WEB OF EXPLOITATION: HOW THE CONSTRUCTION INDUSTRY SYSTEMATICALLY SHORT-CHANGES IMMIGRANT WORKERS
Local construction subcontractor R&R Steel got caught paying immigrant workers way less than they were due.
By Jim DeBrosse – November 10, 2017
For our November 2017 issue, we look at immigration in the city: Who we were, who we are, and who we’re becoming.
Edward Gonzalez—and dozens of other Hispanic workers for R&R Steel reinforcing the concrete on the new parking garage at Eighth and Sycamore streets—would have never known they were being cheated out of tens of thousands of dollars in wages if Gonzalez hadn’t happened upon a couple of concrete workers discussing pay scales at the site. “You [steel reinforcement] guys are at the top of the food chain,” one of the concrete workers told him. The envious remark came as a surprise to Gonzalez, who for the last four months had been paid $19 an hour by R&R Steel. But the concrete worker assured him that, under the state’s prevailing wage law, Gonzalez and the other R&R Steel workers should be making upwards of $46 an hour on the city-supported project. Gonzalez, one of the few R&R workers fluent in both English and Spanish, spread the word to his coworkers and a lively discussion followed—until an R&R foreman told the group to break it up and get back to work.
Many of the migrant workers on the R&R crew were used to being underpaid as they traveled from job to job around the country for weeks or months at a time. But Gonzalez had roots in the Cincinnati area—he’d lived here for 15 years—and a family of five to support. He decided to fight. So did friend and fellow worker Gandhi Merida, an eight-year resident of Florence with a family of four. In March 2016, they took their complaint to the Cincinnati Interfaith Workers Center (CIWC), a mostly volunteer nonprofit group fighting wage theft and immigrant abuse in the region.
“Labor advocates say the exploitation of immigrant workers is the dark underside of today’s construction industry.“
What Gonzalez and Merida didn’t realize was they had taken the first step toward exposing a labor recruitment scheme that CIWC volunteer Greg Whitlow compares to “a form of slavery.” R&R Steel, a Cincinnati concrete-reinforcing company owned by Ronnie C. Estes Jr.—who declined to be interviewed for this story—recruited mostly Hispanic immigrant laborers, many of them undocumented, from Florida and other low wage states with promises of higher pay, free housing, and transportation to Ohio. But once here, they were paid much less than promised and crammed into substandard housing, as many as eight men in a rental house, according to former employees.
To make matters worse, R&R paychecks frequently bounced as Estes failed to make his payroll on almost a weekly basis. If workers complained, he reduced their hours until they were forced to look for work elsewhere in the area or somehow find their way south again to their families. At the height of its operation a year ago, R&R had as many as 150 employees working on sites in Ohio, Kentucky, Indiana, and Florida.
For publicly-subsidized construction projects, like the parking garage for the new high-rise luxury apartment building at Eighth and Sycamore streets in downtown Cincinnati, Estes falsified the documents showing he paid his workers the required $46.80 an hour plus health care and other benefits, then paid them $19 to $26 an hour with no benefits and pocketed the difference. He also falsified the required certificates showing that his employees were properly trained to perform potentially dangerous jobs.
But in an industry where the incentives to cut costs are fierce and where too many bad actors escape the notice of too few regulators, R&R Steel continues to find work in Ohio and other states.
Labor advocates say the exploitation of immigrant workers is the dark underside of today’s construction industry. Unscrupulous subcontractors not only cheat their workers but also risk their safety and the soundness of the projects they work on by failing to properly train them for highly skilled positions. Over-stretched investigators seldom intervene unless they hear directly from workers who face language barriers and the loss of their livelihood if they complain.
Meanwhile, general contractors, with ultimate responsibility for the welfare of the workers and the safety of the projects they supervise, find it all too easy to look the other way while branding their work sites with catchy slogans touting their dedication to quality and community service.
