For a year, Cristian Batres was a regular visitor at a construction site on 19th Avenue in Queens, New York. The job was Wildflower Studios, a $1 billion movie production complex. As an officer with the local carpenters’ union, Batres frequently checked in with the workers who were assembling the 775,000-square-foot studios—a project several years in the making, backed by actor Robert De Niro and producer Jane Rosenthal, among others. The building, completed at the end of 2024, was the target of several labor protests that aimed to bring attention to the fact that Leeding Builders Group, the general contractor, had hired several nonunion as well as union subcontractors.
On one visit, in May 2024, Batres approached a cluster of about a dozen workers, all clad in the same dirtied neon shirts that marked them as employees of Gotham Drywall Inc., one of the biggest nonunion subcontractors on the job—no stranger to managing as much as $258 million in contracts. Yet when he asked each worker who their employer was, their answers were complicated.
“Some guy says, ‘Oh, I work for this guy called Bruno,’” Batres recalled. “You go to the next guy, and he says, ‘I was working with M.A.S., and it’s not around anymore, but I’m working for the same guy, Daniel—he’s opened another company.’ And then you go to the next one, and he says, ‘Yeah, I’m working for Atlantic.’ But these guys, they’re all wearing a Gotham Drywall shirt.”
Gotham Drywall was of interest to Batres because several people who did the work that the company was contracted to complete had told him they weren’t paid. “At one point, some of the guys were behind two or three weeks,” he said. “They didn’t know what to do.” He saw workers on lunch break who skipped food and tried to rest their eyes instead. He wondered if he should give some of the men money: “Maybe help get them some lunch.” One worker couldn’t talk about the situation without crying.
Several of Batres’s encounters were captured on video, part of a trove of documentation that the union gathered about Gotham Drywall, including from garbage bags that the company left in public spaces. (“Definitely invest in a crosscut shredder,” advised Michael Piccirillo, president of Local 20. “Everybody is lazy. I’m sure they have one shredder in the office. Nobody wants to get up, so they just throw stuff in the garbage.”)
The story of Wildflower Studios isn’t just about one billion-dollar project in New York City possibly short-changing workers. It’s Exhibit A for what’s become known in the industry as the labor-broker model, a system of farming out hiring that makes it easier for employers to stiff workers and avoid responsibility for their safety while, at the same time, depressing wages and cheating communities out of billions of dollars of tax revenue. “It’s a pyramid,” Batres said. “No matter how you look at it, it’s always a pyramid scheme.”
The system, which has become essential to how the construction industry operates, goes something like this: A general contractor hires a subcontractor, who works with a labor broker—or several—to source crews. The developer pays the subcontractor. The subcontractor then pays each labor broker a check, which is taken to a check-cashing facility. Where the money goes from there is anyone’s guess. In theory, it’s distributed to the crew that the broker assembled. Sometimes that happens, but too often it doesn’t. Brokers can take as big a cut of a crew’s wages as they want, even if it means taking all the money. The layers of obfuscation, the cash payments doled out by elusive shell companies, make it intensely challenging to document wage theft.
After the carpenters’ union in New York City identified 18 shell companies that had worked with Gotham Drywall, union officers went to visit the addresses for each company. None had facilities for storing equipment or tools, or any public-facing office space. In fact, each was a private home or apartment. “These are supposed to be contractors for major New York City worksites,” Piccirillo said, “and they’re working out of apartment buildings. To be a contractor you should at least have a garage that has material in it, at least an office front. And none of them did.”
Labor brokers have been around for decades—long before the second Trump administration began its brutal, sweeping program of immigration enforcement. But although not all workers caught up in the labor-broker model are undocumented immigrants, President Donald Trump’s promises of mass deportation and his violent tactics—including raids at workplaces and residences—have given the brokers new power. Federal agents haunt construction sites, and laborers, terrified of being deported, are more vulnerable than ever to brokers’ intimidation and threats. Jorge Duran, a union representative in Minnesota, argued that Trump’s immigration policies let employers say, essentially: “If you go and report me, I’m going to call ICE on you.”
