Minnesota workers allege wage theft at state-subsidized project in Thief River Falls

The employees working at the bottom of the contracting chain on the massive Digi-Key construction project say they've been stiffed tens of thousands in wages.

The employees working at the bottom of the contracting chain on the massive Digi-Key construction project say they've been stiffed tens of thousands in wages. Fair Contracting Foundation

Digi-Key, an electronics supply company that employs about 4,000 people in the small northern Minnesota town of Thief River Falls, is in the process of building a $300 million distribution facility. About $4 million of that comes from state subsidies.

Accepting public money requires strictly following the law. Which includes properly recording the hours construction workers put in, and paying them prevailing wages.

Wage theft watchdog Fair Contracting Foundation of Minnesota believes one Iowa-based contractor on the Digi-Key site is misidentifying its employees as ironworkers when they’re actually pouring and finishing concrete. Cement masons are paid $44 in Pennington County, while ironworkers are paid just $24.81. (Northern Minnesota's prevailing wage rates differ from those of the Twin Cities, where ironworkers are paid more.)

By cheating workers out of nearly $20 every hour, Millennium Concrete has pocketed at least $300,000 over five months, says FCF executive director Mike Wilde.

Last October, local labor unions hosted a lunch for Digi-Key construction crews. There, some Spanish-speaking Millennium Concrete employees learned that they always received the lower ironworker wages regardless of the type of work they did.

Labor organizers checked their statements against certified payroll records requested from their employer, and concluded their hours and wages looked very counterintuitive.

“It might be an acceptable rule of thumb to assume that 20 percent of work hours on a large cement pour, like at Digi-key, are ironwork hours because it is common to see two ironworkers reinforcing with rebar in advance of maybe eight cement masons,” according to a FCF complaint sent to the Minnesota Department of Labor and Industry.

“However, it is highly suspicious when Millennium Concrete reports several consecutive workweeks of 60 percent and even 80 percent of hours attributed to ironwork. This would be an almost inverse of what one would expect.”

After two workers met with union representatives to learn how they could remedy this, they were taken off the Digi-Key project and reassigned to projects back in Iowa, according to the complaint. Another worker's sworn statement alleges that Millennium Concrete revoked his job and offered him no medical support after he fell and injured himself on the worksite. 

Millennium Concrete is not registered to do business in Minnesota with the secretary of state’s office. Nor does it have a construction license under the Department of Labor and Industry.

Wilde says Millennium Concrete underbid at least three other Minnesota contractors “who would have liked to do that job in compliance with the law.”

On Wednesday, local union and non-union workers protested the alleged wage theft and worker retaliation at the Digi-Key project, and delivered a letter to McShane Construction, the general contractor, which oversees Millennium Concrete.

Neither Millennium Concrete nor McShane Construction responded for comment.

Digi-Key released a statement to Valley News Live: “Digi-Key was very recently made aware of allegations involving a subcontractor working on the Digi-Key expansion project. We are working with our general contractor to understand the issue and will continue to monitor the situation.” 

“We would like to emphasize that even according to Kevin Pranis, the marketing manager for LIUNA MN/ND, who is publicizing the allegations on behalf of LIUNA, Cement Masons Local 633, and the Northwest Minnesota Building Trades, the union action isn’t against Digi-Key itself. Digi-Key does great stuff in the area. People are excited about this project.”

There could be many different forms of redress, Wilde says.

“Can McShane fix it? They could. Could the state fix it? They might. Could DigiKey do something? They could kick them off the project,” he says. “But ultimately the violator here is Millennium, we believe.”

Update: McShane Construction responded with a statement.

"McShane is aware of the allegations against work associated with Millennium concrete," said VP Josh Vidro. "McShane does not believe the allegations are accurate and is investigating to ensure all work is completed appropriately. McShane is completing Certified Payroll on all jobsite workers to ensure all Prevailing Wage requirements with the State of MN are being followed. McShane takes worker safety very seriously and is working with Millennium for a formal response to all allegations."