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Helmut Schmidt, Published January 25 2014

Area firms violate Minnesota wage and overtime laws

MOORHEAD – Area firms underpaid 78 workers almost $118,000 for several Moorhead college and university projects going back to 2011, Minnesota Department of Labor and Industry documents show.

The violations of the state’s wage and overtime laws are a sign that higher standards should be required of contractors to ensure fair pay and competition, said the leader of the Fair Contracting Foundation.

One firm, FM Contracting of West Fargo, shelled out nearly $69,000 in back wages for failing to pay the prevailing Clay County wage for carpenters during its work on Minnesota State University Moorhead’s Dahl Hall, said Mike Wilde, the executive director of FCF.

FM Contracting’s errors were not the result of any shenanigans by the firm, Wilde said.

But the discovery sparked a wider investigation of state projects by the Department of Labor and Industry that found a number of violations of the state’s wage laws.

With $850 million or more in capital projects expected to be approved in this year’s state bonding bill, Wilde and Minnesota 2020 spokesman Joe Sheeran said labor groups and conscientious contractors want to ensure competition is fair and wages aren’t undermined.

“These are laws meant to strengthen or protect the local economy,” Wilde said. “If you’re transporting Bismarck or Fargo or Jamestown workers to work on a Moorhead job, you have to pay a Moorhead wage rate.”

Investigations spike

The number of investigations by the Department of Labor and Industry rose sharply in recent years.

In 2010, 60 wage investigations collected $226,197 in pay and benefits for 75 workers, the department reported.

In 2011, 79 investigations collected $324,995 for 198 workers.

But in 2012, 195 investigations collected $877,986 in back pay and benefits for 382 workers.

“Wage violations in the construction industry are a problem,” Wilde said. “We’re happy about the increased enforcement, but we have a lot of concerns from Rochester to Moorhead to Duluth.”

The Department of Labor and Industry examined several state construction projects in Clay County from 2011 to 2013, uncovering wage discrepancies big and small.

In the case of FM Contracting, the audit found 19 employees were owed $68,795.53 in back pay because they weren’t paid the local wage for carpenters.

Follow-up investigations of Dahl Hall contractors found:

• Brothers Fire Protection of Elk River, Minn., failed to pay three employees $1,764.62 in overtime.

• Dakota Electric Construction, Fargo, paid $4,521.07 to electrical apprentices for failure to pay prevailing wages.

• Overhead Door Co., Fargo, paid $212.25 to one employee for a prevailing wage issue.

• Northland Glass and Glazing, Fargo, paid eight employees $415.29 for prevailing wage or overtime issues.

• McArthur Tile Co., Fargo, paid $989.91 for wage issues and deducting the cost of using a truck from wages.

• Cullen Insulation, Fargo, paid $10.13 in overtime to two workers.

Other investigations found:

• Lien Insulation, Fargo, paid 20 employees $35,564.24 for various wage violations tied to MSUM’s Lommen Hall project.

• Minko Construction, Fargo, paid $5,080.31 to seven employees for wage issues tied to MSUM’s West Snarr Hall project

• McArthur Tile Co., Fargo paid $164.55 in overtime to six workers for work on Minnesota State Community and Technical College Moorhead’s library classroom addition in 2011.

• Manning Mechanical, Fargo, paid $362.60 to five employees on the MSUM’s Owens Hall business center project.

Jan Mahoney, MSUM’s vice president for finance and administration, said the school has a project manager, but it also relies on oversight by the architects and the Minnesota State Colleges and Universities system.

Violations are typically worked out between the contractors and state officials, she said.

Mahoney said the biggest challenge may be that the Department of Labor and Industry doesn’t have a set schedule to update wage rates, making it tough for contractors to be sure that they’re following current rules.

“We take prevailing wage very seriously. We try to abide. But there will be times when there will be an oversight,” Mahoney said.

More wage issues

Other area projects have had wage issues, too, Wilde and Sheeran said.

• A complaint last year by FCF led to an investigation that found five contractors on a University of Minnesota Crookston dormitory project had underpaid workers more than $30,000.

By mid-November, $27,425.28 had been recovered, Wilde said.

• Air Mechanical of West Fargo paid more than $80,600 to workers after the U.S. Department of Labor determined the firm has not paid prevailing wages, benefits and overtime to employees building Lake Park-Audubon High School.

The Fair Contracting Foundation, based in St. Paul, was started by the state’s Building and Construction Trades Council.

Wilde said the group also counts on support from some of the state’s contractors.

Minnesota 2020 is a progressive think tank that focuses on education, health care, transportation, clean energy and economic development issues.

Readers can reach Forum reporter Helmut Schmidt at (701) 241-5583