With workers getting cheated, Legislature needs to toughen wage theft law

Today on job sites across Minnesota, one in five construction workers is likely to experience being misclassified as independent contractors, paid off the books and/or have their wages stolen.

Although we passed an effective law addressing wage theft in 2019, the issue remains prevalent across our industry. Wage theft and construction industry tax fraud hurt workers, hurt law-abiding businesses, and they hurt the community by shortchanging taxes, unemployment insurance, workers compensation and other benefits.

The Construction Worker Wage Protection Act (HF1859) would ensure that workers subjected to wage theft have recourse to collect unpaid wages from contractors. The law would make sure general contractors and project owners hire responsible subcontractors once we place the responsibility for preventing wage theft upon those with the most control over construction labor practices.

Today, general contractors are responsible for safety on the project — or they can be held accountable. General contractors are also responsible for workers’ compensation on their job sites. Similarly, we are asking that wage and hour violations also should be the responsibility of general contractors.

For years, we heard from general contractors and developers that corner cutting by some subcontractors has created a competitive disadvantage for honest businesses. For years we were also asked by the Associated General Contractors — which represents union construction companies — and other employer partners of ours what we are doing to curtail this practice of workers being paid off the books.

Some may ask, why are we working on another wage theft bill this session since one was just passed in 2019?

The biggest reason is that we haven’t seen much of a change in construction since the law was passed. About half of the multifamily work we see in wood frame, drywall and other work are still being performed by subcontractors that pay cash under the table.

We were particularly alarmed by a high-profile case of alleged wage theft at a project developed by the Wilfs — owners of the Minnesota Vikings. The Carpenters and other organizations came to realize general contractors need to be liable for the wages owed on their site. The workers we assisted who worked at Viking Lakes in Eagan and across other projects in the Twin Cities were owed thousands of dollars over a period of not just months — but years.

Imagine being that worker, owed that sum, and having no ability to seek recourse because many of these subcontractors cut and run and stay one step ahead of the law.

We’re leveling the playing field between the worker and not only their direct employer, but the general contractor who has final say and ultimate control of their job site. Today, a worker must attempt to navigate a web of subcontractors, sometimes as many as three, four, or five layers of subcontracting — often intentionally designed to deprive workers of wages and avoid accountability.

We also believe that this bill is focused on the problem while avoiding unintended targets: We exempt a number of construction projects, including single family construction when a homeowner is having work done on their home; state prevailing wage projects; and contractors that have signed collective bargaining agreements. In these situations, workers already have a process where they can seek recourse when they are not paid fairly for their work.

We did this to keep the law focused on where it can make the most impact. Representatives of the carpenters’ union met with a general contractor opponent of the bill about a year ago to discuss their subcontractors. When we asked about a subcontractor that had been caught with a child labor violation, the owner said to us, with a straight face, that he had asked the labor broker about the child working on their site, and he was told the worker took his kid to work for a while to show him what working in construction was like.

This kind of willful ignorance and negligence in our industry must stop. We believe that changing who is responsible on a job site is the only way to assure more compliance and fair treatment of workers. While the idea for this bill grew out of the alleged wage theft and sexual assault that happened in Eagan at the Viking Lakes project, this bill is about all of the wrongs that continue to go unchecked in construction. Every developer, owner and general contractor should be held to a high standard of what goes on, on their projects.

Our goal is not for a bunch of contractors to be caught breaking the law. Our goal is for general contractors to do the right thing: Hire subcontractors who have real payrolls, employees who are on the books. No corner cutting, no paying cash under the table. Now is the time to even the playing field for workers. Enough is enough when it comes to shirking responsibility for a problem that can and must be addressed.