Trades push Royal Credit Union to ditch contractor accused of underpaying immigrant workers

June 1, 2022 by

Building Trades representatives join a protest outside Royal Credit Union in Inver Grove Heights.

Efforts to stop worker exploitation in the Twin Cities construction industry continued to gain momentum today, as construction unions called out Royal Credit Union for using an out-of-state masonry contractor accused by watchdog groups of underpaying immigrant laborers.

As the credit union cut the ribbon inside a newly acquired and refurbished branch in Inver Grove Heights, worker advocates set up a protest outside with signs, banners and an inflatable fat cat clutching a construction worker with one claw.

Unions accuse Eau Claire, Wis., contractor Stone Pro Concrete and Masonry of putting the squeeze on immigrants hired through the H-2B visa program, which allows employers to seek seasonal help when they are unable to hire enough U.S. workers.

The federal program requires employers to pay minimum wage rates based on the location and type of work performed. But after interviewing over a dozen H-2B visa holders on multiple Stone Pro job sites, representatives of the Laborers union (LIUNA) determined the contractor was underpaying workers by as much as $8 per hour.

“They bring on these workers as carpenter’s helpers, but they actually do concrete and masonry work, which is a totally different pay scale,” said Octavio Chung Bustamante, a marketing representative with LIUNA who has been investigating Stone Pro since 2019.

When Bustamante and other union representatives learned Stone Pro would be working on Royal’s new retail office in Little Canada, they took their findings to the credit union.

“We did reach out to Royal Credit Union on May 5,” Bustamante said. “We went to the branch manager in the St. Paul location, but we didn’t hear back.”

As a result, LIUNA and other unions active in the #NotOnMyWatch campaign decided to drop in on the ribbon cutting in Inver Grove Heights – and bring along their inflatable fat cat.

Organizers also circulated copies of anti-immigrant and Islamophobic Facebook content attributed to Stone Pro’s owner. Bustamante called it “hypocritical” for a company turning profits off immigrant labor – and contrary to Royal Credit Union’s stated values.

“It’s not about union or non-union,” Bustamante said. “It’s about making sure the industry is fair for everyone.”

The #NotOnMyWatch campaign brings together unions and community groups like Twin Cities worker center CTUL to identify cases of abuse and assist exploited workers in Minnesota’s construction industry.

“We’ve seen horrific abuse in this industry, from wage theft to dangerous working conditions,” CTUL Co-Director Merle Payne said. “So we’re calling on large developers and users like Royal Credit Union to take steps to use responsible contractors, to step up and make a difference.”

CTUL members who work in the multifamily residential construction industry launched a campaign last month to pressure large developers in the Twin Cities to partner with them in keeping wage theft, labor trafficking and other abuses off their job sites. They call it the Building Dignity and Respect program.

Organizers will announce the next steps in that campaign – including which contractors they will push to sign onto the new program – at a march and rally June 16, beginning at noon at Plymouth Congregational Church in Minneapolis.

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Workers seek commitment from developers to build with ‘dignity and respect’

May 13, 2022 by

As allegations of wage theft continue to bubble up from the Twin Cities’ nonunion construction industry, a worker-led initiative aims to partner with developers to keep labor abuses off their job sites.

After months of behind-the-scenes planning and organizing, construction workers this week publicly invited local developers to join the Building Dignity and Respect (BDR) program and agree to uphold basic human-rights standards for everyone working on their projects, including workers employed by subcontractors.

Post-construction cleaning worker Daniel Sanchez estimates that he has lost over $110,000 to wage theft over 10 years working in the industry. He said layers of contractors and subcontractors should not shield developers from responsibility for abuses on their projects.

“Morally, developers have to be accountable for what’s happening on their job sites,” Sanchez said during an event to roll out the BDR program in Minneapolis yesterday. “We know we’re not going to change this industry by getting rid of just one subcontractor. Developers need to work with us to stop wage theft.”

Sanchez and other construction workers, who have been organizing with the local worker center CTUL, called out a handful of local developers by name, urging Doran Properties Group, MWF Properties, Solhem Companies, United Properties and YellowTree to come to the table with BDR now, before workers and their community allies ramp up the public pressure.

CTUL Co-Director Merle Payne said the campaign would target three large, multi-family construction developers – assuming they have not yet signed onto an agreement with the BDR – with a public action June 16. CTUL’s previous campaigns include a groundbreaking effort to pressure big-box retailers like Target and Best Buy take responsibility for the labor practices of its cleaning contractors.

“Housing developers in the Twin Cities are at a crossroads,” Payne said. “On one path, they can choose to ensure basic dignity and respect for the workers who develop their projects and who build our cities either by signing into the BDR program or by using 100% union labor. On the other path, developers can continue business as usual, maintaining an industry with rampant wage theft, dangerous working conditions and, at the extreme, labor trafficking.”

