Latino immigrants working for subcontractors are too often subject to wage theft and threats of retaliation
As big development dollars flow into Portland amid an explosion of new luxury apartments, McMansions and high-rises, it’s a money grab for those looking down from the top floor of the construction industry.
For many laborers at the bottom, however, it’s a gamble.
Will they get a paycheck? Will it include payment for all the hours they worked, including overtime? Will their earnings, at the very least, equate to minimum wage?
Too often, the answer to those questions is no.
“You see all these buildings right now,” explained Jason Sheckler, a local union carpenter, “you’ve got three stories of concrete, which is all union, and then after that, the next four stories on top of that are wood framing – non-union. That’s a ton of jobs, and that’s a ton of workers being exploited in this town. And they’re carpenters. We have to change that.”
During the past two years, labor regulators have found nearly 50 Oregon construction contractors failed to pay their workers at least $3.4 million in back wages and overtime pay, and that figure includes only an audit and the two largest suits out of 260 wage claims in the construction industry in that time period.
Over the past five years, the Oregon Bureau of Labor and Industries, which handles prevailing wage claims against state-funded projects, has received 148 prevailing-wage complaints and claims worth $1.12 million in Multnomah County alone.
Many of the skilled sectors in the commercial building industry are heavily unionized, but there are significant gaps among wood framing and drywall subcontractors – and among contractors working on residential projects, from home building to remodeling and maintenance.
Typically, it’s Latino immigrants working for these non-union subcontractors who are most likely to be subject to exploitation, wage theft and threats of retaliation if they speak up or attempt to organize.
Sheckler’s union, the Pacific Northwest Regional Council of Carpenters, has been sending Spanish-speaking union representatives to non-union commercial job sites in an effort to organize Latino workers in recent years.
It’s an increasingly popular approach among labor unions, many of which in the past had blamed immigrant workers for declining wages and job shortages.
The way the carpenters see it, if immigrant workers are getting paid fair wages and benefits, everyone is better off.
“It’s equal work, equal pay,” said Juan Sanchez, a carpenters union representative. “We do not discriminate against anybody.”
But getting workers to show up at union meetings isn’t easy.
Sanchez said that when he makes site visits, workers heed the foreman’s warnings not to talk to him, but he hands them his card anyway and tells them to call him if something happens.
“I am not going to expect a phone call that day,” he said. “It may be a month. It may be three months. You know when it’s going to be? When the job gets completed and they didn’t get paid.”
•••
Sanchez is the heart and soul of the union’s outreach efforts, his fellow union members say.
That’s because for Sanchez, it’s personal.
“I was exploited,” he said.
When he immigrated to Portland from Mexico in the late 1990s, he was flat broke, alone and could speak only three words of English: yes, no and please.
“I would point to the menu to order at McDonalds,” he said.
He found a job hanging drywall in residential housing projects, no application needed. He was housed with other workers new to the U.S. on property owned by his new boss.
Six days a week, he’d hop into a van with six to eight other men at 4:30 a.m. and travel to a jobsite where he’d work into the evening. He wasn’t given breaks, and his employer deducted money from his paychecks for everything from van insurance and mileage to rent and the use of his tools while on the job.
“At the end of the month, he’d give me few 20s or 50s,” Sanchez said. It was always less than $200.
He said he “knows for a fact” Latino workers continue to face this form of exploitation in Portland’s current market. It’s what motivates him to continue his outreach.
When Sanchez was earning next to nothing, his boss was paying him piece-rate, meaning he was paid according to the number of tasks completed rather than by the hour.
It’s legal, so long as complete records are kept showing the wages equate to Oregon’s minimum wage or more per hour, said Karen Clark, a spokesperson for Portland’s U.S. Department of Labor Wage and Hour Division.
She said piece-rate pay is common among drywall and wood framing contractors.
“Employers still need to maintain records of hours, but there’s a mentality that because they are being paid piece rate, it doesn’t really matter,” she said. “It does matter, because oftentimes people are not being paid minimum wage.”