Post-tensioning cable work on reinforced concrete, nicknamed “rodbusting,” is a technique that stretches steel rods in hardening concrete to give beams, columns, and slabs the added strength to support many tons of weight. Powerful equipment can stretch a 50-foot cable four inches in length by applying 33,000 pounds of pressure. The half-inch thick cables have been known to snap during the procedure, throwing chunks of concrete several hundred feet and cutting through any part of a worker unlucky enough to get in the way. Post-tensioning reduces the need for more expensive and labor-intensive steel rebar reinforcement, but it also demands more skill and safety awareness among its workers.
To gain contracts on some of the region’s most sought-after construction projects, R&R Steel not only underbid its competitors but, according to the U.S. Occupational Safety and Health Administration, skirted the necessary training and supervision for dangerous work like rodbusting. On the Eighth and Sycamore project, Whitlow says that R&R gave its Spanish-speaking immigrant workers the required two-day safety-training course in English, then had English-speaking workers take the test for them. Gonzales and Whitlow say that Estes also supplied the Level 2 certification card of a deceased supervisor, Brent Eiskant, as proof that R&R had the required personnel on the job.
To provide a steady supply of immigrant workers to his job sites, Estes employed a Spanish-speaking broker in Miami who promised recruits 50 to 60 hours of work each week at wages of $30 an hour—$6 to $7 an hour higher than they could earn in Florida—plus gas money for the drive up north and free lodging when they arrived. There was no need to advertise; word of mouth among the Miami immigrant community quickly spread the offer. But before the recruits were sent north, Whitlow alleges, they were asked to sign multiple blank forms that would be filled in later to show they were earning the required $46.80 an hour.
Florida recruits like Manuel Morales, who began working for R&R in April of last year, discovered a different reality upon their arrival. Morales says he was paid $25 an hour instead of the promised $30, was lucky to get 30 hours of work in a week, and wasn’t permitted water or restroom breaks on the job. His free lodging was a dilapidated three-bedroom house near downtown Hamilton with six other workers.
Still, Morales says, he found the conditions bearable until late last year when he began refusing to sign the blank prevailing wage forms. That’s when Estes cut Morales’s hours to 10 a week, sent him to a job site five hours away and started abusing him verbally as he worked, cursing at him and sometimes throwing his helmet. “I just got tired of being yelled at and quit,” he says. Morales has since returned to Florida.
To earn the business of larger contractors such as Turner and Al. Neyer, subcontractors must cut their labor costs to the bone. Exploiting immigrant labor helps them do that, says Leila Rodriguez, associate professor of anthropology at the University of Cincinnati, whose research focus is immigrant integration in the Cincinnati area. “It’s part of this trend of big construction companies externalizing a lot of their costs” by hiring a chain of subcontractors. Larger contractors “wash their hands of the issue by saying, ‘This other company gave me these workers, so how was I supposed to know’” if they were being cheated. Often, too, subcontractors work with other smaller companies and bid on projects as a package deal without the general contractor knowing, or sometimes caring, who they hire.
Estes’s scheme wasn’t uncovered by project sponsors or even the general contractors who are ultimately responsible for managing construction projects. Instead, it took the courage of workers like Gonzalez and Merida.
After alerting CIWC, Gonzalez and Merida worked an additional four months at R&R so CIWC investigators could document their complaints. When Estes ignored their demands for back wages, the two men went on strike in June 2016 and, as they had expected, stopped getting work from R&R. Worse, though, was the fear they might be blackballed in the local construction industry. CIWC went to work in their defense, winning their case with the National Labor Relations Board, which awarded the two men a total of $14,900 in back pay. But after leaving R&R Steel, Gonzalez was unemployed for more than a year until he found a job in July with another construction firm, and Merida has been working as a cook at an Olive Garden restaurant.
Two former R&R office employees—one who was fired and one who quit—filed suit against Estes earlier this year, saying he sexually and emotionally harassed them while ordering them to falsify payroll and tax documents. Sherri Gillette and Tonya Hudson allege in their lawsuit that Estes “stayed high on cocaine and/or crack from Friday afternoon starting after his weekly, court-ordered drug testing until early the following week when he would…begin guzzling massive quantities of water in order to be able to pass his drug test on the following Friday.”
