Shortchanged: An in-depth look at wage theft
The Fair Contracting Foundation of Minnesota is one of the Twin Cities’ leading organizations in the fight against wage theft.
The foundation is one of just a few dozen organizations across the country that focus on wage theft in the public sector construction industry, and the only one in Minnesota. Created in 2011, the nonprofit labor management committee employees three investigative attorneys who pursue complaints and cases of wage theft, from local contactors not paying prevailing wages to employees misclassified as independent contractors, in all levels of government across the state.
We spoke with Mike Wilde, the foundation’s executive director, to talk about FCF’s work and wage theft.
Q: Why was the foundation created?
Mike Wilde: The FCF was created as a program sponsored by the [Minnesota Building and Construction Trades Council] to address some of the wage theft and unlawful practices in the publicly funded construction industry. The [council] had seen many laws go unenforced for a long time and they wanted to make sure all the contractors that were bidding on public work were adhering to the law. And so they created the Fair Contracting Foundation, the very first for the state.
Q: What does FCF’s work look like?
The FCF promotes prevailing wage law education, compliance and enforcement. It advocates for practices, policies and laws that ensure fair government contracts, a strong local industry and protection of the public interest. It operates like a small law office. We take leads, calls and questions from various sources about people who are cheated on public construction. Sometimes they’re from individual employees who speak out, trade representatives who see red flags or its competing contractors who want the law to be followed. Those are the three big ones.
What we usually do is get all the information we can and we present it to the enforcing agency, like the Minneapolis Department of Civil Right, Minnesota’s Department of Labor and Industry or the U.S. Department of Labor.
Q: Are there types of wage theft that are increasing?
A really fast and growing one is what’s called employee misclassification. All of the laws that are labor and employment-wise are established based on the employee-employer relationship.
But a lot of companies are saying, “I don’t have employees, I just hire independent contractors.” A man with a van and a paintbrush is a painter, Joe’s Paint Company, and it’s a scam. And that way the employers don’t pay Social Security, any FICA taxes, any state or federal taxes, or worker’s comp. So they drive bids down. And what happens is all those laws go out the window. And the people on the receiving end think they’re empowered because they’re self-employed, but they’re employees misidentified as independent contractors. So there’s a lot of victims in that — the state coffers, the federal coffers, and in my mind its Social Security fraud. There’s a lot of legality involved on whether that’s the case.
Q: What’s the punishment like for contractors that cheat workers?
Up until recently there was none. [Regarding] repayment, a lot of people joked that it was an interest-free loan where they had to pay back what they should’ve paid in the first place, and that’s it. Usually they just get a lawyer and negotiate it down to some sort of middle dollar figure.
Now in public construction, there’s a state law called the “responsible contractor” law that started Jan. 1, 2015. There are certain threshold that if the contactor cannot verify that they’ve passed those thresholds then they’re not deemed responsible and can’t bid on public sector work. The standards are pretty high. If you have a bookkeeping error you’re not going to run afoul of that law. Now, all of sudden, businesses have an added incentive to pay their workers according to the law. And quality, law-abiding contractors appreciate it. Everyone has to play on the same level playing field.
Q: What can people do to stop wage theft?
Support prevailing wage, understand and support the “responsible contractor” law, and be aware what your government is building. Public construction is our infrastructure so the public dollar should be spent to lift local economies and the citizens, not deprive them.
For more information on the Fair Contracting Foundation, visit fcfmn.org.