconcile time records against payroll output each cycle. Discrepancies between hours worked and hours paid are what investigators look for first. Clean reconciliation is your first line of defense.
• Verify overtime is calculated correctly. Hours over 40 in a workweek require pay at time and a half. Confirm your payroll system is applying that calculation and not carrying straight time past 40 hours.

What Finance Teams Need to Know About Missed Payroll

• Treat missed payroll as a financial emergency, not a cash flow management tool. Delaying or skipping payroll to manage liquidity crosses a legal line. The moment a pay date is missed, the company is in violation of the FLSA.
• Understand the cost structure of a DOL judgment. Under the FLSA, liquidated damages can equal back wages owed — meaning a wage problem that reaches judgment could double in cost. That potential doubling changes the risk calculus on unresolved pay issues.
• Act during the administrative window. Field Assistance Bulletin No. 2025-3 gives employers a meaningful off-ramp – resolve violations before litigation and liquidated damages are off the table. That is a financial lever worth building into how your company responds to any DOL inquiry. 
• Factor wage and hour liability into financial risk planning. Willful violations carry civil penalties on top of back wages and damages. This case involved all three. That is a material financial exposure that belongs in any honest risk assessment.

HR Strategy to Handle Pay Complaints and Avoid Retaliation

• Recognize pay complaints as protected activity. Under the FLSA, employees have the right to raise concerns about their wages. A complaint about missing or incorrect pay is a legally protected act.
• Train managers on the only acceptable response to a pay complaint: Take it to HR. Without explicit training, managers make costly mistakes – a dismissive comment, a schedule change, a termination – that can all read as retaliation even when that wasn’t the intent. Managers need to know that any adverse action following a pay complaint, however minor, creates legal exposure.
• Document every pay complaint and your response to it. During a DOL audit, if an investigator asks what happened after an employee raised a pay concern, you need a clear paper trail showing the complaint was received, escalated, and addressed – not ignored or punished.