An advisory council assembled by county attorneys in Ramsey and Hennepin counties earlier this year approved a report estimating that wage theft costs construction workers over $3 million in wages each year, and diverts over $11 million from Social Security and Medicare funds.

While prosecutors and state regulators have begun stepping up efforts to hold contractors accountable, the BDR program is setting out to stop wage theft before it happens.

Developers that participate in BDR would sign a legally binding agreement to protect workers on their projects from wage theft, physical and sexual abuse and human trafficking, and to provide them with safe working conditions and fair pay.

The BDR Standards Council would provide education to workers about their rights and protections, and monitor participating developers’ job sites to ensure compliance.

“If a contractor refuses to maintain compliance, they will no longer be able to work for developers that participate in the Building Dignity and Respect program,” said Doug Mork, executive director of the Standards Council.

The program follows what’s known as the “Worker-driven Social Responsibility model,” which agricultural workers in Florida successfully used to raise standards in an industry with similarly murky relationships between landowners, labor brokers, contractors and workers.

CTUL member Pedro Carbajal, a painter on local construction sites, was among local workers who traveled to Florida for a firsthand look at how the model works.

“If they can do it there, we can do it here,” he said. “We may work in different industries – farm work and construction – but what unites us is the cause, what unites us is the suffering we’ve lived. And together, we can change this.”

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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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County attorneys take aim at criminal wage theft

April 27, 2022 by

Ramsey County Attorney John Choi’s office recently hired Jacob Shawback (L) to investigate prevailing-wage and wage-theft allegations. Shawback previously worked at the Fair Contracting Foundation of Minnesota, which monitors labor standards on publicly funded construction projects.

Local prosecutors intend to shine a search light on the shadowy corners of the economy where wage theft and labor trafficking have found a home, especially the non-union construction industry.

Ramsey County Attorney John Choi recently hired a full-time investigator to begin delivering wage-theft cases for potential prosecution under the state’s theft-by-swindle statute. Choi, who co-chaired a Labor Advisory Council with Hennepin County Attorney Mike Freeman, said the hiring is a step toward moving more wage-theft cases into the criminal justice system.

The most common types of wage theft occur when employers misclassify workers as independent contractors, fail to pay minimum wage or don’t follow overtime laws. The state’s labor and commerce departments investigate those violations, but the investigations often result in civil penalties – a warning, a fine or being temporarily barred from bidding on public projects.

“In a way, it can all be just looked at as a cost of doing business,” Choi said.

“Both Mike Freeman and I have this really strong belief that some of this conduct should be looked at from a criminal prosecution perspective,” Choi added. “Oftentimes, it’s not until people are subject to potential jail or prison time – or that negative publicity of being prosecuted – that you get people’s attention.”

‘Rampant’ wage theft

The advisory council led by Choi and Freeman pulled together prosecutors, regulators and labor advocates to work collaboratively on best practices for holding wage thieves accountable in the criminal justice system.

Earlier this year, the council approved a report that found “rampant wage theft” in the non-union construction industry in Hennepin and Ramsey counties, noting that it comes at a significant cost to local communities.

The report estimated that 4,872 construction workers in the two counties are victims of payroll fraud, that employers steal over $3 million in wages each year and that wage theft diverts over $11 million from Social Security and Medicare funds.

For unions and labor advocacy groups like CTUL, the report’s findings validated the complaints they have heard from people working in the non-union construction industry, where layers of subcontractors and labor brokers too often conceal illegal dealings.

“Wage theft cannot be tolerated in an industry that is so essential to our city’s infrastructure,” CTUL Co-Director Merle Payne said. “Not only does wage theft hurt workers and their families, it also puts a strain on taxpayers when developers off-load the cost of labor and insurance onto the public.”

Raising the profile

The Labor Advisory Council also worked to create a “handoff process,” so that civil investigators could deliver relevant information to agencies pursuing criminal prosecution without hindering either process. The council also reached out to both county sheriffs to get buy-in from law enforcement.

“We know there’s a lot more we can do in the criminal justice system if we get the right kind of investigation done,” Freeman said.

The Hennepin County Attorney’s Office demonstrated as much with its high-profile prosecution of Ricardo Batres. The notorious wage broker pleaded guilty in November 2019 to felony charges of labor trafficking and insurance fraud, and received a nine-month jail sentence.

But even as they celebrated the Batres case, labor advocates warned that his crimes were just the tip of the iceberg when it comes to wage theft in the Twin Cities. Choi said the Batres case was a turning point in his office’s decision to get proactive about criminal prosecution.

“I just realized, we’re sitting here waiting because we’re usually the recipient of cases,” Choi said. “But sometimes to get something done, you just have to go and do it yourself. So let’s go out and hire somebody to be our investigator.”

