Wage theft and worker misclassification are forms of exploitation that litter the construction industry, where unscrupulous employers take advantage of employees to pay them less than what they are owed. A recent Economic Policy Institute (EPI) study found that construction workers lose out on as much as $16,729 per year in income and job benefits; the EPI also reported that wage theft costs American workers as much as $50 billion per year — more than annual robberies, burglaries and motor vehicle thefts combined.

SMART locals are fighting against such practices from coast to coast – helping workers win the pay that they deserve.

Watch coverage of victories against wage theft and worker misclassification by SMART local unions.

“Wage theft is occurring everywhere in the construction industry, and employers will take advantage of those people who may not know what their rights are or have any idea of what prevailing wages are,” SMART Local 16 (Portland, Oregon) Business Manager Brian Noble explained in a recent episode of SMART News. “That’s who they prey on.”

SMART Local 16 has filed 10 prevailing wage complaints against 360 Sheet Metal, an aggressively anti-union contractor in Vancouver, Washington, whose workers previously went on strike after joining Local 16. The company was paying workers $12 to $15 an hour for fabricating duct in its shop, at a time when the prevailing wage (which applies to fabrication of ductwork in the state) was more than $65 an hour.

The Washington Department of Labor & Industries has resolved four of the 10 complaints so far.

“In those four cases,” Noble said, “they found that [the owner of 360 Sheet Metal] owed over $200,000 in back wages to 20 workers, and they assessed $115,000 in penalties for failing to pay prevailing wage in the shop.”  

In Virginia, meanwhile, SMART Local 100 filed a complaint with the U.S. Department of Labor (DOL) alleging that a nonunion contractor on the Potomac Yards Metro Station project had misclassified sheet metal workers performing metal roofing work on the station. This resulted in them being paid approximately 60% less than the prevailing wage – hurting those workers and taking work away from Local 100.

“Misclassification is pretty rampant across the country,” explained Local 100 Marketing Director Chuck Sewell to SMART News. “Our contractors have to abide by certain rules, they have to pay certain rates, they know what the rates are, so that’s how they bid the projects. If you have these low-wage contractors come in and undercut everybody and get the project, it takes work hours from the local.”

The DOL investigation, which ended in the fall of 2022, found that the employees in question were, in fact, misclassified, resulting in more than $288,000 in back wages being recovered for eight workers.

Such wins against wage theft and worker misclassifications are critical for employees, ensuring that they are fairly compensated for their labor. They also demonstrate the crucial role unions play in representing all workers, including those who have yet to be organized.

“It’s important that we make sure all workers are represented and get what they deserve,” Noble concluded. “[It’s vital] that we stop these employers from undercutting our contractors and the industry, and most importantly, that these underrepresented workers are getting what’s truly owed to them.”

A new analysis by the Eco­nomic Policy Institute (EPI) estimates that misclassified construction workers lose out on as much as $16,729 per year in income and job benefits compared with what they would have earned as employees. The study, which broadly focuses on worker misclas­sification across multiple industries, not only demonstrates the economic cost faced by workers when their employer denies their basic rights on the job; it also reaffirms the need for Congress to pass pro-worker laws like the Protecting the Right to Organize (PRO) Act.

Worker misclassification is one of the more common ways bad-faith employers deprive workers of their rights and fair compensation. By incorrectly classifying an employee as an independent contractor, employers deprive workers of, among other things:

  • Overtime wage and hour protections;
  • The right to earn a minimum wage;
  • Eligibility to participate in state and federal unemployment insurance systems or qualify for workers’ compensation insurance;
  • National Labor Relations Act protections that guarantee workers’ rights to form a union and bargain collectively for better pay and benefits.

