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Minnesota AG reaches settlement with contractor over obstructing investigation of labor abuses [1]
['Max Nesterak', 'More From Author', '- October']
Date: 2023-10-05
The Minnesota Attorney General’s Office entered into a settlement agreement on Tuesday with a construction contractor accused of obstructing an investigation into labor abuses. The suit alleged the contractor had refused to turn over employment records, threatened workers and instructed them to lie to state officials.
The settlement agreement requires Property Maintenance & Construction owner Leopoldo Pimentel to cooperate with officials at the Minnesota Department of Labor and Industry, clearing the way for regulators to finish a two-year investigation into claims of wage theft and other labor abuses on major construction projects across the Twin Cities.
Workers say they routinely put in upwards of 12 hours a day, six days a week but were not paid all they were owed, including time-and-a-half for overtime, as the Reformer first reported in 2022. In total, workers say Pimentel owes them more than $100,000 in unpaid wages for their work at well over a dozen properties, including Viking Lakes, a sprawling mixed-used development in Eagan built by the Wilf-family owners of the Minnesota Vikings.
The workers brought their complaints to state officials in the fall of 2021 with the assistance of the North Central States Regional Council of Carpenters union. But when investigators began looking into their claims, Pimentel stonewalled state officials, and his associate told workers they “were going to pay” if they spoke to investigators, according to Attorney General Keith Ellison’s lawsuit.
Pimentel also threatened a Reformer reporter when asked for comment about the allegations in May 2022, writing in an email, “any article published related to this would be done at your own risk.”
In the lawsuit, Ellison’s office alleged Pimentel refused to turn over documents to state investigators and flouted laws requiring he maintain employment records like timesheets, pay stubs, tax documents and contact information for all of his employees.
Pimentel did not admit wrongdoing in the settlement but could face a fresh lawsuit and even criminal charges if state officials determine he stole wages from workers. Under a 2019 law, wage theft in excess of $1,000 is a felony, though it is seldom prosecuted.
As part of the settlement agreement, Property Maintenance & Construction will pay $7,500 to the state of Minnesota and turn over a slew of documents, including text messages and contact information for previous employees.
Pimentel agreed not to contact former workers — directly or indirectly — and will not ask workers if they have communicated with state investigators.
Pimentel will also meet with all of his workers in the next two weeks and explain they are free to cooperate with the state Department of Labor and Industry. He must do so with an investigator from the Attorney General’s Office present, called an “extraordinary step” by Burt Johnson, a lawyer for the carpenters’ union.
“I was impressed with that part of it,” Johnson said. “The importance of this case is that the state of Minnesota … is standing up for workers and protecting their right to report wage theft.”
Many of the workers are undocumented immigrants from Mexico and Central America, making them particularly vulnerable to exploitation for fear that reporting labor abuses could jeopardize their ability to make a living and even lead to deportation.
Workers say Pimentel made them get fake Social Security numbers in order to work for him, a federal crime that could lead to prison time. Undocumented workers who are victims of labor rights violations, however, may be protected from deportation, under a Biden administration policy.
Undocumented immigrants, often misclassified as independent contractors, are a fixture of the construction industry, especially nonunion firms.
Nearly a quarter of construction workers in Minnesota — about 30,000 people — are misclassified or paid off the books, according to one estimate by the Midwest Economic Policy Institute. This prevents workers from receiving basic protections, including overtime and workers’ compensation insurance.
Misclassification and wage theft also cost the state in lost tax revenue. Minnesota loses upwards of $136 million a year in tax revenue because of construction payroll tax fraud, according to an estimate by the Midwest Economic Policy Institute.
Ellison created a task force on worker misclassification to make recommendations to the Legislature and state agencies on how to combat the practice.
The Minnesota Legislature passed a law earlier this year aimed at cracking down on wage theft by making general contractors responsible for unpaid wages by their subcontractors. Previously, general contractors could shield themselves from liability through layers of subcontracting — even if they had reason to believe they were benefiting from wage theft and misclassification.
The siding work at Viking Lakes was contracted to a company called Advantage Construction, which in turn farmed the work out to Pimentel’s company.
A representative of MV Ventures, the development arm of the Minnesota Vikings, said last year they were unaware of any reports of labor abuses at Viking Lakes, where both wage theft and the rape of a female worker were reported to the authorities. The MV Ventures spokesperson said subcontractors on its project were required to “sign agreements ensuring fair labor practices for workers at the site and requiring strict compliance with all federal and state labor, benefit, workers’ compensation and wage laws.”
If the claims are substantiated, the company said “the subcontractors will have breached their contracts with MV Ventures Construction and will be held accountable.”
The settlement agreement applies to the following properties on which Property Maintenance & Construction worked:
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