Construction wage theft back on MN lawmakers’ agenda

Alvaro Chavez (L), a member of CTUL, testifies in support of the Construction Worker Wage Protection Act, authored by Rep. Sandra Feist (R).

Construction firms in Minnesota would bear greater legal responsibility for the labor practices of their subcontractors under legislation introduced by DFL lawmakers last month.

Building Trades unions and worker advocacy groups say the measure is necessary in the wake of reported abuses on non-union construction sites, most notably the Viking Lakes development in Eagan, where last year 40-plus workers alleged being cheated out of over $100,000 in combined wages.

Under the proposed Construction Worker Wage Protection Act, tradespeople hired by a subcontractor or labor broker would be empowered to seek unpaid wages from the larger contractors responsible for bringing their boss onto the jobsite.

Advocates say holding so-called “upstream” contractors accountable will create a much-needed incentive to do business with responsible subcontractors. The measure would also give construction firms legal authority to request payroll information from their subcontractors, so they can avoid liability.

“Compliance would finally be incentivized,” the Carpenters union’s Adam Duininck told members of the House Labor Committee during a hearing on the bill March 2.

Minnesota Building Trades unions lobbied to pass the nation’s strongest wage theft legislation four years ago, but Duininck and other labor leaders say the new law has not deterred developers and general contractors, like the Wilf family’s MV Ventures, from turning a blind eye to wage theft on their projects.

A report approved by Ramsey and Hennepin county attorneys last year found “rampant wage theft” in the non-union construction industry, estimating that employers in those two counties steal over $3 million in wages each year and divert over $11 million from Social Security and Medicare funds by misclassifying employees as independent contractors or paying in cash.

During the committee hearing March 2, Alvaro Chavez, with assistance from a Spanish language interpreter, explained to lawmakers how he witnessed the wage-theft model firsthand. After working for several weeks framing the bottom floor of a multifamily development in St. Paul, Chavez said, he and his crew abruptly learned they were being replaced for the project’s next phase.

“They never paid us for the work we had already done,” Chavez said. “When the supervisor of our group called the owner of the company, Strong Framing, who was a subcontractor on this project, he wouldn’t answer the phone.”

Chavez and other members of the crew approached the local worker center CTUL for assistance recovering their lost wages. Their first call was to the project’s developer, Yellow Tree.

“They told us they had contracted with U.S. Framing to do the work and we should call them,” Chavez said. “When we called U.S. Framing, they told us they contracted with Strong Framing, the company of the person who was no longer taking our calls.

“None of these companies wanted to take responsibility for paying our wages.”

Dan McConnell, president of the Minnesota State Building and Construction Trades Council, said that responsibility rightly belongs to those with most control over the construction site. “Managing a project and making sure everybody gets paid is literally what owners pay a general contractor to do,” he said.

But too often, by the time workers like Chavez discover they have been cheated out of their wages, it’s too late to hold their immediate employer accountable, Simon Trautmann, a labor attorney and member of the Richfield City Council, told lawmakers.

“You’ll have the subcontractor who has an LLC with zero assets,” Trautmann said. “That creates a policy problem where there is literally no money and literally nobody (to hold) accountable. This is a business model.”

Members of the House Labor Committee voted to advance the measure, House File 1859. Its companion bill, Senate File 1988, has so far passed through two committees.

“The bottom line is if you control the worksite, then you can prevent wage theft,” said Rep. Sandra Feist (D-New Brighton), the bill’s lead author in the House. “We want to level the playing field so ethical business practices can win the day, and they’re not going to be underbid by unethical subcontractors.”