The state is investigating 28 Ala Moana Center contractors for noncompliance with labor laws, casting a cloud over the opening of the mall’s $570 million Ewa wing.

The probe involves building contractors who skirted the law by paying workers under the table and not providing basic health coverage or other required insurance, said the state Department of Labor and Industrial Relations.

The state agency confirmed this week its investigation has so far found that at least seven employers did not pay temporary disability insurance or state-mandated health insurance for full-time workers. The state wouldn’t provide the names of the contractors involved or the number of workers affected.

“We are investigating 28 contractors’ compliance with labor laws,” said Bill Kunstman, spokesman for the Labor Department. “The low-hanging fruit is determining whether they have temporary disability and prepaid health care insurance. The unemployment insurance investigations take longer as we do a desk audit, then go to the employer to look at their records.”

Separately, the state is examining some of the work sites for safety violations, which could result in citations and up to $7,700 in penalties per violation over the next few weeks. Ala Moana executives declined comment.

Tyler Dos Santos-Tam, executive director of the Hawaii Construction Alliance, representing five union groups, said the organization has been looking into these issues for several weeks.

“We were informed by some of the workers who were working on the individual stores within the Ewa wing that they were getting cash payments and not being provided with insurance and health coverage,” Dos Santos-Tam said. “It was all very concerning to us. We were very disappointed to learn these problems are indeed happening. It’s very likely there will be more issues about whether contractors are properly licensed and whether contractors are paying proper taxes. It’s a huge project — the biggest private construction going on.”

The fine for not providing health coverage and temporary disability insurance for workers is $1 per employee, per day, and not less than $25.

“Our goal is to ensure both a level playing field for employers and protecting workers,” said DLIR Director Linda Chu Takayama.

Takayama said the law, written in 1969, needs to be updated.

“The department could play a stronger enforcement role with additional resources or a change in the law. While a dollar a day may have been a deterrent in 1969, it’s clearly insufficient today, and we hope the policymakers address our enforcement capacity in the upcoming legislative session,” Takayama said.

DLIR said its investigators are working with employers to have them voluntarily comply with the law, “so we’re not at this point going to go the penalty route.”

“What we’re really seeking is for the employers to comply and have insurance for their employees,” Kunstman said. “All things considered, we’re trying to just work with them. That’s the real goal, to ensure workers have coverage.”

A spokeswoman for the Tax Department wouldn’t comment on whether an investigation is underway, though the agency, along with the DLIR and Department of Commerce and Consumer Affairs’ Regulated Industry Complaints Office, last month announced an outreach and “regulatory action” to inform contractors of their responsibilities and tax laws and check to ensure contractors and subcontractors working on the Ewa wing expansion were properly licensed.

“This is really a systemic problem for the industry, and it’s up to not only the contractors, but also the landlords to make sure what’s going on on their property is proper and all rules are being followed. Clearly, their internal policies weren’t being followed,” Dos Santos-Tam said.

A memo provided by Dos Santos-Tam from Ala Moana owner General Growth Properties Inc. to its contractors showed that the center knew about the state’s concerns last month.

The memo, dated Oct. 23, notifies contractors that the state would be visiting unnamed tenant job sites and that “contractors should prepare accordingly.”

“It makes us question what GGP knew, when they knew it and why they didn’t condemn it,” Dos Santos-Tam said.