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Construction workers exploited by Colorado’s underground economy want to add bite to wage theft law

Wage theft is currently an unclassified misdemeanor, no matter how much is owed, but a new focus on fighting labor trafficking could change that in Colorado

The Southwest Regional Council of Carpenters in north Denver hears from one or two construction workers nearly every day complaining of wage theft. The union helps workers file claims with the Colorado Department of Labor and Employment and is part of a coalition asking the state for stronger laws to crack down on wage theft and labor trafficking. (Jennifer Brown, Colorado Sun)
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In Colorado’s underground economy, where cash flows under the table and crews are lured by the promise of good wages and free housing, workers are getting ripped off.

Especially construction workers who don’t speak English or aren’t living here legally.

Union officials have uncovered allegations of wage theft from subcontracted workers who restored Colorado Mills Mall in Lakewood after it was pummeled by a hailstorm in 2017. From construction workers at TopGolf in Thornton. The Monarch Casino in Blackhawk. SkyHouse Denver Apartments. And the Emerson Place Apartments near downtown Denver, where a construction fire killed two workers in 2018.

That’s just a few of the well-known projects mentioned at the Capitol this session as legislators attempt to strengthen law regarding wage theft and human trafficking. Formal complaints of wage theft to the Colorado Department of Labor and Employment number up to 4,300 per year.

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At Colorado Mills, more than 200 construction workers collected their cash from the back of a pickup truck in the parking lot, according to Angel Esparza, a field representative for the Southwest Regional Council of Carpenters. He was on site to make sure the workers were getting fair wages and instead ended up being threatened by a contractor and facing charges of trespassing.

The stories are rampant, and the stacks of claims filed with the state — many of them written in Spanish and from workers housed by labor brokers in the same place — are helping piece together details of an off-the-books economy, particularly in the drywall industry. The problem is that Colorado law lacks punch — wage theft, at most, is an unclassified misdemeanor, no matter how much an employee is stiffed. That could soon change, with bipartisan support for legislation making wage theft of more than $2,000 a felony.

“Employers are ripping off the workers and that’s basically their business model,” said Diego Bleifuss Prados, who helps employees try to get paid at the Wage Theft Direct Action Team at El Centro Humanitario. “Generally, they don’t fear consequences for what they have done.”

Here’s how it works: A labor broker, also called a coyote, entices workers by offering good wages and, sometimes, housing. Many of the workers already live here, but some are from Texas and Oklahoma, according to the Southwest Regional Council of Carpenters, which helps workers file state claims for unpaid wages multiple times per week in its north Denver headquarters.

The labor broker is paid by a subcontractor to provide the workers for a particular job, which could last from days to months. That subcontractor is paid by a general contractor to provide the work. The tiered system means the workers are not employed by anyone but the labor broker.

And many of those workers don’t get the pay they were promised, according to hundreds of pages of wage theft claims prepared at the carpenters union. The pay is short. The broker garnishes wages to pay for rent. The checks are no good.

“Things change once they get here,” said Juan Arellano, a representative with the Southwest Regional Council of Carpenters. “And you don’t have a choice once you are here — you take it or leave it.

“There is a lot of money changing hands, and the ones who are impacted are the workers. You have hundreds of workers on these projects and they are paid in cash. Where is that cash coming from?”

Union representatives have started wearing hidden cameras on their bodies as they walk through job sites and ask workers whether they are receiving fair pay, including overtime, and whether they filled out any payroll paperwork. A video they captured this month shows a jobsite foreman at a senior living complex warning workers they should not talk to any union reps, and if the union reps show up on the jobsite, they will be arrested for trespassing.

Workers who haven’t gotten paid come to the union’s brick building just off Interstate 70 almost every day. And some agree to file a formal complaint.

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Arrellano and fellow union representative Gustavo Maldonado by now know the names of the labor brokers who leave their employees hanging without pay after one construction job, then move on to the next one, where they do the same. Most of the workers are Latino and most are not living here legally, they said. In some cases, when they ask for their pay, the labor brokers threaten to report them to immigration authorities.

“Basically, they just do not exist,” Maldonado said.

Pamela Garcia is waiting on $3,288.

Garcia was hired to tape drywall seams for $16 per hour during construction of a Denver apartment building last year. She wasn’t paid for the last five weeks of the job, even as she put in 40 or more hours per week. The labor broker who hired her, and who did not return messages seeking comment for this story, kept telling her he would pay her as soon as he was paid by the subcontractor who hired him.

“All I could do was wait,” she said.

He finally gave her a check for $1,860, but it didn’t clear. She texted him that she had no money to buy Christmas presents for her two daughters. Then she told him she was struggling to pay her bills. Garcia’s family back in Mexico, where her father earns $120 every two weeks working in a paint factory, suffered too, when she was no longer able to send them money, Garcia said in Spanish, translated by Arellano at the carpenters union.

