After a 15-month investigation that spanned 19 construction sites, the Minnesota Department of Labor and Industry announced Dec. 19 that it will seek to recover $1.2 million in unpaid wages and the same amount in liquidated damages from two subcontractors that allegedly schemed together to cheat 25 workers out of the pay they were owed.
The allegations include practices that Building Trades unions have long warned are too common on non-union construction sites, like paying workers off the books, failing to pay overtime and taking unauthorized deductions from workers’ pay.
Local representatives of the Carpenters union, in fact, have maintained that they met with the developers behind at least one of the sites, the Wilf family’s Viking Lakes apartment project in Eagan, to warn against working with the subcontractors targeted by the investigation – to no avail.
Those subcontractors, Property Maintenance and Construction Inc. (PMC) and Advantage Construction Inc., have said they will contest the agency’s allegations in court. An initial hearing is scheduled next week.
After investigation results were made public, the North Central States Regional Council of Carpenters (NCSRCC) released a statement saying that its representatives “worked closely” with the DLI and the 25 victims of the alleged wage theft scheme.
“Workers were willfully unpaid by PMC’s owner and actively discouraged from reporting violations and cooperating with the DLI investigation,” the NCSRCC statement said. “Now the employer is challenging DLI’s findings, which will be resolved at a hearing before an administrative law judge.
“The result of this hearing will be a significant step toward protecting employees and holding contractors accountable for their business practices. NCSRCC will continue to work with the DLI and other industry partners to find justice for workers who have fallen victim to wage theft practices, as well as partner with contractors to continue fair and lawful decision-making.”
Attorneys for Advantage also responded to the complaint, saying the subcontractor “did not employ any of the parties listed on the statement of back wages.”
The statement continued: “Even if Advantage were the employer of the individuals identified in the statement of back wages (and Advantage surely was not) the Department’s findings of back wages are not supported by actual records and therefore the penalty is arbitrary and capricious.”
But DLI investigators determined that PMC and Advantage were “joint employers” of the alleged victims at Viking Lakes and 18 other construction sites – including the Beyond Apartments in Woodbury, Liffey on Snelling in St. Paul, Roseville Terrace Garages and The Winslow of West St. Paul – between March 4, 2019, and June 5, 2022.
Advantage would frequently subcontract roofing and siding work to PMC, investigators found. While Advantage may not have employed those laborers “on paper,” the agency alleged in a legal notice filed in December that “in practice” Advantage trained the workers and furnished their uniforms, tools, supplies and safety equipment.
“Advantage supervised their work,” the notice reads. “Some employees were also told, and reasonably understood, that they worked for … Advantage.”
The notice outlines several forms of wage theft that PMC and Advantage workers allegedly faced on the job:
- Overtime pay was not consistent, despite workdays that typically stretched 10 hours, sometimes longer, over the course of a six-day workweek.
- Workers sometimes received a “daily rate” instead of hourly wages, which is illegal, but sometimes workers were further shorted for days worked during the pay period.
- Payments in cash, off the books. PMC sometimes deducted 7% from an employee’s cash payment. “Employees were told the deductions were for taxes,” the notice says. “The deduction was sometimes noted on a post-it note in the envelope containing their wages.”
DLI also maintains that the violations were willful, tacking on a $25,000 civil penalty to the fines.
The agency alleges that PMC’s owner displayed knowledge of overtime laws while flouting them. Additionally, the owner discouraged workers from reporting violations, participating in DLI’s investigation or even speaking with representatives of the Carpenters’ union.
“After participating in the Department’s investigation … some affected employees feared for their safety,” according to the DLI notice.
In October 2022, the state Attorney General’s office sued PMC and its owner for allegedly hindering and delaying DLI’s investigation, for failing to make, keep and preserve records, and for refusing to make records available to the agency.
The parties settled that lawsuit in September 2023, clearing the way for DLI’s investigation to conclude.
Labor Commissioner Nicole Blissenbach said the investigation shows her agency will be relentless in pursuing wage theft and other labor abuses, no matter how long it takes.
“Wage theft hurts workers and their families, and hurts responsible employers that abide by the law,” she said. “It is unacceptable for employers to cheat employees out of the full wages they work so hard to earn. Likewise, it is unfair for contractors to have an edge when bidding against law-abiding companies by stealing wages from workers.”