Sometimes labor brokers control workers’ lives well beyond the jobsite. “A lot of these guys are former coyotes who used to bring migrants across the border,” explained Mark Erlich, a fellow at Harvard who’s spent several years studying the model. “And at some point they just shifted over to this.”
In Ann Arbor, Michigan, a representative from the carpenters’ union recorded a video of himself talking to a worker named Luis. He was working on Verve, a high-profile 217-unit apartment building. In the video, Luis tells the union rep that he’s originally from Zacatecas, Mexico, and that he owes a $7,000 fee to the person who sneaked him across the southern border. The labor broker who brought him onto the job, whom Luis identifies as Rolando, deducts repayment of this fee in installments. After the fee is paid down, there’s $230 left for Luis in return for his 40-hour week, which works out to $5.75 an hour—below federal minimum wage.
“He told us most of the guys on the job were in the same situation,” said Juan Ortiz, one of the organizers from the carpenters’ union who spoke with Luis. “And this ain’t the first time. We’ve heard it over and over again. Once they get here, they’re pretty much owned by that broker until the fee is paid off. It’s gut-wrenching what we see all the time. They don’t even have enough money for gas or food.”
Ortiz noted that the safety of female workers he meets is often at greater risk. Ask Bessy. In August 2022, two months after she traveled with her three-year-old daughter from Honduras to the United States, she made her way to Tennessee. A friend picked her up there and, knowing she needed work, introduced Bessy to someone who was looking to hire workers for a painting company. That man, Eric Cruz, was a labor broker who offered a job that came with transportation. “This was really big for me,” Bessy said, speaking through an interpreter, “because I had just arrived in the U.S.”
Cruz offered Bessy $15 an hour. Soon she was painting apartments and townhouses, mainly around Nashville and the nearby suburb of Madison. Her days usually began at 7 a.m. and ended at 6 or 7 p.m., sometimes later. She received her wages in cash at the end of the week—for the first two weeks, at least. After that, she started getting partial payments, anywhere between $100 and $300 for the 50-hour workweek. “He always blamed the general contractor,” she recalled, “saying the checks didn’t go through.”
This went on for several weeks, during which Bessy was living in a friend’s house. She knew she couldn’t stay there for long. She had no one to turn to except the labor broker. “I asked Mr. Cruz if he knew a place we could rent,” she said. “He told me he could find a bedroom in a house where his girlfriend lived.” Lacking other options, she and her daughter took the available room.
The living arrangement lasted about a year. During that period, Bessy said, Cruz continued to pay her between $100 and $200 each week. But now, instead of blaming the general contractor, he told Bessy the revised sum was correct. The rest of the pay went toward rent for her room. “I became so tired of it,” she said. “When I said I wasn’t going to work for him anymore, he became very angry and started yelling at me. I was so depressed because I didn’t know what to do.”
She felt unsafe knowing that Cruz controlled her employment, her transportation, and her housing. In March 2023, she decided she couldn’t do it anymore. “I stopped going to work, but I kept asking for the money he still owed me,” she said. “He just kept yelling and insulting me. He would call me fat and call me a whore. I was very scared because I was living in a house he rented, and I was afraid he would come in and do something to me.”
In the end, Bessy and Cruz’s girlfriend decided to leave the house together. The two, who had become closer through the experience, came to understand just how much Cruz was controlling both of their lives. “He was very confident because he was sure nobody would do anything to him,” Bessy remembered. “He said, ‘Oh yeah, people have tried to sue me before, but it never works. Paying for the lawyer will cost more than what I actually owe you. Nobody can do anything to me.’”
Eventually, Bessy worked with the local painters’ union to file a complaint against Cruz with the U.S. Department of Labor. The evidence she submitted—voicemails from Cruz, text exchanges—was substantial enough for the department to initiate an investigation. Unable to locate Cruz, however, the government dropped the case.
Isabel Felix, the union representative who helped Bessy with documentation, said she has heard of more than 100 other workers who had their own bad experiences with Cruz. “I get one or two calls a month about Mr. Cruz,” Felix said.