She said the sum can also be well above minimum wage, but frequently that isn’t the case. “Not only are they not meeting minimum wage,” she said, “they’re not being paid the overtime rates too.”
Property owners and developers overseeing the projects often escape liability, as the laborers getting ripped off are usually two or three times removed.
This is because the developer hires a general contractor, who often hires subcontractors, and sometimes the laborers are removed even further when these subcontractors hire their workers through labor brokers – also known as body brokers or coyotes.
It’s also common for the contractor to pay the labor broker a lump sum on the books, and then the broker passes down under-the-table cash payments to an undisclosed number of workers.
“One of the banes of migrant labor has always been the use of labor contractors to recruit people,” attorney Michael Dale said. He’s the director of a nonprofit that represents low-wage workers, the Northwest Workers Justice Project.
He said Oregon developed a good system for combatting wage theft among labor brokers in the agricultural sector by creating a bonding and licensing structure. But during Portland’s pre-recession building boom in the mid-2000s, he said those same practices began to pop up in the construction industry.
“In fact,” he said, “some were farm-labor contractors, or people who had been banned from being licensed farm-labor contractors, now bringing people to work in construction.”
He said that as the construction industry picks up again, body brokers are making a comeback, but it hasn’t reached pre-recession proportions yet.
He said it’s when employers can’t find enough workers – particularly in wood framing, drywall and painting – that they turn to body brokers to fill the positions.
These labor brokers are a big concern of the carpenters union as well.
“The coyote gets paid from the contractor, then he pays the worker cash – if he wants to. So no income tax, no state tax, no nothing,” Sanchez said. “The bad thing about that is not only are the workers getting exploited and taken advantage of, but when that subcontractor has these coyotes, honest contractors can’t nearly compete with that.”
He pointed to several documents the union had obtained that showed instances where one man, a labor broker, had been paid a flat fee for a job that would take several men to complete.
“These contractors also work with people who bring people across the border. There’s a circle of how they’re connected,” Sheckler said.
He said some labor brokers have been known to threaten workers.
“It comes to the point where some of those people, their families are threatened back home,” he said.
•••
In December, Antonio Becerra was on lunch break from framing in a new high-end apartment building, The Fifty at Division, on the corner of Southeast Division Street and 50th Avenue, when a union rep approached him.
It was a Friday, and that evening Becerra attended his first union meeting. The following Monday morning, he was fired – right after his supervisor asked him if he accepted the rep’s invitation.
Becerra, a 31-year-old husband and father, said he had worked for Timber Technologies LLC for about 18 months without incident.
With the help of the union, Becerra filed a complaint with the U.S. National Labor Relations Board, and Timber Technologies agreed to a non-admission settlement payment of $128 and was required to post notices at its jobsites, informing workers that they have the right to join a union or organize.
Street Roots interviewed several other workers who were also new to the carpenters union.
One was Will Medrano, who immigrated to the U.S. from El Salvador two decades ago and has spent the majority of the time since working in wood framing and siding. He said that before joining the union, he was often denied overtime pay. At his last job, he said, he was making $4 less per hour when he left than when he started, but he put up with it because of his immigration status.
“I didn’t have documents,” he said. “It was scary.”
One man declined to be named because he was still working for a non-union employer when the interview took place. He had a freshly broken arm wrapped in a cast, which he said his boss was hassling him about. He had fallen off a ladder while on the job.
“They don’t like me to see the doctor,” he said.
He came to the union that night with a friend; it was his first meeting.
“I want to join,” he said. “We work hard.”
Another worker we spoke with, Jesus Vasquez, is one of eight men who filed a claim against G Builders LLC for what they allege is roughly $7,000 owed to them for work they did on new high-end apartment buildings and a creative office space and retail building located in downtown and inner Southeast and Southwest Portland.
The union helped them refer the case the Department of Labor, where it’s under investigation.
Earlier this year, the Labor Department found a major Oregon drywall company, Westside Drywall, had failed to pay its workers at least $1 million in wages over the past six years.
The Hubbard-based contractor was sued in 2010 for $200,000 owed to 62 workers, and then was sued again this past February for $800,000 owed to more than 100 workers in unpaid overtime.
