After putting up a new interior wall for a six-story dorm for University of Minnesota students, Ivan Gonzalez confessed to some problems with a job that he, along with dozens of other immigrant workers, were rushing to finish.
Inside a second-floor dorm room-to-be, Gonzalez said he typically worked 10-hour days, six days a week doing drywall, and was paid $220 a day, often in cash. “There’s no overtime pay, no benefits,” Gonzalez said, noting he sometimes worked 13-hour days.
Two co-workers were keen to highlight another problem: as they were leaving work one recent evening, they saw six teenagers – they guessed 13, 14 or 15 years old – scurrying out of a van and into the building to do clean-up work.
Upset by such scenes, worker advocates – from Minnesota’s attorney general to immigrant worker centers – have voiced alarm that many Twin Cities construction workers are toiling under hugely exploitative conditions.
Sometimes labor contractors disappear without paying workers the two weeks’ pay owed them.
Like Gonzalez, many workers are misclassified as independent contractors, not as employees, and their employers cheat them and the government by not paying overtime or social security, workers’ compensation and unemployment insurance taxes.
“Some contractors are engaging in some of the worst behavior you can imagine,” said Dan McConnell, president of the Minnesota Building and Trades Council, a union group. “We hear about people treated like slaves, kept in some dreary house, not able to talk with anybody. They’re told that if they complain, they’ll have them deported. One labor broker threatened to behead some workers’ family members back in their home country.”
Eager to curb such abuses, several labor unions and a prominent workers center, the Centro de Trabajadores Unidos en la Lucha (CTUL) came up with an innovative idea: they founded the Building Dignity and Respect Standards Council, a group they want Minneapolis-area building developers to join.
By joining, developers would pledge to ensure that their contractors and subcontractors comply with a code of conduct that calls for a $20 minimum wage, paying time-and-a-half for overtime, paying workers’ comp and unemployment insurance taxes, not misclassifying workers and never threatening workers or using child labor.
For its champions, Building Dignity is a model they hope will spread to other cities to stop abuses and lift standards for the nation’s nearly 9 million construction workers. “A big advantage of this is we wouldn’t have to worry about always responding case by case about wage theft,” said Douglas Guerra, a drywall worker and CTUL member who helped Building Dignity write an educational handbook for immigrant workers. “This program would ensure that developers help prevent wage theft from happening in the future.”
Guerra has been victimized many times: a subcontractor once skipped out on paying him over $3,000 in wages, and some contractors, eager to misclassify him as a contractor, insisted he buy his own workers’ comp insurance. Speaking in Spanish, Guerra said: “Building Dignity, even if it doesn’t eradicate all abuses, would really transform things and alleviate lots of problems.”
One study found that over 30,000 Minnesota construction workers (23% of the total workforce) are misclassified as independent contractors and paid off the books. The study said misclassified construction workers earn $29,700 less a year (36% less) in wages and benefits than they should. Moreover, the study found that Minnesota loses $136m annually in tax revenues due to construction payroll fraud, including $65m in income taxes and $58m in workers’ compensation premiums.
“Misclassification is a very serious problem when it comes to construction,” said Keith Ellison, Minnesota’s attorney general. “A lot of these companies are pushing the costs and risks on to individual workers and reaping the financial benefits for themselves.” By misclassifying workers, employers can cut costs per worker by 30% by not paying overtime or social security and Medicare taxes or unemployment insurance and workers’ comp premiums.
Union officials say that in the Twin Cities, non-union contractors do half the multi-family residential construction and often pay less than half what unionized contractors pay. Most non-union contractors used to be law-abiding, union officials say, but now most systematically break wage-and-hour laws.
Ellison and local prosecutors have been bringing more wage theft and misclassification cases against construction contractors and labor brokers, but worker advocates say the law-breaking continues unabated. One labor broker was recently indicted for fraud, for underestimating its payroll by $3.1m in order to illegally cut its workers’ comp premiums by $340,000, while a second broker was indicted for workers’ comp fraud and sexually assaulting a worker.