Choi’s office gained funding from the county board to replace a retiring, part-time employee who investigated prevailing-wage violations with a new, full-time investigator to help deliver cases related to prevailing wage and wage theft.

The new investigator, Jacob Shawback, previously worked for the Fair Contracting Foundation of Minnesota, which monitors labor standards on public construction projects across the state. “You’ve got to love working on behalf of working people, and Jacob has the background of working with labor unions around this issue,” Choi said.

The county attorney said he hopes the increased public attention on wage theft as a crime will have a deterrent effect and raise awareness among other prosecutors in the state. Choi compared it to his office’s focus on sex trafficking a decade ago, which drew nationwide attention.

“I remember when I first started talking about it, people would ask if it’s really happening here,” Choi said. “A lot of people weren’t aware of it. But we gained a greater awareness, and that greater awareness came, in part, because we started having cases.

“Our labor partners are telling us they know for a fact these violations are happening. It’s not a clerical mistake; people are actually stealing. And I think this is one of those areas that needs improvement to make sure these cases get the attention of the justice system.”

Learn more

Choi and others involved in the Labor Advisory Council’s work will offer a presentation at the May 11 St. Paul Regional Labor Federation (RLF) delegate meeting, beginning at 6 p.m.

“Despite the strongest wage theft protection law in the country, we know workers in Minnesota continue to experience wage theft,” RLF President Kera Peterson said. “I’m glad for the opportunity to serve on the Labor Advisory Council, and I’m thankful that County Attorney Choi and the Ramsey County Attorney’s Office are working to enforce our existing wage theft law.”

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Union carpenters spotlight tax fraud in construction industry

April 14, 2022 by

Members of the North Central States Regional Council of Carpenters demonstrate outside a development site in northeast Minneapolis.

Union carpenters across the Midwest this week are calling out contractors who commit payroll fraud to gain an unfair leg up in bidding on construction jobs, a practice that drains $136 million from state coffers each year in Minnesota alone, according to one recent study.

In northeast Minneapolis Wednesday, members of the North Central States Regional Council of Carpenters picketed a residential construction site, taking aim at Wisconsin-based Painting America Inc., a contractor on the project, for undermining area wage and benefit standards.

Painting America has faced charges from the Minnesota Department of Labor Industry for illegally misclassifying employees as independent contractors, and union representative Woodrow Piner said former employees have reached out to the Carpenters for help recovering lost wages.

“At some point workers get frustrated by how they’re being treated and look for a change, and they find their way to our office,” said Piner, the NCSRCC’s director for central and southern Minnesota.

“A number of workers from Painting America Inc. have reported being paid off the books, not having withholdings or taxes held off their checks, and not being paid overtime after 40 hours,” Piner said. “And these were workers directly under the supervision of Painting America.”

Contractors who follow the law and pay workers fairly struggle to compete on cost with unscrupulous bidders, driving down standards in the industry. Piner said the practice is most prevalent on multifamily, wood-frame construction sites.

But construction workers aren’t the only ones hurt by employee misclassification and other forms of payroll fraud. It costs taxpayers, too.

In a study issued in January 2021, researchers from the Midwest Economic Policy Institute found Minnesota loses $136 million in state revenues annually due to construction payroll fraud, including $65 million in lost income-tax revenue. Nationally, tax fraud in the construction industry costs the public $8.4 billion per year, according to the Carpenters Union.

“That means hardworking taxpayers are picking up the slack,” Piner said.

Construction payroll fraud also drains $13 million from the state’s unemployment insurance fund and $58 million from the workers’ compensation pool, according to the report. Adding insult to injury, workers misclassified as independent contractors or paid off the books are not eligible to access those funds if they are laid off or injured on the job.

Although payroll fraud persists in Minnesota, the state’s new wage theft law – touted by supporters as the strongest in the nation when it passed in May 2019 – gives state regulators new tools and more resources to crack down on the practice. County attorneys in the metro are increasing their attention on wage theft, too.

That’s good reason, for carpenters on the picket line in northeast Minneapolis, to keep shining a spotlight on the multifamily, wood-frame construction industry.

“We’re looking for elected officials, developers and contractors to pay more attention, to be accountable for what is happening on these projects,” Piner said. “Not only does it hurt the taxpayer, it’s about the dignity of workers.”

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As session begins, Minnesota unions see opportunity for investments in infrastructure, frontline workers

January 31, 2022 by

Essential workers marched outside the Capitol during a union rally last summer.

With a projected $7.7 billion budget surplus, state lawmakers have an historic opportunity, union leaders said, to fully invest in public services, infrastructure and frontline workers during the 2022 legislative session, which began today.

Lawmakers traditionally take up capital investments – the so-called “bonding bill” – in even-numbered years, but the record surplus, coupled with unspent federal pandemic relief funds, could allow for more broad spending measures this year, including long-delayed compensation for frontline workers.

