A Livermore construction company that has built housing for university students and low-income residents has agreed to pay $3.9 million to settle a lawsuit filed by the state claiming that the firm cheated its workers out of pay for two years, officials said Wednesday.

Country Builders Inc. must pay $2.2 million in back pay to more than 120 construction workers to settle a suit that Attorney General Jerry Brown filed in Alameda County Superior Court. The remaining money consists of civil penalties and payments to a state compensation insurance fund.

Under the settlement, the company is also barred from working on any government-funded public works projects for three years, the maximum period allowed by state regulations.

Some of the company’s government-funded construction projects have included the University Village student housing in Albany for UC Berkeley students with families, student housing at California State University East Bay, and housing complexes in Oakland, Berkeley, San Pablo and San Jose.

Brown’s office began investigating the company after employees reported that they weren’t being paid the prevailing wage for public-works projects. The company also misclassified its hourly wage rates to avoid paying the full amount it owed to the state in workers’ compensation premiums, the state’s lawsuit said.

The attorney general’s office sued the company in March, claiming that the company engaged in unfair competition and violated state labor laws.

Attorney for defendants, Roger Patton, said the company did not admit wrongdoing. “They’re going to continue to do quality construction work,” he said. “We think it’s a fair settlement, and the company’s happy to get it resolved and move on.”

Paul Cohen, spokesman for the Northern California Carpenters Regional Council in Oakland, said the union is “very pleased that workers will get the wage they are entitled to.”

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