One reason Cruz had little trouble evading law enforcement when investigators tried to look into Bessy’s complaint was that he was operating as an LLC, or limited liability company. Establishing an LLC only takes a few minutes online, and while exact fees vary between states, it’s never more than a few hundred dollars. Ditching one of these shell companies is easy. So is starting a new one. And operating with such a shadowy business model gives labor brokers the cover to introduce illegal enterprises, such as drug dealing, into their work.
In Minnesota, a 64-year-old worker named Arturo, who is from Mexico, met a labor broker named Eduardo Valenzuela. Arturo has had steady work over decades in the construction industry, despite lacking legal status in the United States, but back in 2020 he had a dry spell, so he did what a lot of enterprising day laborers do: He started driving around to jobsites to see if anyone needed an extra set of hands. Someone from a company called Painting America sent him to Valenzuela, who had recently started a new LLC.
Arturo said that Valenzuela brought him onto a drywall installation job at an apartment complex in Prior Lake, Minnesota, and that they agreed on $25 an hour. When the job started, Arturo was putting in 10-hour days, but after the first week, Valenzuela paid him only $200 in cash. Arturo’s 50-hour week earned him $4 an hour. Still, he stuck with it. “I had to keep this job,” he said, “because, well, it’s some money.”
The situation was made worse for Arturo because, at the request of Valenzuela, he brought two other men onto the crew to help get the job done—his grandson and a friend of the grandson. They, too, were paid $4 an hour.
Arturo was able to make it work for three months by supplementing the meager income with his savings until there weren’t any savings left. Much of it had also gone to medical care for his son, who was awaiting a kidney transplant.
When Arturo pressured Valenzuela to start providing full payment to him and the two others he had brought onto the job, Valenzuela stopped taking his calls. He also stopped visiting the jobsite. When he did finally come around, he didn’t have any money to pay Arturo. Instead, he presented an alternative. “Eduardo came with a big bag of cocaine,” Arturo recalled, “and he said, ‘OK, I owe you money, but you can go and sell this and make double the money.’” He estimated that the bag of cocaine that Valenzuela offered that day was a pound. “I said, ‘I don’t know if I can do it. One problem is the police get me in jail. What’s going to happen to my kids?’”
Other workers, he said, took Valenzuela up on the same offer. “Because the guys need the money. The Spanish-speaking guys, we don’t have Social Security numbers, so the government doesn’t pay us for unemployment.”
Arturo rejected the idea of selling cocaine. His grandson was so scared by the proposition that he immediately left the United States and returned to Mexico. So did his friend. “They didn’t want to stay because they are scared of these people,” Arturo said.
Arturo didn’t run. Instead, he continued his efforts to get paid in full. It never happened. After a while, he noticed that he was being followed home at the end of the day by the same car, which would park close to his house. This went on for a few weeks, even after the job ended.
Eventually, Arturo got in touch with Jorge Duran, the carpenters’ union representative for his region. Duran helped Arturo document his experience and file a case with the U.S. Department of Labor in March 2020. Duran has tracked the LLCs that Valenzuela has started over the years. In his estimate, Valenzuela opened at least six separate LLCs in 2023 and 2024 alone. (Calls to Valenzuela went unreturned, as did emails and phone calls to Painting America, the subcontractor that worked with him.)
At the close of 2024, Duran was investigating over 300 cases of worker abuses at the hands of labor brokers in Minnesota: workplace injuries, unpaid wages, lack of access to required sick days. He, too, has felt threatened by labor brokers at certain points in his investigative work. He said the words “You are dead” were scratched into the hood of his truck. At one point, the back window was smashed. “But I’m not afraid,” he said. “I’ve been doing this for 24 years. If one day they are going to kill me, then they’re going to kill me. But I’m not going to stop.”
At bottom, the labor-broker model hinges on the misclassification of workers. The federal government sets standards to distinguish between employees and independent contractors. According to the IRS, a worker should be classified as an employee if their employer tells them what work to do, how to do it, and when to do it. An employee has hours set and tools provided by the employer. An independent contractor, by contrast, is a worker who decides how to complete a job, supplies their own tools, and sets their own hours.
