Minnesota has some of the harshest penalties in the nation for wage theft, yet roughly one in four construction workers have been victimized by the practice, according to a new report.
Researchers at the Illinois Economic Policy Institute and Midwest Economic Policy Institute recently delved into the problem of wage theft in the greater Midwest area, and they found that Minnesota employers lead the area in the practice. According to the research, 23 percent of Minnesota construction workers, or more than 30,000 individuals, have been victimized by wage theft. That’s five percent higher than the Midwest average, which sits at 18 percent.
Types Of Wage Theft
Wage theft can happen in a number of different ways. For some workers it takes the form of being misclassified as an independent contractor so that employers can avoid paying certain benefits or for workers’ compensation costs. For other workers it’s more direct, as they aren’t appropriately compensated for hours worked or for overtime hours. In total, estimates suggest that wage loss accounts for roughly $136 million in tax losses each year in Minnesota due to payroll fraud. Of this, $65 million is lost in income tax revenue, $13 million in unemployment insurance contributions and $58 million in workers’ compensation premiums.
Comparatively, Wisconsin loses an estimated $40 million while Illinois loses around $186 million each year due to payroll fraud.
“The sheer numbers and the scale of the problem is both daunting and discouraging and depressing, but certainly aligns with what we experienced in the field,” said Lucas Franco, research manager for LIUNA Minnesota and North Dakota. “What they’re doing imposes costs on law-abiding small businesses, on working families, and on taxpayers who have to make up the budget shortfall,” added Frank Manzo IV, policy director for the Midwest Economic Policy Institute and co-author of the report.
The researchers say that wage loss is very prevalent in the construction industry, where the low-bid model often leads employers to try to cut costs any way they can, even if their actions are a form of wage theft. A 2017 study from the Economic Policy Institute found that workers who are subject to wage theft experience an average loss of $3,300 each year if they work year-round.
The problem is even more prevalent among non-union construction workers. A 2019 study involving construction workers in the Twin Cities found that nearly half of all non-union respondents reported some form of wage theft within the last 18 months.
“Anecdotally, as we talked to non-union construction workers, people say, ‘We’ve just become accustomed to the idea that one out of every four jobs isn’t going to pay me my full wages,’” said Brian Merle Payne, co-director of the Centro de Trabajadores Unidos en la Lucha (CTUL).
Many workers, even when they’ve identified that they are having their wages unfairly garnished, don’t know where to turn for a resolution. They may even face employer pressure or threats for exposing the wage loss, so oftentimes they opt to stay quiet. It’s important to realize that wage loss, even if it’s unintentional, is a crime and that you have legal options. For starters, a workers’ compensation lawyer can help calculate exactly how much you’ve been shorted and help you get compensation for what you deserve. You also have protections against retaliatory actions from your employer, so don’t be afraid to talk to a lawyer about getting what you deserve.
So if you know that you’ve been a victim of wage theft or you just want to talk to a lawyer to see if you have a case, reach out to the experienced attorneys at Hey Workers today to learn about all your recovery options.