Unions also plan to lobby for pro-worker policy changes like paid family leave, and to remain vigilant in preventing attacks on existing worker rights and protections from gaining traction.

While Gov. Tim Walz and a labor friendly DFL majority in the House have expressed an appetite for robust investments and pro-worker policies, the outlook is less rosy in the Senate, where Republicans hold a narrow majority.

“The Senate has proven to be an obstacle – if not a roadblock – for years to paid family and medical leave, as well as more recently frontline worker pay,” said Melissa Hysing, the Minnesota AFL-CIO’s legislative and strategic research director. “The challenge is always going to be the Senate.”

Minnesota unions are sure to advance their own priorities to the Capitol with solidarity from the labor community. But here’s a look at the agenda unions crafted together as part of the Minnesota AFL-CIO, which unites over 1,000 affiliate unions and 300,000 working people.

Union tradespeople called on lawmakers to pass a bonding bill outside the Capitol in 2020.

• Infrastructure jobs

Not only is it a bonding year, but the $1 trillion federal infrastructure bill, signed into law by President Joe Biden last November, gives Minnesota an opportunity to leverage additional funds for capital investment and create tens of thousands of family-sustaining jobs.

The Minnesota Building and Construction Trades Council, the voice of the state’s construction unions, praised Walz’s Local Jobs and Projects Plan, unveiled earlier this month. In a statement, Executive Director Tom Dicklich said the $2.7 billion infrastructure bill would leverage funding to support “statewide projects for years to come.”

“The passage of the Local Jobs and Projects act will provide an opportunity to create a solid pipeline of projects that can sustain the construction industry and the jobs it provides,” Dicklich said. “We thank Governor Walz and his team for putting forward this plan and urge all lawmakers to work together to make these needed investments in the jobs and infrastructure that Minnesota deserves.”

At a rally in downtown Minneapolis in December 2021, advocates called on legislators to stop playing politics with a fund created to compensate essential workers.

• Frontline worker pay

Last July, Minnesota lawmakers set aside $250 million in funds to compensate essential workers for keeping the state running during the COVID-19 pandemic. But workers never received a penny, as lawmakers on a bipartisan working failed to agree on who should be eligible.

Republicans on the working group blocked any plan that did not direct the payments to a narrow pool of health care workers, first responders and long-term-care workers. But unions, including the Minnesota Nurses Association, argued against excluding any frontline worker.

Hysing said the Minnesota AFL-CIOwill support Walz’s proposal to give each of the state’s estimated 667,000 frontline workers a $1,500 bonus, calling it “unfinished business.”

Julie Bleyhl, executive director of the American Federation of State, County and Municipal Employees (AFSCME) Council 5, called Senate Republicans “disrespectful” for seeking to exclude retail workers, bus drivers, janitors and others from the payments. Many Minnesotans have churned through their paid time off – or gone without pay – to quarantine or provide care for themselves and their families.

“While the need for public services has increased dramatically for many years, the COVID-19 pandemic has had a particularly devastating impact on our workforce, through forced overtime and COVID-19 exposure,” Bleyhl said. “That is why our union remains steadfast in our commitment to fighting for frontline worker bonus pay for all frontline worker heroes.”

• Paid family leave

In more unfinished business, the Minnesota AFL-CIO will continue to co-chair a statewide coalition of labor, faith and community organizations lobbying to extend paid family and medical leave benefits to all workers in the state.

The coalition supports creating a statewide insurance pool that would cover the cost of replacement wages for workers who take time off for the birth or adoption of a child, or to be with an ailing family member. Workers would be eligible for up to 12 weeks of leave, with benefits ranging from 55 to 80 percent of their typical wages.

The program is included in Walz’s proposed spending package, and House DFL leaders have proposed using part of the budget surplus to pre-fund benefits for two years.

“Working people should never be forced to choose between a paycheck and taking care of themselves and the people they love, and lawmakers can take action so we never have to make that choice again,” Minnesota AFL-CIO President Bill McCarthy said.

• Workers’ Compensation eligibility

Unions will encourage lawmakers to extend the law, passed in 2020, creating a presumption that first responders and health care workers who contract COVID-19 did so on the job, making them eligible for Workers Compensation benefits.

• Wage theft

Despite passing with bipartisan support in 2019, Minnesota’s new wage theft law – the strongest in the nation – has been a target of attempts to weaken its protections and soften penalties on offending employers. Hysing pointed to Republican proposals last year that would have stripped language requiring employers to notify new workers of their wages before their first shift.

“So workers wouldn’t know until after they’ve received their first paycheck what they’re supposed to receive,” she said. “One of the first defenses against wage theft is workers knowing what they’re supposed to be paid – that shared understanding between the worker and employer about what the wage is for work performed.

“We will continue to work to maintain these hard-won protections and make sure workers get paid for the work they’ve done.”