By these standards, labor brokers should, arguably, be classified as employees. They operate out of private homes and apartments and do not maintain their own shops; they are told what job to complete, and when and how to do it. But because they operate as LLCs, they are classified as independent contractors. By hiring a labor broker as a contractor instead of an employee, a company like Gotham Drywall shifts legal responsibility to the broker for most labor protections, including workers’ comp insurance. (Gotham Drywall didn’t respond to multiple requests to answer questions about Wildflower Studios. Neither did Leeding Builders Group or Adam Gordon, the managing partner for the film production facilities.)
Joslyn, one worker on the Wildflower Studios job, recalled that the labor broker who hired him told him he was responsible for his own safety: “He told us, ‘If you get hurt and you can’t work, you’ve got to take care of it on your own.’” Joslyn recalled seeing a worker fall from a ladder. “He wasn’t tied off like he should have been or anything like that,” he recalled, “and he fell. That was that. He was out and they brought someone else in.”
The workers provided by brokers largely remain ghosts, legally speaking. If brokers and the crews they sourced were classified as employees, they would have to complete an I-9 form to confirm eligibility to work in the United States. A 2023 report from the Century Foundation estimates that up to 2.1 million workers in the construction industry are misclassified, and that 23 percent of the industry’s workforce is made up of undocumented workers.
Subcontractors will often have “core crews” on a jobsite; additional workers brought in by labor brokers are left with little or no official accounting. Sometimes the only record of signing in and out of work is a WhatsApp thread.
Occasionally union representatives go to jobsites and count workers themselves. In 2020, Piccirillo had representatives at a jobsite on Water Street in Manhattan where Gotham Drywall was doing work. The representatives recorded a head count of 15 workers in Gotham Drywall uniforms. Later, the union obtained documents from Gotham Drywall’s garbage that listed only eight workers for the same job. According to a January statement, also taken from Gotham Drywall’s garbage in 2020, the company had more than $258 million in contracts around the same time. If the company was underreporting its workforce by 46 percent— the rate of underreporting that union representatives observed on Water Street—the total impact of its actions would be significant.
Because the workers sourced by labor brokers rarely, if ever, appear in any paperwork, there’s no enforcement when it comes to safeguarding their health or wages. They cannot access unemployment insurance or workers’ compensation; they do not get paid sick or family leave—even when a state mandates such benefits. And now, many workers caught up in the model have to evade ICE officers any time they step out of their home.
The anonymous workers who are managed by labor brokers bear most of the injury caused by their hiring practices, but the approach to sourcing construction labor also weakens society more broadly, not least by allowing employers to evade taxes. For subcontractors, a perk of hiring labor brokers as LLCs is that they get to pass on legal responsibility for payroll taxes and contributions to the social safety net, Medicare, and Social Security. Although the brokers are legally responsible for these things, they can easily dodge them by hopping from one shell company to another, making it exceedingly difficult to hold them accountable for the taxes they owe.
Losses that result from this sleight of hand are steep. A January report from the Economic Policy Institute estimated that the country’s social safety net funds lose out on up to $3,070.10 annually for each misclassified worker; the Century Foundation report cited earlier estimated the overall cost of worker misclassification in the United States to be somewhere between $5 billion and $10 billion. This cost is borne by everyone who relies on tax dollars to maintain the social safety net, to fund schools, roads, and hospitals. “The model essentially hurts the tax base,” said James Hanley, an assistant district attorney for Manhattan who helped bring a successful indictment against a labor broker. “We want to have government services. We want well-run subways. And this is a huge, huge tax base that is not being taxed, essentially.”
The model is not limited to the private sector. Developers who win public contracts with public funding also work with labor brokers. Wildflower Studios, for instance, was the beneficiary of tax credits from New York state. When projects with public support use the labor-broker model, it means taxpayers get taken advantage of coming and going: It’s not just that their communities aren’t seeing revenue that should be coming from undeclared payroll taxes, but, through subsidies, taxpayers are giving money to the projects using the model.
Often labor brokers skip out not just on tax responsibilities but on insurance, too, particularly in states like Texas, where worker protections are so minimal that subcontractors aren’t required to carry workers’ comp. “All that matters is we are going to build these homes cheaper than anybody in the nation,” said one builder in Texas who has 3,000 employees and 400 clients. (He asked to remain anonymous because of fears about speaking out about labor brokers.) “Everyone loves to talk about the ‘Texas miracle,’” he said, referring to the pace at which the state has built new homes in recent years, “but they don’t want to admit it’s the labor-broker model that makes it possible. I’m talking about guys who have made a billion dollars off the back of these workers.”