The EPI study analyzed the 11 professions most likely to be misclas­sified by employers, including home health aides, landscapers, truck drivers, janitors and nail salon workers. (Notably, the analysis pointed out, “people of color and immigrant workers are more likely to be in occupations where misclassification is common.”) For construction workers, the disparities for misclassified workers — especially when compared to the wages and benefits negoti­ated in a union contract — could mean the difference between a family-sustaining career and living paycheck to paycheck.

The devastating effects of worker misclassification demonstrate how important it is that SMART members and locals work to bring unorga­nized workers into the union.

“According to our calculations, illegal misclassification costs the typical construction worker between $10,177 and $16,729 per year,” the EPI wrote in its study. “These esti­mates are both conservative because we have not attempted to place a monetary value on the worker’s loss, when misclassified as an indepen­dent contractor, of rights guaranteed by the National Labor Relations Act, including the possibility of union representation.”

The EPI added: “Policymakers should establish or expand the use of a strong, uniform protective legal test for determining employee status and pass the Protecting the Right to Organize (PRO) Act, which would make it harder for employers to misclassify employees in order to prevent them from forming a union and bargaining collectively.”

The devastating effects of worker misclassification demonstrate how important it is that SMART members and locals work to bring unorga­nized workers into the union.

“Contractors who misclas­sify their employees aren’t just depriving those workers of pay, benefits and protections; they are actively bringing down the wages and working conditions in local areas, and exploiting working families in order to strengthen their market share — taking jobs from SMART members in the process,” said SMART General President Joseph Sellers. “By fighting against misclassification and bringing those workers into SMART, we lift all workers up — including our current and future members.”

SMART released the latest episode of SMART News on Tuesday, May 2. Episode eight features videos on organized labor’s success repealing so-called right-to-work in Michigan; SMART Heroes reaching the 500th graduate milestone; victories against wage theft in Virginia and Washington; SMART-TD’s rail safety efforts in the U.S. Senate; SMART members’ retirement security; and much more.

Watch individual videos from this episode:

SMART Local 80 Business Manager Tim Mulligan detailed the “travesty” of Michigan Republicans passing right-to-work legislation and taking prevailing wage away from union members in the Wolverine State; he also explained how organized labor worked with pro-worker elected officials to restore full collective bargaining power and prevailing wage in March of this year.

“Local 80, 7, 292 and actually our Transportation Division, we came together as one to get rid of right-to-work,” Mulligan told SMART News. “The repeal of right-to-work and the reinstatement of prevailing wage is so important for Michigan as a state.”

Later in the episode, International Training Institute Administrator Michael Harris and SMART Heroes graduates Kevin Moore and Sean Thompson spoke about the impact that SMART Heroes has had on their lives – as well as the other 500 military servicemembers and recent veterans the program has graduated over the last five years.

“I was honestly a little bit shocked at the level of camaraderie and brotherhood [in the union], that mimicked what I had in the [service],” said U.S. Army veteran Moore.

In other segments, SMART locals detailed recent victories on behalf of workers harmed by wage theft and worker misclassification; SMART-TD Ohio State Legislative Director Clyde Whitaker testified for rail safety in front of the U.S. Senate Commerce Committee; Local 24 members highlighted enormous megaprojects and job opportunities in central Ohio; and members in Maryland and Canada talked about their work serving their neighbors during the SMART Army’s month of community action in April.

Finally, SMART General President Joseph Sellers reflected on the progress our union has made on pension strength and security, progressing from the red zone, to the yellow zone, and finally to the green zone in January of last year.

“I wasn’t quite sure that I, during my working career, would have the opportunity to see a green zone National Pension Fund,” Sellers said in his interview with SMART News. “That was a really good process for us.”

Watch all episode eight segments here.

Former Secretary of Labor Marty Walsh (left) and Deputy Labor Secretary Julie Su.
Former Secretary of Labor Marty Walsh (left) and Deputy Labor Secretary Julie Su. No official affiliation with or endorsement from the Department of Labor. Photo Credit: Department of Labor Alyson Fligg

From trafficked garment workers to misclassified truck drivers, from future union apprentices to business owners who abide by the law, the record is clear: Current Deputy Labor Secretary Julie Su is the right choice to lead the U.S. Department of Labor. She has a proven track record of acting on working families’ behalf – not just talking the talk – dating back to her days as a human rights lawyer.

