A January study produced by the Illinois Economic Policy Institute showed 18 percent of all construction workers experienced some form of wage theft in Wisconsin, Minnesota and Illinois. This impacts the workers but also taxpayers. When contractors flaunt loopholes in the law, or outright ignore the law, we see misclassified workers lose access to basic labor protections, including minimum wage, overtime pay, unemployment insurance, and workers’ compensation insurance.

BluSky Restoration, a national firm based in Colorado with over 33 offices across the country, is violating these rules and laws by blaming sub-contractors for any possible violations. They are claiming a few bad sub-contractors are causing limited problems and that the vast majority of the work they do receive no complaints or problems.

BluSky Restoration claims that treatment of workers is not their responsibility. They hire hundreds of sub-contractors a year and they claim to have a track record of only partnering with scrupulous sub-contractors. BluSky uses a mix of its own direct employees (including project directors, project managers and team leads) supplemented by a network of temporary staffing agencies that supply needed construction craft labor for projects.

But the facts tell a different story, in a statement signed in March of this year one of those sub-contractors, Pablo Ramirez, details a far different side of the BluSky public image. Mr. Ramirez details a string of late, inadequate, and questionably withheld payments that forced him into a kind of indentured servitude to BluSky, which included partial reimbursment, a lack of record keeping, non-payment, and even work performed at a private residence in lieu of payment .

BluSky claims that they are up to date with all payments to subcontractors, and that payment to and treatment of workers is not their responsibility. In other words, BluSky is more than happy to cash the large, sometimes government-funded, checks for these disaster related projects, but that’s as far as their responsibility to the sub-contractors and the workers they hire goes. LiUNA and in many cases state and federal laws disagree.

Many of these disaster recovery and restoration projects are funded with taxpayer money, and at least two private equity firms, Dominus Capital and HarbourVest Partners, which receive funding in many instances from public and private pension funds. While BluSky is responsible for the day-to-day running of the business, by investing in and profiting from BluSky their investors signal approval of their ethical business practices and should answer for them.

Cases such as Mr. Ramirez’s stem from the cleanup in Iowa after the derecho storm in 2020. Workers at one project, Cottage Grove Place, travelled from Texas to work on the cleanup. Workers were faced with nonpayment of wages and overtime; inadequate and unsafe housing; lack of medical care for workplace injuries; no pay stubs or written statements of hours worked, amount earned and deductions made; unregistered subcontractor and threats and retaliation against workers for exercising wage payment; and concerted activity rights and failure to provide PPE for work or to protect them from COVID-19.

These workers were employed by joint employers BluSky Restoration contractors and Painting & Demolition Ramirez Company, owned by Pablo Ramirez. They were checked in for work by BluSky, were required to wear tee-shirts with the BluSky logo on the jobsite, and BluSky project director Wayne Gibson regularly reviewed their work.

The workers at Cottage Grove Place eventually walked off the job with the support of Cedar Rapids community activists, organized labor, and local clergy. The workers had not been paid in weeks and had no money to buy food or to even return to their homes in Texas. The workers eventually signed non-disclosure agreements with BluSky and received wages. If BluSky truly believed that this was caused by errors by sub-contractors why would they have continued to sub-contract with Mr. Ramirez?

The situation in Iowa is only the latest issue to come to light with BluSky. BluSky is one of two defendants named in a 2019 Minnesota federal class action lawsuit that alleges violations of the Fair Labor Standards Act , including failing to pay minimum wage, not paying time and a half for overtime, and making improper and oversized deductions for lodging and other travel expenses. Workers also claimed they did not consistently receive pay stubs, and in some instances allege their time sheets were fabricated by BluSky personnel.

BluSky takes work from local contractors and brings in workers from outside the area to undercut job opportunities for local workers and bypass local wages. In Missouri, it is currently working on the Old Webster School Building in the city of St. Louis. This project has received $8 million in federal low-income housing tax credits, $2.2 million in state historic tax credits, the St. Louis Equity fund will invest $9.4 million to finance the project, and the St Louis Affordable Housing Commission will make a loan of $500,000. All of this is going to an out-of-state contractor who is taking work from local contractors and local workers.

Contractors that break the law regarding wages and safety impact our local economy, our local workers, local contractors, and local taxpayers. Enforcement of the laws regarding contractors and subcontractors, payroll classification, and workplace safety needs to be improved and violations and violators need to be prosecuted.

The study by the Illinois Economic Policy Institute on wage theft found that in the three upper Midwest states wage theft was rampant and contractors and employers are getting away with it:

  • In Wisconsin, about 14,500 construction workers are misclassified or are paid off the books, accounting for 10 percent of the workforce.
  • In Minnesota, about 30,100 construction workers are misclassified or are paid off the books, accounting for 23 percent of the workforce.
  • In Illinois, about 52,800 construction workers are misclassified or are paid off the books, accounting for 20 percent of the workforce.

Contractors and employers are getting rich off stealing from their workers. They are also breaking the law. By misclassifying workers and paying them in cash, they are denying states and the federal government payroll taxes, unemployment insurance, and workers compensation. Not paying these drives those costs up for contractors that are following the law.

If our government officials cannot or will not create or enforce laws designed to keep bad actors like BlueSky in line, we must continue to shine a light on their deceptive practices and demand that the workers they exploit for profit can benefit, not just a few investors hundreds of miles away.