Over his decades in business, said Stan Marek, a Houston-based builder, it has become increasingly difficult for a builder to make competitive bids without using labor brokers: “The labor brokers are going to beat us every time, because they’re not providing workman’s comp and they aren’t paying taxes.”
Even if a broker does take out an insurance policy, it often doesn’t cover the number of workers on a job. An insurance certificate, which a broker submits to confirm coverage for the subcontractors who hire them, does not provide proof that the policy has adequate coverage for a specific job; it only confirms that a policy is held. A certificate of insurance for a $1 million job often looks the same as a certificate for a $25,000 job.
One example of just how easy it is to acquire inadequate coverage and continue getting away with it: In Florida, a shell company claimed $43,200 in payroll for four workers. With the crew of four, over a yearlong period that same company cashed more than $11 million in checks and was issued 450 certificates of insurance. How does that much money get earned and how do that many certificates of insurance get issued for a company with a crew of four?
Skipping out on legitimate insurance policies lets labor brokers keep more money in their pockets. The risk is worth it because the workforce is too fearful to report anything or even go to the hospital if they get hurt. “They tell workers just go to the ER and they’ll take care of you,” Marek said. “That’s what they do, they go to the ER. And who pays for that? Taxpayers. We pay for that.”
Legal cases against labor brokers and the subcontractors who go along with the scheme can be massively difficult to build and prosecute. “They weave an elaborate web,” Piccirillo said. “We have to put the whole case together, basically tie it in a bow.” Sometimes city prosecutors and state agencies pick it up, and “sometimes they don’t.” Often law enforcement won’t dedicate the resources needed for an indictment until a builder or subcontractor abuses the labor-broker model for many years, and the scale of the fraud or abuse reaches breathtaking levels. In April 2024, for instance, a labor broker in California pleaded guilty to cheating workers out of $1 million. In October of that same year, five labor brokers in Orlando were indicted, and the U.S. district attorney’s office sought a $19 million forfeiture. In January 2025, the DOL won a judgment against two Phoenix-based shell companies that owed workers $3.725 million.
In 2020, the Manhattan DA’s office began an investigation into a company called JM3, one of the biggest nonunion drywall and carpentry companies in New York City. “We identified a number of carpentry and drywall companies that were engaged in really large volume and very suspicious financial transactions,” said Hanley, one of the assistant district attorneys who handled the case. “All of which, based on prior experiences, were very consistent with companies engaged in payroll tax frauds and insurance frauds … the hallmarks of the labor-broker model.”
Hanley and his colleagues peeled back the layers of LLCs that allowed payroll checks to pass through several hands before winding up at a check-cashing facility. Each LLC that was incorporated would last for about a year, Hanley explained, and each company would report workers’ comp policies with minimal payroll and minimal worker head counts. “These companies don’t really exist, other than being on paper as an instrument to get cash to the labor brokers to then pay the workforce.”
Just as Gotham Drywall had done at Wildflower Studios, the labor brokers working with JM3 on various jobs brought in workers who were, in effect, employees of JM3, although they were kept off the books. “The workers would go through the orientation process, safety trainings, and the daily sign-ins, every time registering as JM3 employees,” Hanley said. “JM3 was a big company. The labor brokers, they have scraps of paper as insurance. No major developer would want these companies really on their sites because of the liabilities that exist. So there would be instructions from the JM3 owners and foreman and the labor brokers to these workers that, ‘Listen, if anyone ever asks, you work for JM3.’”
Proving the scheme required getting a warrant for extensive documents—payroll records, internal emails—but the crucial evidence came in the form of wiretaps, which documented conversations between JM3 personnel discussing what to do when workers were injured. “JM3 had a very established business practice,” Hanley explained. “They would lie about any workplace injuries suffered by their employees. The agreement would essentially be, ‘We’ll pay the worker off in cash. Hopefully, we can pay him less than what the injury would entitle him to.’”
