This story has been updated with a statement from Reuter Walton.
Yesterday local authorities executed a search warrant and arrested Ricardo Batres, the owner of American Contractors and Associates (ACA).
At a Wednesday press conference, Hennepin County Attorney Mike Freeman announced the charges against Batres.
“We have charged Batres, 46, of Crystal, with one count of labor trafficking, one count of insurance fraud and one count of theft by swindle. We allege that he sought out undocumented workers as employees of his contracting company to do framing carpentry and installing sheet rock. Because they were undocumented and fearful of deportation, Mr. Batres paid them less, worked them harder, put some of them in overcrowded housing without hot water and did not provide medical benefits,” Freeman said. “We will vigorously prosecute Mr. Batres and we hope this serves as a warning to developers and general contractors to not turn a blind eye to this kind of illegal activity.”
The charges are the result of a lengthy investigation into workplace abuses documented by workers with the support of Centro de Trabajadores Unidos en Lucha (CTUL), a South Minneapolis low-wage worker-led organization that fights for fair wages and working conditions in the Twin Cities metro area. Information was also provided to the commerce department’s Fraud Bureau by labor unions and The Advocates for Human Rights. Notably, this is one of the first times a labor trafficking charge has been brought in Minnesota.
“Human trafficking yields an estimated $150 billion worldwide each year,” said Robin Phillips, Executive Director of The Advocates for Human Rights. “Minnesota is not immune to … human rights abuse, which relies on violence and threats to force people to work without pay, in dangerous conditions and in fear. Human trafficking thrives when systems fail to hold those who profit from exploitation accountable. Today’s charges send an important message that Minnesota will not stand by when workers are victimized.”
Jose Adalid Zavala Lopez and Yimer Iriarte Banegas, motivated by the abuses they experienced working under Batres, chose to participate in the investigation.
While Zavala Lopez and Banegas were nervous about going public with their experiences and concerns, they eventually concluded that the only way these abuses will change is if workers like them confront the problem. “We know that it’s not only us who are getting abused,” said Zavala Lopez
Banegas noted that intimidation took place because, “Batres took advantage of the fact that he knew the laws and we didn’t.” After trainings with CTUL, Zavala Lopez and Banegas were able challenge Batres’ assertions. “We got the strength to organize,” said Zavala Lopez.
“We see this kind of fraud occurring on a regular basis in construction throughout the Upper Midwest and beyond,” said NCSRCC Executive Secretary-Treasurer John Raines. “Some developers have routinely hired general contractors and subcontractors that exploit their workers by paying them off the books through labor brokers. The developers and general contractors who hired American Contractors and Associates have profited from the deplorable conditions that give rise to human trafficking.”
“We have a community where most developers and general contractors support middle class wages and benefits for construction workers. Cheating contractors and those who profit from partnering with cheating contractors must be held accountable.”
Dan McConnell Business Manager with Minneapolis Building and Construction Trades Council made the following statement:
“We’re troubled by the growing number of low-road contractors that steal from their own workers or misclassify them to avoid tax and workers comp obligations. Employers like Ricardo Batres have no place in our industry. This should be a wake-up call to every developer and contractor that subcontracted work to American Contracting, and then looked the other way while Batres lined his pockets at the expense of workers: he’s not getting away with it, and you won’t either. It’s time for responsible developers and contractors to take concrete actions to ensure something like this never happens again, and we look forward to working with them toward that goal. It took a lot of courage for these workers to stand up for their rights and we need to listen to them. “
The experience of immigrant workers Zavala Lopez and Banegas demonstrates that a growing national economy does not translate to better labor opportunities across the board.
Since the 1980s, the share of employed workers who are union members has fallen by half. Subsequent Supreme Court decisions and state laws against organized labor have eroded labor standards and hampered collective bargaining.
Annie Lowrey, a contributing editor at The Atlantic, explains that a greater share of the economy is controlled by fewer hands since the 1990s. “This raises profits, slows economic growth, increases inequality, and, yes, suppresses wages. Workers, in effect, have fewer employers to choose from. Employers have more power to set workers’ wages at a low level,” Lowrey writes.
The erosion of workplace rights makes it easier for exploitative employers like Batres to operate. As the Trump administration increases its hostility towards immigrant laborers, the worksite becomes a more treacherous place.
Bartes’ ACA worked on construction projects led by Reuter Walton, one of the largest Developers and General Contractors in Minneapolis, and Lennar, the single largest home-builder in the Twin Cities metro area for every year since 2006. At the time of publication a represenative Lennar could not be reached.
Reuter Walton made the following statement:
“Prior to the charges announced today by the County Attorney’s office against Ricardo Batres, the owner of American Contractors and Associates LLC, Reuter Walton Commercial, LLC had no knowledge of the allegations contained in the complaint nor of the actions by Mr. Batres and AC&A that form the basis of the charges. More specifically, although today’s Media Advisory regrettably mentioned our firm by name in connection with projects on which AC&A had been engaged, we want to clarify and emphasize that not only is Reuter Walton not a subject of the complaint, but our firm has never contracted with either this entity or individual. However, as a result of this matter we have now become aware that one of our subcontractors did in fact hire AC&A as a second-tier vendor on a project in 2017 without disclosing that fact to us. Although we have not yet been approached by any government authority seeking information or investigation in connection with this matter, labor trafficking is a very serious matter and Reuter Walton will cooperate fully with all authorities if and when it is asked to do so.”