His addiction, they say, led to “frequent outbursts in the workplace, cursing at [them], screaming at them to the point they would get his spit in their faces. He flipped over tables, threw chairs….” He allegedly showed them pornography on his cell phone at times, and when angry he would “throw pens and highlighters at them, blow smoke in their faces and flip his cigarette ashes on them, yelling, ‘Does it bother you?’” The lawsuit is awaiting a trial date.
Estes’s drug problem dates back to at least Oct. 1, 2014, when Fairfield police investigated a disturbance near his address on Boehm Drive at 1:30 a.m. and found him naked, sweating profusely, beating on neighbors’ doors and walking and yelling in the street. The arrest report describes Estes as unable to sit still after being handcuffed in his living room and “the whole time [he] was talking about being the smartest man on Earth and that he had everything in the world figured out.” Cocaine and marijuana were found in a search of his apartment. After treatment at Mercy Hospital in Fairfield, Estes was charged with drug possession, disorderly conduct, and indecent exposure. He was convicted and sentenced to 30 days of jail time and two years’ probation.
But Estes’s troubled company and financial history goes back even further, to at least 2005, when an earlier concrete-reinforcing company he registered in his mother’s name, Quantum Steel, was involved in a disastrous Indianapolis-Marion County Public Library expansion. The two-story underground parking garage supporting the structure was supposed to cost $6.9 million and the total project $103 million, but it ran up $50 million in cost overruns after library officials found pervasive cracks, holes, and other defects in the garage’s reinforced concrete.
Early in the legal free-for-all that ensued, a library attorney fired off a letter to Shook Construction, the project’s Dayton-based general contractor, blaming Shook for failing to report gross defects to the construction managers and for using inexperienced and untrained subcontractors, including Quantum Steel. The case was settled out of court in 2008, but the library fell $32 million short of recouping its overall losses. Records show that Estes filed for bankruptcy in 2005 and failed to renew the state incorporation papers for Quantum Steel three years later.
R&R Steel currently is finishing up an office building project in Erlanger and starting a new one on a dining hall at Eastern Kentucky University, both for Lithko Contracting. In Columbus, Ohio, R&R has also been hired by C.J. Mahan for work on new luxury apartments on North High Street and an expansion of a paving plant on East Fifth Avenue.
Government authorities, and the trail of disgruntled ex-employees, finally caught up with Estes earlier this year. In addition to the almost $15,000 due to Gonzalez and Merida, he now faces $6,300 in back pay owed to workers on a treatment plant project in Bucyrus, Ohio, ordered by the U.S. Dept. of Labor; $35,000 in fines from the U.S. Occupational Safety and Health Administration for falsifying safety training documentation for steel workers on the Eighth and Sycamore project; $150,789 in back pay to 63 employees and another $141,487 in penalties ordered by the Ohio Department of Commerce for wage and benefit violations on the Eighth and Sycamore project; and potentially more than $25,000 in damages from the lawsuit filed by his former office workers. Cincinnati’s Department of Economic Inclusion is withholding $96,000 in funding to R&R Steel for the city’s portion of the Eighth and Sycamore project and has asked the city purchasing office to bar R&R Steel from work on any future city-supported projects.
Whitlow, the CIWC volunteer, says he has approached several general contractors in the region to ask why they hired R&R Steel for a particular project. “Do you know what they say? ‘I didn’t even know they were here.’ Either they don’t know who their subcontractors are, or [R&R] has got the lowest bid and they just don’t care.”
Executives at Danis Group of Companies, the construction manager of the Bucyrus Water Treatment Plant project, had no idea R&R Steel was cheating its workers out of thousands of dollars in prevailing wages until a company supervisor noticed the unsafe condition of an R&R Steel worker’s boots. The supervisor “said to the guy, ‘Hey, at the wages you’re making on this project, can’t you afford to buy some decent boots?’ The worker told him he was only making $19 an hour,” Whitlow says.
Danis officials looked into R&R’s payroll and discovered that its paychecks to employees did not match the state’s prevailing wage statements it had been filing. Danis then alerted the U.S. Department of Labor.