Wiretaps revealed how JM3 would whisk injured workers away and place them on a different project, making it impossible for site safety supervisors to conduct investigations. In one intercepted call, a JM3 employee discusses a worker’s fractured arm. “The way they talked about the worker was really horrifying, honestly,” Hanley said. According to the indictment, the company told a supervisor to tell the site safety inspector that the worker didn’t go to the doctor because “he don’t need no fucking doctor.” The supervisor was told to let the worker sign in, and then, at a break, take him out of the building. The story would be that the worker “fell walking on the street.” On a different call, the indictment alleged, company representatives discussed how to hide the worker’s injury from the inspector, “including by making the worker wear a heavy, long sleeved coat that would hide the cast/sling on the worker’s arm.”
Other calls between JM3 personnel revealed discussions about the need to come up with some “miscellaneous bullshit” to make their JM3 contract make sense. This was critical because even though stacking one shell company inside another may seem like a convoluted, perhaps even fishy way to do business—JM3 writing checks to company A, and company A writing checks to companies B and C—it is not necessarily illegal on its own terms. Construction projects usually have so many different subcontractors involved, Hanley explained, that such complicated setups are unremarkable. The companies’ lawyers, who know this, are well-positioned to take advantage.
The Manhattan DA’s office won a guilty plea from JM3 in January 2024. Hanley wasn’t sure, he said, whether the case would have come together without the wiretaps. “And,” he added, “not every case would merit that. It’s a pretty substantial labor as well as financial investment from the office and whatever law enforcement agencies we’re working with.”
Remedies to address the problems endemic to the labor-broker model are hard to come by. Law enforcement agencies—from the municipal level to the feds—are aware of the issue. In August 2023, the Financial Crimes Enforcement Network, which operates within the Department of the Treasury, released a document that spelled out 11 red flags for illegal activity from labor brokers, including withdrawals of “large or unusual volumes of cash” and companies that have “minimal to no tax- or payroll-related payments to the IRS, state and local tax authorities.”
Still, however easy it might be to spot the model, there is little incentive for developers and subcontractors to take the threat of enforcement seriously. A 2019 study released by the then–attorney general for the District of Columbia estimated that a builder operating in the region who uses the labor-broker model to misclassify workers can save 16.7 percent on labor costs. Lawmakers, too, have little incentive to crack down. What politician wants to be seen as slowing down construction in a country that is clearly crying out for more housing?
Mark Krikorian, the executive director of the Center for Immigration Studies and a supporter of Trump’s deportation policies, argues that the problem is not one for policymakers to solve but rather law enforcement and the private market. “Tighten the labor market through cuts in immigration and enforcement against illegal immigration,” he said. “Then allow the free market to do its work.”
Krikorian recognizes that the workers caught up in the labor-broker model suffer. For him, however, the fix begins with removing the undocumented workforce from the country and replacing them with working-age citizens who have left the workforce and, presumably, won’t be as vulnerable to abuses. “The goal needs to be to move construction away from its reliance on illegal immigrant workers,” he said, as with “restaurants and landscaping and all the rest.” He echoed details in a 2024 report from two of his colleagues at the Center for Immigration Studies, which showed that the number of U.S.-born men aged 16 to 64 who are not in the labor force increased by 13.2 million from 1960 to 2024, while the number of working-age immigrant men in the labor force increased by 14.1 million. The void left by citizens who have left the labor market, in other words, has been filled by foreign workers.
Krikorian admits that removing the undocumented workforce from the country is difficult but argues that it’s necessary. “Employers need to understand that there might be a slowdown because of immigration enforcement,” he said. “It’s kind of like an alcoholic trying to break the habit.” Krikorian would like to see more resources put into training more U.S.-born workers in trades and other professions. “Builders are going to have to make their jobs more attractive with higher wages and better benefits, and they’re going to have to do a better job, whether individually or working with industry associations or community colleges ... of recruiting future workers.”
The trouble with Krikorian’s solution is that even if legions of U.S.-born workers are recruited in the coming months and years, the labor needs of the country will likely still exceed the supply. After all, on top of the U.S. labor shortage, the country’s birth rate is declining. In all likelihood, immigrant labor will continue to be essential to the national economy.