According to the criminal complaint, Batres recruited laborers for wood wall framing and sheetrock installation. Batres used their undocumented status as leverage to force them to work long hours with low pay and without adequate safety protection. He told his employees they would lose their job and be deported if they went to a doctor for injuries suffered on the job.
The criminal complaint asserts that in May 2017, Batres hired about a dozen men, promising them wages, benefits, and, in some cases, housing. However, once they arrived at the job sites, they learned that they were working 10 to 12 hours per day, usually six days a week. They were not paid overtime and were often working as high as six stories above ground without proper safety equipment, according to the complaint.
Zavala Lopez worked for Batres for three months. While working, a wall fell on him, severely injuring his back. He was left alone for an hour before it was decided that, instead of going to the doctor, Zavala Lopez would be treated by a massage therapist. The massage aggravated the injury and Zavala Lopez was eventually moved to a hospital. Batres told Zavala Lopez not to report the incident or Batres would report him to immigration. Batres had promised Zavala Lopez money for living expenses while he recuperated, but only gave him $200 a week. Zavala Lopez still struggles with mobility due to his injuries despite 10 months of treatment and physical therapy.
Zavala Lopez was eventually apprehended by ICE, and would later learn that Batres informed the other employees of his call to ICE.
Banegas commented that the harsh Trump administration immigration policies have had a negative psychological impact on immigrant workers, especially those working in construction. Hearing rumors of workplace raids has resulted in laborers who are afraid to report to work for fear of deportation. According to Banegas, there is a perception that ICE comes to workplaces — in particular, to construction sites.
“When I was in jail for seven months after I was picked up by ICE I noticed that many inside also worked construction,” he said.
“All too often crimes like labor trafficking go unreported, and victims – usually the most vulnerable members of our city – are denied justice,” said Minneapolis Mayor Jacob Frey. “In Minneapolis, we are committed to enforcing our labor laws and holding accountable bad actors who attempt to deny workers the respect and dignity they deserve. Anyone involved in the construction industry should be held to a set of standards that ensures workers are treated with dignity and issues like labor trafficking and wage theft are eradicated.”
“I am appalled that this contractor targeted immigrant workers and thought he could get away with not paying the wages and worker’s compensation that they are owed,” said Minneapolis Ward 3 City Council Representative Steve Fletcher. “We do not and will never tolerate this behavior in Minneapolis. It’s the responsibility of developers to ensure that every single contractor and subcontractor they hire is following the law and treating everyone on their job site with respect.”
The experience of these workers is not uncommon.
Over the past decade, the United States Department of Labor (USDOL)  has uncovered at least 235 violations of federal wage and hour laws totaling over $340,000 in back wages  owed to construction workers in Minnesota. In addition, the federal Occupational Safety and Health Administration (OSHA) of the USDOL uncovered over 3,500 instances of violations of federal health and safety laws that exposed more than 5,900 construction workers to dangerous working conditions in Minnesota in the past 15 years. Over 3,400 of those workers  were exposed to “serious” violations, defined by OSHA  as a violation where there is a “substantial probability that death or serious physical harm could result from a condition which exists.” These are just reported cases, representing a much larger problem in the industry given reports of frequent worker intimidation.
CTUL has also learned that former employees of Edge Construction, LLC experienced wage theft.
Workers report that between Oct. 30, 2017 and March 23, 2018 they were not paid the required time and a half overtime and did not receive all of their wages for the hours that they worked. It is estimated that the 10 workers are owed almost $30,000, with one worker owed more than $7,000. These workers built Lennar homes near Lake Elmo and Prior Lake, the Elko New Market Commerce Center, and the Good Samaritan Society “Lodge of New Hope” in New Hope.
In an extreme case, CTUL obtained photos of a contractor choking a worker. The worker was owed back wages and was working without a lunch break. When he confronted the contractor about his wages and break, the contractor grabbed him by the throat, picked him up and slammed him on the ground. Another worker took two photo before calling the police.
University of Minnesota labor economist at the Carlson School of Management Aaron Sojourner stated that the “Unethical employers and the developers who use them harm workers. They make promises, take the product of workers’ skill and sweat, and then cheat the workers out of their earned compensation.”
“This low-road strategy puts ethical employers at a competitive disadvantage, creating a race to the bottom,” Sojourner continued. “Some real estate developers encourage this by heavily pressuring contractors to reduce costs and turning a blind eye to wrongdoing and corner-cutting. The economy runs on trust. Cheaters corrode it. It requires great courage for workers to stand together against powerful interests. Everyone who supports fair competition in our community should applaud this action.”