Construction wage theft back on MN lawmakers’ agenda

March 17, 2023 by

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.”

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Alleged rape on Wilfs’ Viking Lakes development sparks outrage, calls for change

October 14, 2022 by

Barb Pecks (R), chair of the Carpenters union’s Sisters in the Brotherhood group, embraces Norma Izaguirre during a press conference on the Capitol steps.

A worker on the Viking Lakes project in Eagan came forward last week with allegations that she was raped and harassed while working for a drywall subcontractor on the troubled job site, developed by NFL owners Zygmunt, Mark and Leonard Wilf’s MV Ventures firm.

Unions and worker advocacy groups decried the alleged assault and, in a press conference on the Capitol steps Tuesday, issued an impassioned call for elected officials, developers, contractors and all workers to do more to stop exploitation of workers in the construction industry.

For developers like the Wilfs, that means cutting business ties with contractors that have public records of wage theft, worker misclassification and other labor abuses.

Absolute Drywall, which employed Norma Izaguirre and her alleged rapist, Diego Medina, has been cited for child labor, misclassification of workers and failure to pay overtime. The state Labor Department also found that the firm submitted false and misleading claims in response to an investigation.

Yet when representatives of the Carpenters union and the local worker center CTUL tried to warn MV Ventures about Absolute Drywall’s track record of exploitation, they were instructed to leave the property, CTUL Co-Director Veronica Mendez Moore said.

“They kicked us off the site and wouldn’t even let us go in and talk with workers, to see what the conditions were like,” she said. “They said to us that they could handle this themselves.”

By last spring, more than 40 workers employed on the Viking Lakes project had come forward to report wage theft, alleging Absolute and other subcontractors had cheated them out of over $100,000 in combined wages. Several workers reported their claims to the Minnesota Department of Labor and Industry.

Madeline Lohman, a senior researcher for The Advocates for Human Rights, said developers that turn a blind eye to subcontractors’ potential violations of wage rules, safety standards and other worker protections too often foster an “environment of impunity,” ripe for more serious abuses.

“Many of the labor trafficking victims that we have served at The Advocates first came forward because of stolen wages, untreated workplace injuries or child labor that had been overlooked, and only afterwards was the trafficking uncovered,” she said. “If developers and large employers … allow smaller abuses to go unchecked, greater ones will flourish in those gaps.”

In fact, Izaguirre told the Minnesota Reformer website that she is among the workers on the Viking Lakes development who have filed complaints of unpaid wages.

She said Medina lured her to work for Absolute Drywall as a cleaner at Viking Lakes and other developments. After several months, he began making sexual advances and touching her inappropriately, eventually raping her in one of the apartments’ showers, according to her report.

Medina threatened violence against Izaguirre and her family if she reported the abuse. But on the Capitol steps, she stood up to the podium and explained what prompted her to come forward.

“I want everyone in the state of Minnesota to make sure no other woman is treated like I was on a construction project,” she said through an interpreter. “My question for Minnesota developers and construction companies is this: what are you going to do to prevent this from happening to another woman?”

One option for developers is to hire union contractors, whose employees can report abuses to their representatives and whose wages and benefits are spelled out in a collective bargaining agreement.

Or, Mendez Moore said, developers should sign a pledge with the Building Dignity and Respect Standards Council, requiring all contractors on their developments to uphold basic labor standards and agreeing to allow independent monitoring – with legally binding enforcement mechanisms – on their work sites. CTUL is ramping up public pressure on several prominent non-union developers to join the council.

Local elected officials, meanwhile, should require accountability measures on all approved projects to ensure workers are not being exploited in their cities, union officials said.

“If one of the most powerful families in Minnesota is not stepping up to prevent horrific worker abuse, it’s time for local governments and the state Legislature to step in,” said Adam Duininck, director of government affairs with the North Central States Regional Council of Carpenters (NCSRCC).

Construction workers – union and non-union – have an important role to play, too, said Barb Pecks, a business representative with the NCSRCC and chair of the United Brotherhood of Carpenters’ Sisters in the Brotherhood committee. She said the union would soon begin working with its contractors to train all members in identifying and reporting labor abuses.

“I can’t say enough about your bravery and courage,” Pecks told Izaguirre on the Capitol steps.

Filed Under: Organizing, Politics, Union Events Tagged With: , , , , , , , ,

Wilfs’ company turned deaf ear to warnings of wage theft at Viking Lakes development

May 10, 2022 by

Abel Susteito speaks at a Capitol press conference about his experience with wage theft on the Viking Lakes apartment project in Eagan.