In March, the Department of Labor sued PR Drywall in Hillsboro for more than $98,000 in back wages owed to employees for overtime and shortages in prevailing wages.
Prevailing wages are area standard wages that the law requires be paid to laborers working on taxpayer-funded construction projects, which for drywall installation and wood framing is about $35 per hour.
Non-union framers and dry wall installers are typically paid piece rate, or can earn anywhere from $10 to $25 per hour, union representatives say.
BOLI’s largest wage claim suit to date resulted from an audit of a public-works project at Southern Oregon University in 2015. It found that 44 different contractors and subcontractors had all failed to pay workers the legally required wages to the tune of $2.5 million in the construction of a dining hall and student housing.
As a deterrent to wage theft, BOLI has the ability to debar contractors, which prevents them from being able to bid on taxpayer-funded construction projects for a period of time, usually a couple of years.
There are 58 contractors and companies currently debarred. Only two contractors have been debarred for life in Oregon.
•••
Cristian Salgado directs Voz’s drop-in Worker Center just south of where Martin Luther King Jr. Boulevard extends above Interstate 84.
It’s a place where day laborers can go to get legal advice if an employer owes them money, learn about their rights and find job opportunities with member employers who are required to offer at least $12 an hour for a minimum of four hours.
Salgado said immigrants are often surprised when they learn they have any labor rights at all.
“It’s pretty amazing,” he said. “It reveals why people take advantage – they are amazed they have the right to be paid.”
Salgado, like Sanchez, is motivated by personal experience. His parents brought him to the U.S. from Mexico when he was 5, and he grew up working on farms, picking strawberries and raspberries.
He was drawn to working with immigrants and took a job as a caseworker at a nonprofit in Springfield that offers services and resources to Latinos. He worked there for several years before attending the University of Oregon in 2011 as a political science major.
The summer after he graduated, he traveled up to Washington to work the cherry harvest and was reminded of why he had advocated for immigrants’ rights.
He said he saw workers handling hazardous chemicals with no protection and working 14 to 15 hours a day with no overtime pay. He went back to work at the nonprofit for a few months before getting hired at Voz in Portland, where he’s been working for about a year.
Salgado pointed out that if a worker steals from their boss, they are likely to get the book thrown at them, possibly facing arrest and criminal prosecution. But flip it around, and employers in Oregon can steal thousands of dollars from a single employee in the form of unpaid wages and never see the inside of a courtroom or jail cell.
While BOLI has referred cases to district attorneys for prosecution, it’s rare. BOLI representatives said the agency has referred a restaurant owner and wreath maker for criminal prosecution but were unable to provide Street Roots with any examples of construction contractors or companies that had been criminally prosecuted.
“Maybe if there was more enforcement and tougher penalties, maybe this wouldn’t happen,” Salgado said.
Kate Suisman, a volunteer attorney at Voz’s twice-weekly wage theft clinic and recent hire at Northwest Workers Justice Project, said it’s common that people who come to her with wage theft issues have also experienced other forms of mistreatment.
“Some of it’s quite racist,” she said, explaining workers have reported to her that employers have told them that because they are immigrants, they don’t have any rights and can’t do anything about not getting paid.
Among the many wage claim cases she’s helped workers submit, Suisman said she’s rarely seen BOLI issue any penalty to employers for failing to pay their workers, or for failing to pay them on time.
“Wage theft pays for employers,” she said.
We asked BOLI Commissioner Brad Avakian why his agency doesn’t go after more employers with fines and criminal charges.
“The most important thing is to make sure that the workers get paid because the workers and their families need the money,” said Avakian, a candidate for Oregon secretary of state. “There are times, especially when you’re dealing with a small business, that we want to make sure that the levying of the fine doesn’t break the business to the point where we can’t collect the wages.”
When it comes to criminal charges, he said, “we have occasionally passed on information to district attorneys – I don’t know that there’s been an appetite in order to criminally prosecute.”