Other general contractors and their project sponsors in the region have been less vigilant in protecting workers. Gonzalez and Merida say R&R Steel, unlike other subcontractors on the Eighth and Sycamore project, failed to provide its workers with water, restroom breaks, and basic safety equipment like protective glasses and lanyards, harnesses, and supporting hooks to prevent falls. Supervisors for the general contractor on the project, Al. Neyer, took no notice of their treatment, the men say. Al. Neyer officials declined to be interviewed for this story, but in a letter last fall to CIWC, Al. Neyer Executive Vice President Jerry Tepe denied the men’s complaints and accused them of “slander.” In the same letter, Tepe also said that Al. Neyer’s investigation into R&R’s payroll found that the men had not been underpaid but, in fact, may have been overpaid. Ohio Department of Commerce investigators begged to differ, however, ordering in June that R&R Steel pay more than $292,000 in back pay and penalties for cheating its workers, including Gonzalez and Merida. Katy Crossen, director of marketing for Al. Neyer, has since said the company will no longer work with R&R Steel on any projects moving forward.
In the fall of 2016, CIWC sent delegations of volunteers and aggrieved employees to meet with administrators at Northern Kentucky University and Miami University with similar complaints about R&R Steel projects on those campuses. The delegations say they never heard back from either university or from the general contractor on both projects, Turner Construction. Each university released a statement in August saying they had looked into the complaints and found that Turner had been in compliance with prevailing wage laws. Neither university, however, mentioned R&R Steel or why university officials had failed to get back to the CIWC delegations as promised. Whitlow said CIWC dropped its case against Turner for the Miami University project, but is still pursuing its case for the NKU project.
Chris Neisler, a former manager at R&R Steel who quit in August 2016 and started his own concrete-reinforcement company in September of last year, says cheating workers is the easy thing to do in a cutthroat industry, but not the smartest in the long run. “Actually, I hate the federal [prevailing wage] law,” he says. “Paying $46 per hour per man is rough. But I bid my jobs based on that [wage rate]. If you treat your employees right, they’ll bust their ass for you. My philosophy has always been that a happy employee makes money for me.”
But many subcontractors prefer to take the low road in order to win contracts. From 2005 through 2016, the U.S. Department of Labor collected $4.4 million in unpaid wages from Ohio construction companies for workers who were cheated out of minimum wage, overtime pay, or the regional prevailing wages required for public works projects. Some 4,858 workers were affected, but their immigration status wasn’t recorded by the agency. The $4.4 million collected by labor officials for all workers is likely only a fraction of the actual wage theft in the industry, union officials say. Terry Burke, business manager of the Heat and Frost Insulators and Allied Workers Local 8, says most construction workers, regardless of their immigration status, seldom file wage and hour complaints for fear of being blackballed. “Workers who come forward in our [insulation] industry, especially since it’s so small, are going to have a hard time finding another job.”
Ohio’s Bureau of Wage and Hour Administration, which enforces wage laws on public projects as well as minimum wage requirements and pay to minors, has just six investigators—down from 15 in 2008—and one supervisor to cover the entire state. The small staff can’t possibly cover the full scope of wage theft in Ohio, says Zach Schiller, research director of Policy Matters Ohio, a nonprofit government watchdog. Enforcing wage and hour laws is seen as “anti-business” among Ohio employers, chambers of commerce, and its conservative-dominated government, Schiller says. “We can certainly demand that it change, but I’m not very hopeful given the current political reality.”
To help fill the gap in enforcement, in February 2016 Cincinnati became the first city in Ohio to pass an ordinance of its own against wage theft. If the city or other agency finds that a company has committed wage theft on a city-supported project, city officials can have the money returned and bar the company from doing any further business with the city, which is what happened to R&R Steel. But passing the ordinance didn’t add any additional resources for enforcement—Cincinnati’s Department of Economic Inclusion has six employees devoted full- or part-time to handling wage complaints, the same number as before.
After leaving their office jobs at R&R Steel October 2016, Hudson said she and Gillette called a variety of state and federal labor agencies to complain about Estes’s payroll and safety practices, but none of the agencies followed up on their complaints with any action.
“I just don’t understand,” Hudson said. “I can’t believe he’s still in business.”