Tradespeople who worked on the Viking Lakes luxury apartments in Eagan went public last week with accusations of wage theft on the project, owned and developed by the same family that owns the NFL’s Minnesota Vikings.

Worker advocacy groups, including the North Central States Regional Council of Carpenters (NCSRCC), pinned responsibility for the alleged labor abuses on the Wilfs, whose company, MV Ventures, ignored the groups’ repeated warnings that subcontractors awarded work on the project had a track record of labor violations and dishonesty.

“MV Ventures is a Wilf-family company. MV Ventures develops the project, hires the subcontractors and has control of the project from start to finish,” Carpenters General Council Burt Johnson said. “They are responsible.”

The union said it has heard from more than 40 workers on the Viking Lakes project who said they were not paid what they were owed, and two workers at a Capitol press conference May 5 confirmed reporting the wage theft to Minnesota’s Department of Labor and Industry.

But any civil or criminal penalties resulting from an investigation are likely to fall on the subcontractors, prompting calls from community leaders for the Wilfs and MV Ventures to do the right thing now.

Veronica Mendez Moore, co-director of the Twin Cities-based worker center CTUL, said MV Ventures should meet with unions to resolve the allegations stemming from Viking Lakes, and sign a pledge with the Building Dignity and Respect Standards Council requiring all contractors on its developments to uphold basic labor standards.

Javier Mendez Velasco speaks to reporters about his experience installing siding at the Viking Lakes apartments.

Mendez Moore also noted the Wilfs benefited from nearly half a billion dollars in public subsidies to build the Vikings’ new stadium in Minneapolis.

“This is a family that needs to be held to a higher standard,” she said. “They need to partner with the community to better ensure standards for all of the people in our city.”

‘Constantly tired’

Despite working for different subcontractors, Javier Mendez Velasco and Abel Susteito described similar labor standards on the 261-unit, luxury apartment project at Viking Lakes. Both said they were paid wages lower than what they were initially promised, with no overtime or holiday pay and no vacation or health insurance benefits.

That was a standard arrangement, Mendez Velasco said, at subcontractors like Advantage Construction and Property Maintenance and Construction (PMC), which employed him to do siding work on the Wilf family’s Eagan development site. In over three years with Advantage and PMC, Mendez Velasco said he never received overtime pay, despite working six or seven days per week, sometimes from 6 a.m. to 7 p.m.

“We were constantly tired, but our boss wasn’t understanding,” Mendez Velasco said through a Spanish-language interpreter. “He would never help us out.”

Susteito hung drywall at Viking Lakes from November 2020 to August 2021 as an employee of Absolute Drywall, a company local unions have been calling out for several years, pointing to past citations for child labor, misclassification of workers and failure to pay overtime. The state Labor Department also found that Absolute Drywall submitted false and misleading claims in response to an investigation.

“I want to ask the Department of Labor to keep fighting for our rights, and for better pay for us,” Susteito said at the press conference.

Carpenters union official Adam Duininck says he and others suggested ways the Wilfs’ company could prevent wage theft on the Viking Lakes project. “Our suggestions just were not taken seriously,” he said.

Profit before public interest

Advocates for construction workers say exploitation is baked into the industry’s business model, with layers of contractors, subcontractors and labor brokers that insulate developers like the Wilfs from responsibility for working conditions and standards on their projects.

Immigrant workers are particularly vulnerable.

“We came here to work, and we have our own dreams. But we were taken advantage of,” Mendez Velasco said. “As immigrant workers we are taken advantage of for our hard work, for our dedication, but also because we don’t have the knowledge and the available resources.”

Union representatives warned the Wilfs’ development company, MV Ventures, about their subcontractors’ checkered background “ad nauseam,” according to Adam Duininck, NCSRCC’s director of government affairs. He said the union also urged the developer to be proactive in preventing wage theft.

“We suggested a number of ways to get ahead of wage theft, including jobsite monitoring and working with outside groups to monitor payroll,” Duininck said. “Our suggestions just were not taken seriously.”

As a result, workers like Susteito, Mendez Velasco and dozens of others are still waiting to be made whole for their work building luxury apartments that are now renting at prices between $1,600 and $2,245 per month.

“These workers take great risk when they come forward and talk to the public about what’s going on,” Johnson said. “We need to believe them.”

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