For updates on the Minnesota AFL-CIO’s work at the Capitol and alerts about how to take action, follow the federation on Facebook and Twitter, sign up for text and e-mail alerts.

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Senate GOP ousts MN labor commissioner, plays politics with worker health, safety

August 13, 2020 by

In a surprise move yesterday that troubled Minnesota’s union leaders and outraged the DFL minority, Senate Republicans voted to oust the Minnesota Department of Labor and Industry’s acting commissioner, Nancy Leppink.

Her removal threatens to undermine ongoing efforts, led by Leppink in collaboration with labor and industry leaders, to keep workers safe and healthy during the COVID-19 pandemic, union leaders warned.

Minnesota AFL-CIO President Bill McCarthy, the state’s highest-ranking union officer, called the party-line vote a “slap in the face to working Minnesotans.” Joel Smith, president of LIUNA Minnesota and North Dakota, said the firing “will make workers less safe.”

Gov. Tim Walz appointed Leppink to serve as labor commissioner after taking office in January 2019, but she, like several members of Walz’s cabinet, had not been confirmed via floor vote in the Republican-controlled Senate.

Majority Leader Paul Gazelka (R-Nisswa) stunned DFLers by putting Leppink’s confirmation on the Senate agenda yesterday, as lawmakers held a special session required to extend Walz’s state of emergency during the pandemic.

Minority Leader Susan Kent (D-Woodbury) said both she and the governor’s office learned of Republicans’ plan to vote not to confirm Leppink in a text message Gazelka sent just minutes before bringing her appointment to the floor. The ambush effectively prevented Leppink’s supporters preparing arguments in her defense.

“None of us in the minority had any expectation that this was going to be an issue in today’s session,” Sen. Dick Cohen (D-St. Paul) said, adding that the surprise confirmation vote was “in contrast to how we’ve handled things” since he joined the Senate in 1987.

Others from Cohen’s caucus were less diplomatic.

Sen. Jason Isaacson (D-Shoreview) called the move “bush league.” He questioned whether Senate Republicans, who have voted repeatedly to curb Walz’s emergency powers during the pandemic, were exacting political revenge.

“You look at the pedigree (Leppink) brings to the table – the professionalism, the experience,” Isaacson said. “And then you look at the ridiculously long list, bipartisan list … who unanimously endorse Commissioner Leppink…

“It leads me to wonder, why would you do this? Is it because we didn’t get our way, and now we’re mad? Is it because the governor hurt our feelings?”

After accepting a position in Walz’s cabinet, Leppink relocated from Geneva, Switzerland, where she worked as branch chief for the International Labour Organization, overseeing efforts to improve worker protections in 187 member states.

But St. Paul is where Leppink began her career as a watchdog for workers’ rights 34 years ago, advancing from the state Attorney General’s Office to a position as chief general counsel in the labor department. She served under both Republican and DFL governors. Later, she went to work in the Obama administration as a leader in the U.S. Department of Labor’s Wage and Hour Division.

In less than two years as commissioner, Leppink has drawn praise from unions and industry groups for her department’s approach to workforce development, particularly when it comes to expanding registered apprenticeship opportunities statewide.

Additionally, Leppink has sought to modernize the department’s enforcement of wage-and-hour standards, including Minnesota’s historic wage theft law, which Leppink championed last year. The department recently secured nearly $315,000 in total back-wages owed to 70 construction workers on a project in Thief River Falls, where a subcontractor violated prevailing-wage, overtime and other wage rules.

But during debate on the Senate floor yesterday, Gazelka and other Republican senators said Leppink had not been accommodating enough to the state’s business owners.

“The Department of Labor and Industry is expected to be responsive and not a hindrance to state’s businesses,” Gazelka said, claiming his caucus has heard “case after case of harassment” from constituents interacting with the department. “She’s in the wrong role.”

Every Republican who spoke in support of removing Leppink was quick to offer assurances that the decision was not being made lightly – even if it was being made without warning.

“I take this very seriously,” Sen. Carrie Ruud (R-Breezy Point) said.

“This is a serious issue we take up,” added Sen. Jason Rarick (R-Pine City).

“We do take this very seriously,” Assistant Majority Leader Karin Housley, of Stillwater, insisted. When the Senate Jobs Committee issued no recommendation on Leppink’s confirmation during a meeting six months ago, Housley added, “that was the notification right there” that yesterday’s floor vote was coming.

DFLers remained unconvinced. Sen. Scott Dibble (D-Minneapolis) pleaded with Republicans not to throw the agency in charge of protecting workers’ health and safety into chaos during a public health emergency, just “to get a shot off at a chief executive with which you are unhappy.”

Whatever victory Republicans achieved with yesterday’s vote, Minnesota Building and Construction Trades President Harry Melander said, came at the expense of working people.