One point that everyone from conservatives like Krikorian to immigrant activists can often agree on is that more resources should be put into enforcement of existing labor laws, particularly laws against worker misclassification. But policymakers at every political level are hesitant to do anything that would act as red tape and slow down new construction. Noel Xavier, a union representative in Massachusetts, said that even in a deep blue state where, ostensibly, lawmakers are much more receptive to labor concerns, support for more accountability is hard to come by. “Anytime you bring up something that may raise costs in a legislator’s eyes, that means less available housing,” he said. “We try to have conversations with big developers all the time. Everyone cares up to a point until it becomes about, ‘This is going to cost me how much?’”
In the absence of action at the federal level, many states and municipalities have tried to take steps on their own. Before he became mayor of Nashville, Freddie O’Connell was a City Council member who worked with his colleagues to pass the Get It Right bill, a law envisioned by Councilwoman Sandra Sepulveda. It attempted to hold general contractors accountable for wage and safety violations committed by their subcontractors. But as the language of the bill was being drafted, the state legislature was already working to undermine it with a state law that prohibited local governments from mandating certain disclosures in the construction industry. “It’s a real challenge,” O’Connell said, “because under Tennessee state law we’re generally preempted from any local actions that would give us regulatory status or allow us to take any kind of enforcement action against those entities who may be involved in wage theft.”
As mayor, O’Connell has sought other ways to confront the labor-broker model. The city tries to work with contractors who do business internationally and come with higher reporting and disclosure standards. In public projects, the city seeks contract language that can help prevent wage theft, leaning on templates for agreements used in other countries or states with better worker protections. “The goal,” O’Connell said, “is to try to open meaningful pathways” for contractors who take the “high road” and don’t engage with labor brokers.
Others, like Matthew Capece, a representative for the general president of the United Brotherhood of Carpenters and Joiners of America in Washington, D.C., propose forcing the insurance industry to hold brokers accountable for the policies they issue. He emphasized that there’s no real system for auditing brokers who issue suspiciously large volumes of insurance certificates to one company and suggested that systems could be put in place to alert the insurer when it had issued a suspiciously large number of certificates to a broker.
Auditing and documentation could go a long way toward bringing more successful indictments, agreed Hanley of the Manhattan DA’s office. He pointed to public-sector construction projects in New York, which now have more safeguards and vetting. In particular, he thinks, mandating the use of certified payroll reports in private construction jobs could help build cases against actors like JM3. “They were on some of these public jobs and just lied on the certified payroll reports. But when you do that, that’s a crime. You can get prosecuted; you can potentially go to jail for that.” Discrepancies between payroll reports and a project’s sign-in sheets are a key sign that, “well, there’s something amiss here.”
Certificates of workers’ comp insurance, Capece also pointed out, are too easy to forge. Why not mandate use of QR code so that a certain policy’s details can easily be verified? Or why not require subcontractors to report which independent contractors they hire for a project? Such reasonable steps could help bring clarity to who is employing which workers, and what the exact nature of their arrangement is. These details could help protect more workers from abuse, slow the criminal organizations that are supplying much of the country’s workforce in the construction industry, and empower communities across the country to start getting more of the revenue on which they should be able to rely.
With Trump in power, none of this is going to happen. His administration is arresting workers, not the labor brokers who abuse them. One chilling example: For more than three years, Jorge Duran helped build a case of $1.2 million in wage theft at Viking Lakes, a 200-acre mixed-used development in Eagan, Minnesota, an effort that kept him in contact with the state attorney general’s office. (A representative from Viking Lakes provided a statement calling the accusations of wage theft “disturbing,” and saying that the company “fully supported” opening the investigation. The two subcontractors accused, Advantage Construction and Property Maintenance and Construction, did not respond to requests for comment.) It now seems unlikely that charges will be brought, according to Duran, because of the dynamics created by Trump’s sweeping approach to deportations. With Trump in office, one of the subcontractors who used the crews began sending ICE to workers’ apartments. “He reported some of them,” Duran argued, “just to get rid of these potential witnesses.” When the case was given to the state attorney general, Duran said, 10 workers had brought claims. As of October, five of the 10 had been arrested.