Adam Gibbs, spokesman for the Multnomah County District Attorney’s Office, said he asked around the property crime unit and prosecutors could only think of one time during the past 10 years that a wage claim case had been referred to them from BOLI. No one could remember the details of the case.
Gibbs said while the the DA’s office takes theft and fraud referrals from quite a few state agencies, “they’re not giving them to us, so we don’t see them.”
He said that after Street Roots inquired about wage theft cases, someone from his office reached out to BOLI “to reaffirm that we will be happy to take and review any case referred.”
But as Dale at Northwest Workers Justice Project points out, it’s hard to collect stolen wages from an employer who’s behind bars.
A Senate bill passed in the 2016 legislative session made it a Class C felony for employers to knowingly violate the prevailing-wage law, however it’s yet to be seen whether it will send more employers to criminal court.
Wage theft is perpetuated by a Catch 22. Punish employers for stealing from their workers, and the workers might never get paid. But do nothing to punish employers, and there is no deterrent to keep them from stealing from their workers.
Further exacerbating the problem, undocumented workers who fear the loss of their job often don’t complain when they get shorted on their paycheck, and BOLI and U.S. Labor Department investigations are largely complaint driven.
“I think BOLI is put in an impossible situation where they really don’t have the resources they need,” Dale said.
Carpenter union representatives agreed.
“The problem is there’s no enforcement,” Sheckler said. “The union has to do the enforcement of workers that are being ripped off.”
BOLI has only 11 wage and hour investigators for the entire state. Three of the investigators are new additions, added to conduct proactive investigations into problem industries, however they are currently focused on seafood processing compliance.
Avakian was hesitant to admit his agency was short on resources. When asked about cuts, he said, “We are able to do very efficient, very quick and thorough investigations in the construction industry.”
But Voz and other immigrants rights advocacy groups have stepped up, conducting outreach to vulnerable workers, teaching them about their rights and helping them file wage complaints with agencies such as BOLI and the U.S. Department of Labor.
•••
On Sept. 23, Sanchez shared Becerra’s experience of getting fired for attending a union meeting with a room overflowing with Latino workers at the carpenters union headquarters on East Burnside Street.
It was the largest turnout since they began their outreach efforts, with about 45 men in attendance, many for the first time.
Many, like Becerra, had bosses who wouldn’t approve if they knew they were engaging with the union.
Before sharing Becerra’s story, Sanchez asked the room, in Spanish, how many had ever worked for “Timber Tech.” Nine raised their hands.
He told them that Becerra had a good job now, with benefits and fair pay – a job the union helped him secure after he was fired.
A handful of local contractors that had subcontracted wood framing are now coming to the union to find workers they hire directly instead. Taking away this business is hurting non-union subcontractors, Sheckler said.
“They already have these guys working for them under a sub (contractor), and now we can say to these contractors, ‘Hey, we got guys if you want to self-perform it, but you’re going to have to pay the union wage.’”
A representative from Andersen Construction was at the September meeting to do just that. He told the men around the table that he had good-paying jobs waiting for them.
Sanchez told the room full of laborers that the union would teach them how to fill out applications and have their back if they get ripped off. He told them that they work hard and they deserve to be paid. As men walked out of the conference room at the meeting’s end, feelings of optimism among them seemed contagious.
“This is our work. This is what we do,” Sanchez said. “Back in the day, I wish somebody would have helped me. I didn’t know better; I was not educated – I just didn’t have the information, and I allowed my employer to take food out of my kids’ mouths. That’s not right, and that’s why I take it so personally.”
By the numbers
260: Wage claims in construction referred to BOLI between July 1, 2013, and June 30, 2015.
2nd: Oregon’s construction industry has the second-most wage complaints, after bars and restaurants. However, construction had a higher reported rate of wage theft when the number of complaints between July 1, 2013, and June 30, 2015, were compared with the number of jobs in each industry.
49: Number of contractors in the Portland area who were fined by the Oregon Contractors Board in September for operating without a license, working with an unlicensed subcontractor, or other license-related violations.
3 out of 4: Construction jobsites in the tri-county area found to be noncompliant in meeting safety standards when inspected by Oregon Occupational Safety and Health Administration, 2013-16.
