‘It has really gotten out of hand’: wage theft rampant in US construction

For years, Cristian Céspedes worked as a foreman for a construction contractor, Unforgettable Coatings, in Las Vegas, where he and his co-workers often worked over 60 hours a week without overtime pay.

He recalls having to tell workers who were injured on the job that they had to deal with the injury and pay for medical care themselves. He knew the treatment and conditions imposed on himself and his co-workers were wrong, but he didn’t know he could do anything about it.

“I always knew stuff was wrong. I just didn’t know where to go to seek help,” said Céspedes, who recently became a union organizer and said a wage theft investigation was kicked off after workers started meeting with local union organizers and learning about their rights.

Wage theft is a pervasive problem facing workers throughout the US. According to a 2014 report by the Economic Policy Institute, workers lose over $50bn a year to wage theft from employers. Wage theft includes tactics from stiffing workers on pay, failing to properly pay workers for overtime, minimum wage violations, misclassification of employees as independent contractors, and not providing workers with mandated break times.

“We didn’t know our rights or anything like that. We were working over 60 hours a week and not getting paid overtime, and here in Nevada over 40 hours is overtime, so we would work 60 to 80 hours a week and sometimes we had to work for free on Sundays just to finish up a project,” said Céspedes.

US regulators are cracking down on wage theft. A 2013 investigation by the Department of Labor recovered $47,393 in unpaid overtime wages to 21 workers in Utah. Last year, the department ordered Unforgettable Coatings and its owner Cory Summerhays to pay 593 workers over $3.6m in stolen wages, damages, interest and penalties.

A reasonable employer might try to avoid repeating a bad and costly decision,” the department noted, but Summerhays “chose instead to double down, and then some.”

According to the investigation, Unforgettable Coatings falsified employment records to deprive workers of overtime pay, intimidated workers from speaking up about the practices and forced workers to volunteer to work on weekends without pay. The intimidation included threatening to call immigration services on workers and reducing workers’ hours and pay if they were suspected to be cooperating with the department’s investigation.

“Emotionally, it took a toll on me. I didn’t know that because I was an immigrant, my employer was allowed to take advantage of me and my co-workers,” said Samuel Castillo, one of the workers at Unforgettable Coatings who received backpay as a result of the investigation. He now works in the construction industry as a union member, where he says the differences are stark compared with the low pay, lack of benefits, and working conditions he previously worked under.

The department credited workers who spoke up and assisted in the investigation despite the threats and intimidation they received from their employer, including Céspedes, who has since joined the International Union of Painters and Allied Trades (IUPAT) as a member and union organizer working to organize other workers throughout the construction industry who are being subjected to similar systematic labor abuses and wage theft.

The fines don’t seem to have deterred others. IUPAT is currently assisting workers in holding another local construction company accountable for wage theft and retaliating against workers, Spectrum Construction.

Carlos Funez worked at Spectrum Construction and was fired along with a few other co-workers after his employer found out they were meeting with IUPAT organizers.

“I noticed from co-workers that they were stealing our money. I would ask why aren’t you saying anything, we’re not getting paid overtime for working on weekends, there was no overtime being paid,” said Funez. “We were asked why we were having those meetings, I said, well, our rights are being violated and the women are being discriminated against.”

Veronica, another construction worker at Spectrum Construction who was fired after meeting with the union and requested to remain anonymous for fear of further retaliation, explained the firings took a toll on her and the other workers. The workers currently have pending charges filed with the National Labor Relations Board over the firings.

“I realized what was happening was wage theft and it was not right,” she said. “The company found out we were having meetings with the union, and they threatened to fire us. We kept having meetings and eventually they fired us.”

“I know it’s kind of hard for most of these workers to come forward. Obviously in the past nothing has been done. That’s not going to keep on continuing like that. That has to change in one way or another and I feel like this is the time,” added Céspedes.

IUPAT has launched several campaigns aimed at organizing workers in the construction industry to not only unionize, but to push back against a trend of wage theft and misclassification that union organizers argue has been worsening in the construction industry, especially toward immigrant workers.

Shane Smith, general vice-president for organizing at IUPAT, said the system of construction contractors using labor brokers, who misclassify workers as independent contractors, driving down pay, benefits and working conditions had grown in recent years around the US, particularly in the south.

“More and more employers around the country are adopting this business model of misclassification and the utilization of this labor broker system. In the last six years in some parts of the country this is almost exclusively the business model,” said Smith. “Basically what employers do, they go out, find two to three labor brokers who are usually former employees who have connections in the immigrant community. They recruit folks, hire folks on 1099s, usually working them more than 40 hours a week.”

1099s are tax forms for independent contractors, where tax liabilities are shifted on to the individual from the employer.

He explained the growing labor broker system often also takes advantage of the brokers, who aren’t well informed about what they’re getting into, or the amount of costs and labor required for the job sites they’re put in charge of finding workers for. This system, Smith said, allows employers to get away with not paying overtime wages, taxes, avoids unionization efforts and disenfranchises employers who do things the right way.

“It has really gotten out of hand,” said Smith, who said they had seen multiple cases where immigrant workers on the same job sites were being funneled to working as independent contractors through labor brokers with construction workers, who are white, being directly paid as employees for the same work.

“It’s worrisome to me that if someone robs a bank, they go to jail for 20 years, for instance, but if someone robs millions of dollars from workers, they get nothing but have to pay restitution and usually they settle for a quarter of what they actually steal and its mind-boggling to me.”

For victims of wage theft, recovering lost wages can take years as enforcement agencies at the state and federal level lack the funding and resources to pursue investigations and the consequences for employers are minimal. And just a small portion of the amount of wages stolen from workers by employers is ever recovered.

Charles Jones has worked in construction for years but in 2023 started working for a glazier contractor called Fredericksburg Glass in Virginia. Glaziers are skilled construction workers who cut and install glass, metal and other hardware in buildings.

Jones discovered in speaking with local union organizers at IUPAT district council 51 that he and his co-workers were victims of wage theft as they were not being paid any overtime or given any breaks while working 10-to-12-hour shifts.

“I was under the notion I was with a company that wanted to see me achieve, grow, accomplish and secure financial stability. Then to find out that I was essentially being robbed by those who I trusted, those who I intentionally helped to build their company, it was devastating. I was let down,” said Jones.

Rolando Bravo Tello also worked at Fredericksburg Glass, and had been involved in a unionization effort last year aimed at pushing back against wage theft issues at the company. Workers were not being paid for the full time they were working at job sites, were not being paid overtime, and were being misclassified as independent contractors.

“When I found out that they were not paying me what they were supposed to pay me and other people were getting paid more and I wasn’t, I felt like it was a knife to the back to say the least,” said Bravo Tello. “I was afraid of speaking up or saying something because I didn’t think I would gain anything out of it.”

He and Jones recently received a wage theft settlement of $34,000 from Fredericksburg Glass and now work as union members in the construction industry, but union organizers argue their case just scratches the surface of the rampant issues facing workers in the construction industry as numerous charges filed with the National Labor Relations Board involving allegations of retaliation and intimidation related to the union drive and wage theft investigation are still open.

Unforgettable Coatings and Cory Summerhays, Spectrum Construction and Fredericksburg Glass did not respond to multiple requests for comment on this story.

“There are companies out there where their main business is exploiting workers for their lack of education, immigration status, or lack of knowledge of labor laws,” said Herbert Zaldivar, organizing director for IUPAT district council 51. “The resources are out there but trying to get workers to come forward because the penalties aren’t severe or the companies are doing it by structure, it’s not there yet. The law needs to go harder. It’s happening everywhere.”