“It’s a game of Whac-A-Mole,” said Burt Johnson, general counsel for the North Central States Regional Council of Carpenters. “There is always another labor broker who is willing to break the law and risk getting punished. It’s the developers and general contractors who can stop the crimes that are committed. They get to decide whether workers will receive middle-class wages, healthcare, pensions and training or whether they will partner will labor brokers to exploit workers.”
In 2018, the Hennepin county attorney, the Minneapolis-area prosecutor, brought a case that sparked greater attention to abuses by labor brokers. Ricardo Batres was accused of not paying overtime even though he sometimes forced people to work 70-hour weeks and was accused of forcing workers to live in overcrowded housing with no hot water. The indictment also accused him of threatening to deport and even kill workers if they complained to public authorities. When a worker severely hurt his back, Batres ordered him to tell hospital officials he wasn’t injured on the job. Batres ultimately pleaded guilty to labor trafficking and was sentenced to 270 days in prison.
CTUL talked with immigrant workers to help gather evidence against Batres. That frightful case spurred CTUL, the carpenters and two other unions to create the Building Dignity council in 2020. The council has gathered steam far more slowly than expected partly because of the pandemic, because the city focused on racial justice after George Floyd was murdered and because developers resisted joining Building Dignity. In June 2022, CTUL sponsored a protest march by construction workers and their allies that sought to pressure three developers – Solhem, Yellow Tree and United Properties – to join Building Dignity, with CTUL asserting those developers had used law-breaking labor brokers. So far, no developers have joined.
Adam Hanson, president of Minnesota Associated Builders and Contractors, voiced developers’ concerns about Building Dignity and the groups that founded it. “Unfortunately, we have heard about the questionable pressure tactics and campaigns they have used against quality, local construction companies and developers in attempts to get these businesses to join their group.” Hanson said. He added that Building Dignity “has given very little information” to developers “about the group’s business model and structure”. He said developers “do not know where the money [Building Dignity] is demanding goes or how it is any different than becoming a union-signatory contractor”.
Doug Mork, Building Dignity’s executive director, said the money developers pay would help hire staff and underwrite a monitoring program to ensure contractors comply with the code of conduct. “We are not a union,” Mork said. “We are not negotiating for higher wages or anything else the way unions do. We have a code of conduct with standards they have to abide by. Ninety-eight per cent of those standards are already the law.” He said developers joining the council “give us the ability to educate, monitor and enforce”.
Yellow Tree and Solhem did not respond to the Guardian.
CTUL is planning another protest march on 12 September to again press Yellow Tree, Solhem and United Properties to join. “This isn’t going to flip overnight,” said Merle Payne, CTUL’s co-director. “This is a huge systems change.”
Asked why it has declined to join Building Dignity, United Properties told the Guardian that it “is firmly committed to adhering to the highest ethical standards with integrity, honesty and good faith in all areas”. It added, “We expect our [contractors] to uphold these same principles.”
Solhem has proposed building up to 600 apartments at a former lumber yard in Northeast Minneapolis, but some neighborhood groups have vowed to block the project unless Solhem joins Building Dignity. Elliott Payne, the city councilman who represents that area, said Solhem’s owner told him that unions were trying to bully him, that he ran a clean, safe operation and that he would not open his books up to a third party he did not trust.
But Payne cautioned Solhem, saying: “I can’t support a project where workers face abuses. I’m hearing stories of workers getting injured on job sites and sexual harassment and assault.”
Ellison, Minnesota’s attorney general, said: “Ultimately if you don’t have something like the Building Dignity Council, you end up with a race to the bottom. We need to keep good contractors, and if you make them compete with people who are cutting corners and doing the wrong thing, they will feel pressure to do the same thing. This makes it extremely difficult for everyone, especially for fair, law-abiding contractors.”