Agenda - Council Work Session - 07/28/2026

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Section 2: Public Money Fueling Worker Exploitation Despite recent efforts by the Legislature and enforcement agencies to curb the practices, wage theft and exploitation remain persistent problems in Minnesota's construction industry. Recent media coverage has surfaced troubling allegations of construction firms cutting corners and abusing workers on projects in Rochester,13 Eagan14and Minneapolis.15Theseaccounts are consistent with research documenting the scale of wage theft and misclassification in the industry. The problems are especially acute in the multi -family housing industry. The high -profile conviction of Ricardo Batres revealed horrific practices that immigrant workers and advocates say are all too common in the construction industry. Batres - a labor broker and owner of American Contractors and Associates LLC - supplied workers and worked as a subcontractor for two prominent Twin Cities developers. In August of 2019, Batres's company was observed working on the TIF-subsidized Lyndale Gardens apartment project in Richfield, Minnesota. He was ultimately charged by the Hennepin County Attorneys' Office with "severe abuse of workers including threatening people with deportation when they complained about problems in the workplace, stealing wages by withholding them, failing to take basic 13 Annalise Johnson, "Rochester Wage Theft Law is First Investigation Under New Law," KIMT 3 News, July 9, 2019, http s //www. kimt.com/content/news/ro chester-wage-theft- case-is-the-first-under-a-new-law-5i 2502382.html. 14 Dee DePass, "Subcontractors on Wilf's Viking Lakes project accused of wage theft," Star Tribune, May 6 2022, https:// www. startribu ne.com/subcontractors-on-wilfs-viking-lakes- project-accused-of-wage-theft/6o oi7ii35/. 15 Paul Walsh, "Charges: Twin Cities contractor threatened to report his undocumented workers if they complained," The Star Tribune, September 28, 2o18, https://www.startribune. com/charges-twin-citis-contractor-threatened-to-report-his- undocumented-workers-if-they-complained/494386221 /. safety precautions, and more."16 In another high -profile case, a worker told members of the Minnesota House of Representatives Labor Committee in February of 2019 that a subcontractor on a major affordable housing project insisted on paying him in drugs instead of the wages they were owed." These abuses are unfortunately all -too - common in Minnesota's multi -family housing construction industry.13 Intense downward pressures on costs and extreme fissuring of the industry create pressure for developers and contractors to cut corners.19 While some developers assert that they have implemented internal controls to prevent exploitation, these measures have often proved to be insufficient according to worker advocates.20 According to a recent report from the Midwest Economic Policy Institute, about 30,100 Minnesota construction workers are misclassified or are paid off - the -books, accounting for 23 percent of the workforce. These illegally employed construction workers earn 36 percent less ($29,700 annually) in combined wages and i6 Penelope Kyritsis and Sean Sellers, "Building Dignity and Respect: The Case for Worker -driven Social Responsibility in the Twin Cities Construction industry," Worker -Driven Social Responsibly Network, November 2019, https://indd. adobe.com/view/efrzf675-oa66-4rfb-9146-f673cf999531. 17 February 6, 2019, testimony by Arturo Hernandez in front of the Minnesota State House Legislature available here starting at 32 minutes and 25 seconds: https://youtu.be/ wttVvPg_xlo. i8 See citations above including stories from Annalise Johnson, Dee DePass and Paul Walsh for examples. 19 Learn more about workplace fissuring, the challenges of labor law enforcement and the lack of employer accountabil- ity in: David Weil, The Fissured Workplace: Why Work Became So Bad for So Many (Boston: Harvard University Press, 2014), February r7. 20 Penelope Kyritsis and Sean Sellers, "Building Dignity and Respect: The Case for Worker -driven Social Responsibility in the Twin Cities Construction industry," Worker -Driven Social Responsibly Network, November 2o19, https://indd. adobe.com/view/efuf675-oa66-41f1)-91464673cf999531. 6 North Star Policy Action