“In these uncertain times, difference of opinion is healthy, but this kind of unproductive posturing in government serves no one and creates anxiety for our members,” Melander said. “Minnesota workers should be put first, but today’s action by the Senate put workers last.”

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Labor trafficker’s victims speak out, pointing to need for reform

January 17, 2020 by

Ricardo Batres (Hennepin County photo)

Notorious wage broker Ricardo Batres, who pleaded guilty to felony charges of labor trafficking and insurance fraud in November, received a nine-month sentence in Hennepin County district court Wednesday.

The sentencing brought to a close the first labor trafficking case to emerge from Minnesota’s construction industry. But worker advocates, armed with the findings of an alarming new report, warn that unless the industry makes some fundamental changes, it’s unlikely to be the last.

Judge Lois Conroy did not stray from the terms of a plea agreement Batres reached with prosecutors last year, but the proceeding did give his victims an opportunity to put their stories on record.

“I fear those connected with Mr. Batres,” one of his former workers, identified by the initials “YIB,” said in a statement read by a victim’s advocate. “I am always fearful. I feel like everyone is my enemy. I did not anticipate this experience in Minnesota.”

“YIB” was one of four former employees who provided the court with statements. They said Batres made them work long hours to keep their housing, which the trafficker arranged, or to pay off debts, which the trafficker held.

Some said they were not paid in full for hours they worked. Others described working through the pain of jobsite injuries, often in unsafe conditions.

“Death was very close to us,” one victim said.

When a spinal injury sustained by victim “JZL” became too serious to work through, Batres instructed the worker to give false information to medical providers, so Batres could avoid liability. In his statement, “JZL” said his family “lived in constant fear” because Batres “threatened to kill us if I reported him to authorities.”

“He treats people worse than animals,” another victim said. “He does not have a conscience.”

Twin Cities construction workers joined the “March for Dignity and Respect,” sponsored by CTUL, in Minneapolis just over a year ago.

An industry in crisis

The testimony of Batres’ victims echoed findings of a new report by the Worker-driven Social Responsibility (WSR) Network, which warns of a “human rights crisis” on local non-union construction sites.

Released last month, “Building Dignity and Respect: The Case for Worker-driven Social Responsibility in the Twin Cities Construction Industry” draws from surveys of 76 metro-area residents who have worked a wide range of construction jobs.

CTUL, a Twin Cities worker center and human rights organization, conducted the surveys last winter, gathering information about wages, benefits, training, workplace safety and more.

Nearly half of workers reported being cheated out of wages they were owed. Many said their employers failed to tack overtime premiums onto their wage rates. Others said they were paid less than minimum wage, were forced to work through legally required breaks or had hours shaved off their time cards.

The report also calls into question safety protocols on local non-union sites. Nearly half of those surveyed said they had not received safety training before beginning work, and 44% reported not getting proper safety equipment from an employer.

Three in 10 workers surveyed said they had been hurt on the job at some point, and most workers who reported getting hurt said their employer failed to cover medical expenses or compensate them for lost wages.

Meanwhile, a third of workers surveyed said they wouldn’t voice their concerns about safety, wage theft or other abuses to supervisors for fear of retaliation, whether it be losing their job or being blacklisted, deported or kicked out of employer-provided housing.

Tip of the iceberg

While Batres’ conviction breaks new ground, advocacy groups like CTUL and local construction unions warn Batres is not the only bad actor in town. CTUL is currently investigating four other labor trafficking cases, with dozens of Twin Cities workers involved, according to the WSR Network report.

At Batres’ sentencing, the worker center submitted a community impact statement into the record, warning the non-union construction industry creates incentives for contractors like Batres to “cut costs on the backs of workers.”

“Large developers and finance behind those developers have learned that they can put downward pressure on contractors on their projects to build the projects as quickly and cheaply as possible,” the statement reads. “This has led to extreme fragmentation in the industry, with multiple layers of sub-contractors competing to offer the cheapest rates possible.

“The effect is that the one who gets the contract is the one who has figured out the most creative ways to skirt labor laws in order to put in a competitive bid.”

Moving forward

Fragmentation and transience may be facts of life for people working at the bottom of construction labor chain, but unsafe conditions, wage theft and abuse don’t have to be.

The report calls for a new, worker-driven model to hold Twin Cities developers and contractors accountable – and to stop traffickers like Batres before they get a toehold in the market.

The approach involves getting decision-makers at the top of the labor-contracting chain to enter a legally binding, standard-setting agreement with a human rights organization.

Similar structures have improved conditions for workers in other highly fractured contracting chains worldwide, CTUL Co-Director Merle Payne said. After years of organizing by tomato workers, corporate buyers and growers entered into a WSR structure – the Fair Food Standards Council – that monitors compliance with a set of unique standards in the Florida fields.