Pamela Garcia, who wasn’t paid for five weeks of work taping drywall seams on an apartment building project, asks for advice from Juan Arellano at the Southwest Regional Council of Carpenters. The union hears from multiple workers each week who say they were not paid. Union representatives say labor brokers who rip off workers are part of Colorado’s underground economy. (Jennifer Brown, Colorado Sun)

Garcia eventually quit the job in December after five weeks without pay and no money to pay her babysitter. She now earns money selling burritos.

“I don’t want to continue to sell burritos for a long time,” she said. “I’m hoping to progress.”

Garcia, who has lived in Colorado for 15 years, filed a claim with the state labor department in January but has not heard back on whether the state can force her labor broker to pay.

At the state Capitol, several construction workers spoke in Spanish to the House Judiciary Committee, using interpreters, to explain how they had failed to receive paychecks after they were hired by labor brokers. House Bill 1267, which has passed the House and is nearly through the Senate with bipartisan support, defines wage theft similarly to property theft and makes it a felony when the amount unpaid is more than $2,000.

Rep. Jonathan Singer, a Democrat from Longmont and sponsor of the bill, recalled a case in his district of two workers who called the Boulder County District Attorney’s Office to report they had not been paid. Messages showed their employer told them they would get paid when they “get legal.”

“We need to take certain people out of the marketplace because not only are they not paying wages but they are also trafficking human beings,” Singer said.

The two workers were paid shortly after the district attorney’s office asked their boss whether he planned to pay. “Currently, wage theft is treated as an unclassified misdemeanor,” Singer said. “Is it worth a district attorney’s time and effort and resources to approach that issue when they know that at best, it’s an unclassified misdemeanor?”

The Colorado Department of Labor investigates 3,800 to 4,300 formal wage theft claims per year, a fraction of the 39,000 to 46,000 phone calls the division answers annually.

Before 2015, the only tool the department had to force payment was mediation. A law that took effect that year created a civil process to force an employer to pay wages through threat of fine and penalty, but there was no criminal recourse. The division has 26 employees, including hearing and compliance officers, to determine whether workers are owed money and try to force employers to pay.

The state labor department is aware of the high volume of investigative records — including photos of cash payments and copies of checks that were no good — collected by the carpenters union. But so far, the department isn’t seeing a huge increase in formal wage theft complaints filed by the construction industry, in part because workers who are not in the country legally are leery of making claims to a state agency.

“Our objective is that someone who performed work, regardless of citizenship, is paid for that work,” said Alexandra Hall Bovee, director of the Division of Labor Standards and Statistics. “We ask no questions about immigration status.”

The wage theft division for years has had employees who speak Spanish, but it recently began collaborating with nonprofits including El Centro Humanitario and Towards Justice to build trust within the Latino community and among those who do not have citizenship. A new website created last year, in Spanish and English, instructs workers on how to file wage theft claims and spells out their rights to get paid for all hours worked.

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State officials hope the effort will help expose wage theft and labor trafficking in Colorado, and that stronger laws will help stop labor brokers operating illegally. Right now, there isn’t a strong enough “trail of breadcrumbs,” said Cher Roybal Haavind, the labor department’s policy and public relations director.

“The nature of the brokers is that they are here one day and gone the next,” she said. “If somebody doesn’t file an official wage claim with us, it’s hard for us to go after a broker when it’s an underground economy. Absent a wage claim from the worker, we don’t know how to identify these folks.”

Former Gov. John Hickenlooper created a task force by executive order in June 2018 to address payroll fraud and the “misclassification” of workers in the construction industry, focusing on workers classified as independent contractors rather than employees. The setup “robs workers” of wages, insurance and workers’ compensation, according to the group’s November report. It also puts law-abiding construction contractors at a competitive disadvantage because “unscrupulous bidders” can undercut them by avoiding payroll costs.

At the task force’s request, the head of the Colorado Department of Labor met with general contractors to ask them to comply with the law, particularly on large, mixed-use, commercial projects with numerous subcontractors. The group also asked the carpenters union to design a system to prioritize tips submitted to the labor department.

The construction industry accounted for more than 170,000 payroll jobs in 2018.

Of the 4,300 formal claims filed each year, about 25-30% end up receiving a full investigation that results in the state issuing a determination in favor of either the employer or employee. Each claim requires about 40 hours of work by staff, and typically takes about four to six months before it’s resolved.

In cases where the employer is at fault, the state can impose fines paid to the state and penalties paid to the worker. In recent years, the department has recouped about $1 million in owed wages each year and more than $1 million in penalties.

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