http://www.startribune.com/535/story/496366.html

Last update: June 16, 2006 – 12:11 AM

'Shadow workers' in the spotlight
Construction firms are increasingly designating workers as independent contractors. Many say it's an invitation to hire and abuse illegal immigrants.

Jean Hopfensperger, Star Tribune

When Joe Navejas drives up to a construction site to talk with workers, he frequently runs into Spanish-speaking guys who are "independent contractors."

Their names don't appear on company payrolls. Their immigration status doesn't have to be checked. Most are paid in cash, frequently less than they bargained for, said Navejas, an organizer for Roofers Local 96 in Minneapolis.

"We call them shadow workers," Navejas said. "And they're not just roofers. It's any type of construction. And it's not just about immigrants. It's happening to all kinds of people."

Designating workers as "independent contractors" can be a legal way for companies to avoid much of the bureaucracy and cost of hiring conventional employees. The phenomenon is under growing scrutiny across the nation as Americans debate whether illegal immigrants are taking jobs from U.S. citizens.

Increasingly common in construction, the work status gives employers flexibility and a chance to hire workers quickly for hard-to-fill temporary jobs. Kurt Swanson, president of the Twin Cities Builders Association, estimated that 75 percent of metro-area home builders use independent contractors most of the time.

"There are so many trades involved [in building a house], having all those workers on staff would be impossible," said Wendy Danks, the association's marketing director.

But it's a practice that also lends itself to abuse. It allows employers to turn a blind eye to immigration status and wage and safety standards, thereby eroding job opportunities for Minnesota workers, critics say. The city of Minneapolis, the Minnesota attorney general and a coalition of religious and labor groups are calling attention to the problems behind the practice.

"The misclassification of workers is a huge problem in the residential market ... and a growing problem in our commercial and industrial markets," said Bill Grimm, the executive director of eight contractor trade associations in Minnesota.

For contractors who play by the rules -- paying taxes and Social Security and workers' compensation -- it's impossible to compete with those who simply hire "independent contractors," he said.

"The rule of thumb is if the employer sets the work hours, provides the tools, tells the worker what to do and how to do it, and can fire them, then chances are they are an employee -- not an independent contractor," he said.

Common in construction

A legitimate independent contractor is generally someone with a tax ID number, who can hire other employees and who sets his own schedule, said Penny Phillips, chair of the labor and employment section of the Minnesota Bar Association.

Phillips, who does a lot of employer training, says there are always "many" people in her classes who use "independent contractors" without following the rules.

No Minnesota agency tracks the number of independent contractors, their employers' names, or whether or not anyone pays their income taxes. Nonetheless, the phenomenon is spreading in the construction industry, which employs many immigrant workers, according to Minnesota trade associations, labor and immigrant groups.

If a Twin Cities homeowner needs a new roof, flooring or drywall, chances are good it will be done by an immigrant worker, and some will be paid as independent contractors.

Scott Fuchs, a carpenter from Buffalo, says he has nothing against immigrant workers; his wife is Mexican. But as a skilled, independent carpenter, he expects $35 an hour.

"I bid on a job last year and the guy told me, "I can get a Mexican to do that for a third of the price," he recalled. "I've got four kids. How can I support a family on that?"

But Fuchs said he sympathizes with any workers who are being abused by employers. He's had the same problem. He's still waiting to be paid for a job he finished in April.

"There's a lot of guys who aren't making the money they should be because of this," he said.

Danks, of the Twin Cities Builders Association, says the use of independent contractors makes economic sense in today's construction industry, at least in housing.

Danks said she didn't know of illegal immigrants being hired as independent contractors in the Twin Cities. But it's a "hot potato" nationally, she said.

A public case

The city of Minneapolis is looking into the practice as the result of picketing and protests directed at the Swervo Development Corp., which is converting the former Whitney Hotel downtown into condominiums.

Organizer Alan Kearney, of the Laborers District Council of Minnesota and North Dakota, said workers on the demolition crew told them they had received no safety training, were paid $6 to $10 an hour in cash and worked up to 12 hours a day. They also violated safety standards in removing asbestos, he said.

A development group led by Ned Abdul, president of Swervo, is building the condos. He called the charges a "union-nonunion dispute." He said that his company hired about 30 subcontractors to convert the hotel, and that as far as he knew, they were adhering to labor laws.

"Once I draft a check [for the subcontractors], I don't know what people do," Abdul said. "Who they hire is not my responsibility. ... I wouldn't doubt that ... people were being paid in cash, but not by Whitney Development."

The city is studying whether its ordinances or building permits could be tightened to deal with questionable hiring practices and related safety concerns, said Minneapolis City Council Member Paul Ostrow.

"It's a matter of good government, of protecting workers themselves, and of making sure that there's not an element of unfair competition," Ostrow said.

Minnesota Attorney General Mike Hatch said he's asked the Minnesota Department of Labor and Industry to investigate possible abuses of independent contractor status, in particular at the Whitney. Kearney said his group has done the same.

"We've had complaints from contractors, from church groups, from labor groups about the Department of Labor's failure to enforce labor laws," Hatch said. "The state can address these issues and should."

Labor Commissioner Scott Brener said he was not aware of the attorney general's requests to look into labor violations. However OSHA investigators in the department, responding to complaints, have visited the Whitney site four times since August, according to department data. Two citations were issued for lack of hard hats and lack of "fall protection."

As for the labor violations, the department needs a complaint from a worker to start an investigation, said Rosalind Wade, director of labor standards at the department. It does not visit construction sites looking for violations; it investigates records when workers make complaints, she said.

People who work with immigrant laborers see no end to the use of independent contractors. Most immigrants just want to work, said Navejas, and will do so whatever they're called.

"We have to find a solution," Navejas said, "because directly or indirectly, this affects every Minnesotan."


Jean Hopfensperger • 612-673-4511