Su began her career as an attorney working for a small nonprofit called the Asian Pacific American Legal Center, where she made headlines for a groundbreaking federal lawsuit filed on behalf of 72 Thai garment workers who were forced to work 18 hours a day in sweatshop conditions in El Monte, California. The lawsuit resulted in more than $4 million in restitution for the workers; it also kickstarted Su’s career-long dedication to fighting against wage theft and worker exploitation.

“For decades Julie Su has fought tirelessly for the rights of working people, from her time as a civil rights attorney, to her tenure as California labor secretary, to her current position as United States deputy secretary of labor,” SMART General President Joseph Sellers remarked at the time of Su’s nomination for labor secretary. “No matter her title or role, Su works to ensure safer workplaces and stronger protections for all.”

Su’s time as labor commissioner and then labor secretary of California demonstrates her commitment to fighting on behalf of SMART members and workers everywhere. She worked diligently to expand apprenticeship programs for California workers who chose not to attend college, and her relentless crusade against wage theft – including California’s “Wage Theft Is a Crime” campaign – led to countless workers receiving the pay they deserve. (It also rewarded employers who follow the law by cracking down on those who would exploit their way to bigger profits.) Su also recognized the pervasive, anti-worker threat posed by misclassification, filing suits against employers who categorized workers as independent contractors and deprived them of better pay, benefits and the ability to form a union.

“Workers of all walks of life have benefited from her advocacy, particularly her fierce struggle against worker misclassification and wage theft – two issues that are rampant in the construction industry,” Sellers added.

As much as Su has focused on enforcing labor laws and holding bad-faith employers accountable, she has done just as much to expand opportunities and position the working class for a favorable future. As leader of California’s Future of Work Commission, Su spearheaded the state’s initiative to ensure workers come first in the face of future technology and policy developments. And most recently, Su worked as former Secretary of Labor Marty Walsh’s right hand in spurring record job growth, nullifying the Industry Recognized Apprenticeship Programs (IRAPs) scheme, investing in registered apprenticeships and pursuing pro-labor policies that protect workers from issues like heat exposure and create good, family-sustaining, union jobs. Her emphasis on the union apprenticeship model is one that, once she is confirmed as secretary of labor, could benefit SMART for generations.

Deputy Labor Secretary Julie Su delivers remarks after her nomination to lead the Department of Labor by President Biden.
President Joe Biden looks on as Deputy Labor Secretary Julie Su delivers remarks on her nomination as Secretary of Labor, Wednesday, March 1, 2023, in the East Room of the White House. (Official White House Photo by Adam Schultz)

“Registered apprenticeship is one of the innovative and time-tested superhighways in the workforce development infrastructure, particularly for communities who have been excluded from good jobs for far too long,” Su said in 2022.

With Su and Walsh at the head of the Department of Labor, the United States’ economy experienced unprecedented growth, including the addition of 12.6 million jobs and the lowest unemployment rate in 50 years. This success, as well as years of working with employers and employees alike to pursue mutual prosperity, has led to Su’s nomination being endorsed by business groups like Small Business Majority and the Los Angeles Chamber of Commerce, as well as labor unions like SMART, North America’s Building Trades Unions, the United Mine Workers of America, the International Association of Fire Fighters, the International Brotherhood of Electrical Workers and many more.

“She has demonstrated her willingness to stand with workers and SMART members since joining the Department of Labor, helping spearhead this administration’s focus on building an economy from the bottom up and the middle out,” Sellers concluded in his statement. “We look forward to working with her to advance the interests of our members and the working class, and we urge the Senate to swiftly confirm Julie Su as United States secretary of labor.”