“This model will work effectively in a sector where the real power is so many tiers away from you as a worker,” Payne said. “It creates accountability through the entire structure by ensuring the people at the top are taking responsibility to ensure their profits are not made off of severe exploitation.”

Building dignity and respect

Workers organizing with CTUL already have launched a campaign to make the WSR model a reality.

They want large developers and general contractors in the Twin Cities to participate in the Building Dignity and Respect Standards Council. The council, Payne said, would establish and monitor a code of conduct that participants would require their subcontractors to uphold at every strata of the labor chain.

Additionally, the council would educate workers about their rights and make it easy for workers to report any violations without fear of retaliation. Any employer found to have violated the code of conduct would face swift, meaningful consequences.

While Batres’ victims waited months for their day in court, in the Florida tomato fields, where workers now have access to a complaint hotline, most disputes are resolved in less than two weeks, according to the Fair Foods Standards Council.

“It really demonstrates the power of what this model can be,” Payne said. “When you have workers themselves empowered to enforce their standards, suddenly you have thousands of monitoring agents on the ground … making sure there are no violations in the first place.

“That’s deep enforcement, and that’s what this model builds. When that happens, in something like this case, Ricardo Batres does not exist.”

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

Trafficker’s plea deal reveals construction industry ‘in distress,’ advocates say

November 20, 2019 by

When a notorious wage broker pleaded guilty to two felony charges in Hennepin County this week, it was welcome news for unions and community groups working to rid Minnesota’s construction industry of labor abuses.

“We are grateful that the legal system is holding those who commit wage theft and illegal trafficking of construction workers seriously,” said Jessica Looman, the Minnesota Building and Construction Trades Council’s executive director, after Ricardo Batres pleaded guilty to labor trafficking and insurance fraud Monday.

The plea deal confirms that Batres recruited immigrant workers to fill jobs on Twin Cities construction sites, and he denied some their legally guaranteed rights on the job by exploiting their undocumented status.

Sentencing is not until January, but prosecutors will recommend Batres serve up to nine months in the county workhouse and five years of probation. He could also be barred from inclusion in future state or federal construction contracts.

The Building Trades Council, which represents the state’s unionized construction workforce, called Batres’ case the first big test of Minnesota’s labor trafficking and wage theft laws.

It’s unlikely to be the last.

In July, 14 Minnesota construction unions launched “Not On My Watch/Ya No Mas,” a campaign to heighten awareness of wage theft and labor trafficking and to assist exploited construction workers.

Dan McConnell, manager of the Minneapolis Building and Construction Trades Council, said Batres’ plea is an indication of the new initiative’s potential.

“The case against Ricardo Batres shows the strength of the construction community when we stand together against wage theft and labor trafficking,” he said. “It’s imperative that we protect the health of the construction community by continuing to call out bad actors who exploit our workers for their own gain.”

Unions are teaming up with community groups like Advocates for Human Rights and the local worker center CTUL to educate workers and identify abuses. CTUL organizers say they are currently investigating three other cases of labor trafficking and over a dozen cases of wage theft in the Twin Cities construction industry.

CTUL Co-Director Veronica Mendez Moore said the Batres case reflects “an industry in distress,” and added that the problem goes beyond labor brokers.

“Real estate developers and their financial backers are directly profiting from this kind of labor exploitation,” she said. “While some sectors of the construction industry are unionized and abide by human rights standards, there is a dark underbelly that does not.”

Minnesota’s new wage-theft law, among the toughest in the nation, will make it easier for officials to patrol that dark underbelly. Passed earlier this year, the law creates additional protections for workers and stiffens penalties for employers that commit wage theft.

Labor traffickers like Batres don’t just show up on construction projects, of course.

“This is a big problem in the industry,” said Burt Johnson, a spokesperson for the North Central States Regional Council of Carpenters. “Construction contractors and developers can no longer hide behind hiring a low-bid contractor when those bids are based on a criminally low price.”

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

Carpenters say prominent developer turns blind eye to abuse allegations

October 2, 2019 by

Samuel Saucedo (L) and Eric Macias (R) attended the Sept. 16 Roseville City Council meeting with their union rep, Jorge Duran, to share their experience working on construction sites managed by Reuter Walton.

What might have been a routine redevelopment deal instead prompted members of the Roseville City Council last month to weigh their oversight responsibilities when it comes to developers reaping tax benefits from the northern suburb.

During a final round of public comment on an arrangement between the city and Reuter Walton Companies, two carpenters stepped forward and detailed abuses they experienced while working on the Minneapolis-based developer’s construction sites.

Samuel Saucedo of Minneapolis and Eric Macias of Rochester say they are still owed thousands of dollars in unpaid wages for work they did on Reuter Walton projects over the course of more than a year.

The two men, who often worked side by side, decided about a year ago to stop accepting jobs arranged by a common “labor broker,” Jose Merino. That included jobs on Reuter Walton sites.

