Unions allege mistreatment on building expansion project in Thief River Falls

Construction labor groups are alleging that workers on the $300 million Digi-Key expansion in Thief River Falls are being abused and cheated out of their rightful wages in violation of the state's prevailing wage law.

Latino workers employed by a concrete subcontractor on the state-subsidized project have complained of being "badly underpaid" and "mistreated," according to the Minnesota and North Dakota chapter of the Laborers International Union of North America.

Workers report mistreatment ranging from verbal abuse to lack of medical care following an injury on the job, the union said in a letter to Illinois-based McShane Construction, the project's general contractor.

Rick Harris, facilities director at Digi-Key, said in a statement that Digi-Key was "very recently made aware of a complaint involving a subcontractor working on the Digi-Key expansion project. We are working with our general contractor to understand the complaint and will continue to monitor the situation."

McShane Construction and the concrete subcontractor, Iowa-based Millennium Concrete, could not be reached for comment Tuesday.

Kevin Pranis, marketing manager for the Minnesota and North Dakota chapter of the Laborers International Union of North America, said labor organizations were planning a "major action" in Thief River Falls on Wednesday morning to highlight their concerns.

Pranis said the union has talked to about half a dozen workers who complained of wage theft and mistreatment on the Digi-Key expansion. But a lot more workers are in "a similar situation. It's at least a couple dozen people," he said.

The allegations are timely in light of the state's new wage theft law, touted as one of the toughest in the nation. Signed by Gov. Tim Walz this spring, the law toughens penalties for wage theft and provides additional money to state agencies to crack down on the practice.

Allegations of mistreatment on the Digi-Key project have been bubbling under the surface for months.

In a November 2018 letter to the Minnesota Department of Labor and Industry, the St. Paul-based Fair Contracting Foundation alleges that Millennium Concrete misclassified concrete workers as ironworkers to avoid paying a higher rate.

The project is in Pennington County, where the state's prevailing wage rate for concrete workers is $44 per hour, nearly $20 more than the ironworker rate. Based on 19 weeks of payroll, the alleged misclassification works out to $300,000 in total lost wages, the foundation said.

Two workers were "reassigned" to projects in Iowa after they complained about not being paid "correctly," the foundation said.

James Honerman, spokesman for the Minnesota Department of Labor and Industry, confirmed in an email that the Digi-Key project is subject to prevailing wage requirements. But Honerman said he couldn't "confirm or deny" that the department is investigating.

"Since the Digi-Key project is funded in part by state funds, it is a prevailing wage project. So, it is required to pay prevailing wages based on the type of work the workers are performing," Honerman said in an email.

Pranis said he believes the department is looking into it because workers have indicated they were contacted by investigators.

Digi-Key, a global distributor of electronic components, is adding 2.2 million square feetof usable space to its existing 700,000-square-foot headquarters in Thief River Falls.

The expansion started in spring 2018. Last fall, a man working for the steel erector on the project was injured on the job and died nine days later as a result of his injuries, according to the Associated Press.

State and local incentives for the expansion include a reduced building permit fee and a tax increment financing package valued at $2.9 million over nine years. In 2017, state lawmakers approved a sales tax exemption of up to $40 million for Digi-Key.

Thief River Falls Mayor Brian Holmer said in 2017 that the project was expected to create 200 to 300 construction jobs, with many of those jobs coming from outside the city of 8,800 residents.

Pranis said the union action "isn't against Digi-Key" itself.

"Digi-Key does great stuff in the area. People are excited about this project," Pranis said.