AG files lawsuit against subcontractors for obstructing wage theft investigation

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Attorney General Keith Ellison announced Tuesday that his office has filed a lawsuit against the owner of a construction supply company for obstructing a large-scale wage theft investigation by state regulators.

Ellison said Leo Pimentel, the owner of Property Maintenance & Construction, threatened workers and refused to provide labor records. The State Department of Labor and Industry launched an investigation into Pimentel more than a year ago after workers, supported by the carpenters’ union, filed complaints.

Workers say Pimentel owes them more than $100,000 in unpaid wages for working on projects across the state, including new homes in Viking Lakes, a sprawling, mixed-use development built by the Wilf family, who owns the Minnesota Vikings belong.

That reformer first reported the workers’ allegations in May, but state officials had not confirmed the existence of the investigation until Tuesday’s lawsuit was filed in Hennepin County District Court.

“[This lawsuit]is about reassuring all Minnesota workers, no matter who you are or where you’re from, that you too have rights and our office will protect your rights,” Ellison said during a news conference.

According to the complaint filed by Ellison’s office, Pimentel obstructed the years-long investigation by threatening workers and telling them to lie to state investigators. One of Pimentel’s managers told a worker that anyone who spoke to DLI investigators “would pay,” according to the complaint.

Pimentel also told workers he would be reducing their hours because workers had spoken to state regulators, according to the complaint.

In the lawsuit, Ellison’s office says Pimentel failed to retain employment records such as timesheets, payslips, tax documents and contact information for all of its employees as required by law. Pimentel has also refused to turn over documents to state investigators, further hampering their investigations.

Ellison’s office is asking a judge to declare PMC’s conduct illegal and order the company to provide the documentation requested by DLI.

A lawyer for Pimentel did not respond to an email seeking comment.

In May, Pimentel wrote in an email to the reformer that he was “aware of no ongoing investigation,” although DLI visited the Viking Lakes site and met with a PMC employee in October 2021, according to the complaint filed by Ellison’s office.

The Viking Lakes Luxury Apartments, Monday, May 2, 2022 in Eagan, Minnesota.

In addition to wage theft, DLI is investigating Pimentel for misclassifying workers as independent contractors to avoid paying workers’ compensation, unemployment insurance premiums and payroll taxes. Workers say Pimentel told them they had to form their own LLCs to receive overtime wages, the complaint says.

Many of the workers are undocumented immigrants who do not speak English. Some of the workers say Pimentel pressured them into getting fraudulent work papers or using fake social security numbers so he could pay them “by the books,” the complaint says.

The Viking Lakes development, which includes the Vikings’ new training facility and team headquarters, is one of 17 construction projects named in the lawsuit where workers allege wage cheating by PMC.

A representative of MV Ventures, the Minnesota Vikings development arm and general contractor for Viking Lakes, said all of their project’s subcontractors must “sign agreements that ensure fair labor practices for workers on site and require strict compliance with all federal and state regulations Benefits, worker compensation and wage laws.”

If the allegations are substantiated, the company said, “the subcontractors will have breached their contracts with MV Ventures Construction and will be held accountable.” MV Ventures said PMC did not receive any additional contracts for Viking Lakes.

Allegations of labor abuse at Viking Lakes go beyond misclassification and wage theft. Earlier this month, the reformer reported that an Absolute Drywall worker was accused of raping a cleaner at the Viking Lakes project. According to workers, DLI is also investigating this company for wage theft.

Gary Gleason, vice president of construction at MV Ventures, was asked to comment on this story and said they have not been contacted by state officials about labor abuse in the Viking Lakes development.

Gleason said Tuesday he had no further comment on the attorney general’s lawsuit, reiterating that MV Ventures “fully supports” an investigation and will cooperate if requested.

Ellison declined to say whether state investigators have contacted MV Ventures about the Viking Lakes labor abuse complaints and said they were unable to share details about an ongoing investigation that goes beyond what is in the lawsuit is included.

MV Ventures is not named as a defendant in the lawsuit. Also Advantage Siding, the company that contracted out the work to PMC after being hired by MV Ventures.

The carpenters’ union, the North Central States Regional Council of Carpenters, has played a key role in exposing PMC labor abuse at Viking Lakes and other construction sites.

After MV Ventures hired non-union contractors to work on the Viking Lakes homes, union leaders urged the company to allow independent investigators to monitor labor violations.

MV Ventures declined independent supervision at its construction site, but the carpenters’ union secretly spoke to workers during the construction process and helped them file their grievances with state regulators.

In response to the lawsuit filed by Ellison’s office, the carpenters’ union called for all parties involved, including MV Ventures, to be held accountable.

“MV Ventures’ response, or lack of response, to these unpaid workers is unacceptable. They hired subcontractors because they knew they had a history of wrongdoing, but MV Ventures continues to ignore accountability for their job site and the people who work there,” said Adam Duininck, director of government affairs at the carpenters’ union. “Now is the time for MV Ventures to step up and fix the situation.”

Wage theft is so common in the construction industry that labor experts say it’s a business model that makes it all but impossible for reputable contractors to stay in business. Almost a quarter of Minnesota’s construction workers — about 30,000 people — are misclassified or paid off the books, according to an estimate by the Midwest Economic Policy Institute.

Ellison created a new wage theft division shortly after taking office in 2019 and said he’s made crime a focus of his office.

In 2019, the state legislature also passed one of the toughest wage theft laws in the country, making it a criminal offense to steal more than $1,000 in wages.

However, no one has been prosecuted for wage theft in Minnesota.

The state has won major civil settlements which DLI’s investigation could lead to – DLI is in no position to conduct a criminal investigation.

“Every Minnesotan should be able to take home every dollar they make,” Ellison said.

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