They subsequently filed complaints with the state Department of Labor, but dropped them, Saucedo and Macias told council members Sept. 16, after receiving hostile phone calls from Merino.

In an interview before the public hearing, Macias remembered answering the phone call while his wife, who had recently given birth, looked on.

“You don’t know me. I’ve got money. I’ve got people. Somebody will find you,” Macias remembered hearing. “He said he’s going to kill me and kill my wife and my daughter, just because I want to get paid the money he owes me.”

After the call, Macias’ wife began hiding whenever anybody came to the door. Even when it was Eric.

A shell game with wages

At the public hearing, a representative of Reuter Walton denied any involvement in the allegations made by Macias and Saucedo. The developer has only two minor labor violations on its record, which resulted in fines totaling $1,000, he said.

The developer also claimed to have cut ties with a carpentry subcontractor that, workers say, did business with Jose Merino, Caliper Building Systems.

But Jorge Duran, a representative for the North Central States Regional Council of Carpenters, said a muddled network of contractors, subcontractors and brokers breeds worker exploitation on large construction projects. And it won’t change unless developers are ultimately held accountable.

“Reuter Walton, they claim they don’t know what’s going on, but what does that really tell you?” Duran said. “That’s why the City of Roseville needs to keep an eye on who this developer hires.”

For Saucedo and Macias, trying to get paid for their work on Reuter Walton projects was a demoralizing cycle that left them spiraling further and further into debt. Subcontractors would say they were waiting to get paid by the contractors; contractors would say they had paid the subcontractors in full.

Macias said he finally approached a Reuter Walton representative. “I said, ‘I’m at your jobsite every day, seven days a week, 12 hours a day. Why don’t you guys pay us?’” Macias remembered. “He said I don’t know. So you go to Caliper, and they say I don’t know. You go to Jose, he says I don’t know.”

Macias said he remains over $9,000 in debt.

Unsafe working conditions, unsafe living conditions

Wage theft wasn’t the only abuse workers recruited by Jose Merino say they experienced. Saucedo said his two teenage sons found work with Merino, despite being minors. (They weren’t paid either.)

And safety wasn’t even an afterthought, Saucedo added, resulting in “a lot of injuries.”

Merino “never provided safety equipment for us – no glasses, harnesses, hardhats, gloves, nothing,” Saucedo said. “People used to get shot with the nail gun, and he wouldn’t pay the hospital bills.”

Workers say Merino recruits them to move to the Twin Cities – Saucedo relocated from North Dakota, Macias from California – with promises of housing for themselves and their families, in three-bedroom, two-bathroom apartments.

The apartments turned out to be real, Saucedo and Macias said, but there were more than a dozen other construction workers already living in them.

And while he didn’t always get paid by Merino, Saucedo added, Merino never failed to collect the $300-per-week rent.

“I would work 70 hours per week, and he would pay me for 45,” Saucedo said. “And he would never pay me overtime.”

Both Saucedo and Macias regret ever moving to the Twin Cities.

“You drive with your family downtown Minneapolis, see so many big Reuter Walton signs,” Macias said. “It makes me really mad. I can’t believe they aren’t paying people.”

Union steps up pressure

Since walking away from Merino a year ago, Saucedo and Macias have joined the Carpenters union. Macias laughed when asked about the difference between working for Merino and working union. “It’s unbelievable,” he said.

But the two have also provided union representatives like Duran a window into the shadowy world of nonunion construction. Duran said he has talked to at least 150 other workers, many of whom are immigrants, who have experienced exploitation and wage theft at the hands of a labor broker.

“This is a very bad, infected virus in construction right now,” Duran said. “And it’s happening all across the state.”

In Roseville, council members didn’t go so far as to dump the redevelopment deal with Reuter Walton, but they did add language allowing the city to withhold and “claw back” tax financing dollars if Reuter Walton or any of its subcontractors on the project are found guilty of wage theft. And the language will be included in all future development deals.

The Carpenters union, meanwhile, plans to continue shining a light on the stories of Macias, Saucedo and other workers who allege mistreatment on Reuter Walton projects. The union also raised its concerns at a St. Paul City Council meeting in August, briefly putting a zoning change requested by Reuter Walton in jeopardy.

The union’s objective, public affairs director Richard Kolodziejski said, is to prevent future abuses by increasing public scrutiny at every level. Developers know Minnesota has a new wage-theft law on the books, and both the Attorney General’s Office and the Department of Labor have announced plans to put that new law to good use.

“The enforcement is going to come now,” Kolodziejski said. “The state is going to be holding (developers) accountable, not just the wage broker.

“So we’re going to keep ratcheting this up and, hopefully, tighten things up in our cities.”

Filed Under: Organizing Tagged With: , , , , , ,
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