507: Number of construction sites inspected for safety in the tri-county area in that time.
294: Safety violations cited by OSHA where the reasonably predictable injury to a worker would be death, 2013-16
3rd: Construction was the third-deadliest Oregon industry during 2014, trailing behind logging and transportation.
47: Number of full-time positions at BOLI’s wage and hour division in 1993, following significant budget cuts to the agency.
30: Number of full-time positions at BOLI’s wage and hour division today. As Oregon’s workforce grows, those investigating labor law compliance continue to decrease in number.
$2.5 million: Largest dollar amount owed to workers after a BOLI investigation. BOLI found 44 construction contractors owed their employees $2.5 million in the building of a new dining hall and student residence at Southern Oregon University in 2015.
– Emily Green
Ending wage theft
A coalition of nearly 40 organizations led by the Northwest Workers Justice Project has been working since the 2013 legislative session to pass new laws to combat wage theft and retaliation in Oregon.
Northwest Workers Justice Project Executive Director Michael Dale explained the Coalition to Stop Wage Theft was responsible for legislation during the 2016 short session that now requires employers to provide workers with detailed pay stubs and copies of payroll records upon request.
He believed the teeth were taken out of the bill, however, when provisions that would have allowed for enforcement were removed.
“Basically what the Legislature did was pass what the business lobby wanted on this issue,” he said.
It’s expected the business lobby will strongly oppose the coalition’s 2017 bills as well.
Coalition’s 2017 legislation
Combating retaliation against workers who make claims:
This bill would make it easier for an employee to win a retaliation case because it shifts the burden of proof to the employer. If an employer fires an employee within a certain period of time after the employee filed a wage claim, the law would assume that the firing was in retaliation, and the employer would have to prove otherwise. That period of time is still being determined but will likely fall in the 60- to 90-day range.
This tactic is similar to a recommendation the Environmental Justice Task Force has considered making to the governor in light of abuses of immigrant farm and forestry workers.
But Oregon is an at-will state, meaning an employer can fire an employee for any reason, or for no reason at all.
But this bill would also require an employer to provide the employee with a written reason for their termination upon request, and therefore prevent the employer from being able to change his or her story at a later date.
We asked Oregon’s Bureau of Labor and Industry commissioner, Brad Avakian, if he thought shifting the burden of proof would work in an at-will state.
“It’s a very high burden for employees that have been treated unfairly to meet, so I think that it’s a fair discussion to have,” Avakian said. “There have been proposals like that made before, they have failed at the Legislature. It would be a very difficult thing to do with the law.”
20 percent penalty on wage thieves:
Another bill being brought forth by the coalition would add a non-negotiable 20 percent penalty to the total amount of wages owed to workers in wage claims handled by BOLI.
Because nonprofits that advocate for immigrants have stepped up to teach workers about their rights and to help them file wage complaints with BOLI and the Department of Labor, this 20 percent penalty would go into a fund that would be distributed to these community groups, by BOLI, in the form of grants.
Redefining independent contractors, lien laws and attorney fee obligations:
This bill covers a lot of ground. For one, it would shift the property that a lien is placed on in a wage theft claim from the property that was being worked on – which typically does not belong to the employer who owes workers money – to the property of the guilty party.
It would also change the law so that employees who sue employers and lose are no longer required to pay their employer’s attorney fees.
But the most notable provision of this bill is that it would redefine what it means to be an independent contractor.
“I’ve had cases here where everyone on a construction site was an independent contractor,” Dale said. “Of course the effect of being an independent contractor is you don’t have wage protections, you don’t have minimum wage, you don’t have time and a half, deductions from your pay are not protected. You don’t get workers’ comp, you’re not paying into the Social Security system, you don’t have, therefore, disability coverage, and on and on it goes. You can’t even unionize, because since you’re not an employee, you’d be price fixing and violating the anti-trust laws.”
He said this bill would define anyone who is conducting the work of a company as an employee of the company, which could have far-reaching implications in the emerging gig economy.
emily@streetroots.org
