Union accuses contractors on Northwestern Mutual project of paying cash, avoiding taxes

A multi-state carpenters union is organizing demonstrations outside Northwestern Mutual buildings in downtown Milwaukee in response to what it alleges is the use of unfair labor practices in the construction nearby of a new apartment tower for the insurance company.

The North Central State Regional Council of Carpenters is alleging some contractors working on Northwestern Mutual’s 7Seventy7 apartment tower are paying workers with cash in order to avoid paying payroll taxes and workers’ benefits. The 34-story 7Seventy7 is going up near the corner of Mason and Van Buren Streets, not far from the company’s new Tower and Commons headquarters building.

Both Northwestern Mutual and various contractors working on the 7Seventy7 apartment building deny the accusations. They argue that the North Central States Regional Council of Carpenters, which represents workers not only in Wisconsin but also Minnesota, Iowa, Nebraska and the Dakotas, has no real proof.

To draw attention to its allegations, the union group has been handing out flyers and holding demonstrations outside Northwestern Mutual-owned properties in downtown Milwaukee.

“The purpose of the demonstration is to bring awareness to the public that Northwestern Mutual is undercutting benefits and wages by allowing work to be under-performed on their project by companies that exploit workers,” said Raul Hernandez, a business representative at the North Central States Regional Council of Carpenters.

Northwestern Mutual contended that no evidence has been found to support the union’s allegations. The company noted that state investigators are looking into the union’s claims and have so far provided no reason to think something is amiss with payment practices on the apartment project.

“Our 7Seventy7 project, set to open this summer, has employed union labor for 85 percent of its contracts,” said Betsy Hoylman, a spokeswoman for Northwestern Mutual. “Some of the interior finishing jobs are being performed by non-union laborers due to our need for flexibility. The Wisconsin Department of Workforce Development has investigated union claims of unfair labor practices and we are unaware of any evidence to support the claims.”

Hernandez said his union has spoken with subcontractor employees who’ve said they’ve been getting paid in cash. One reason they might not have told investigators about those transactions was “fear of retaliation,” he said.

A spokesman for the Department of Workforce Development declined to discuss whether an investigation of unfair labor practices was taking place at the construction site.

“Due to federal and state confidentiality laws and requirements, we cannot acknowledge whether an investigation involving the information you provided is being or has been conducted,” said John Dipko, a spokesman for the DWD.

In flyers handed out at Northwestern Mutual’s building at 720 E. Wisconsin Ave., the union specifically blames Schmidt Building Co. and Alpine Insulation for the alleged unfair labor practices. These contractors “hide behind labor brokers who exploit & violate our laws and tear down Milwaukee’s area wage standards,” according to the flyers.

Hernandez said many of the workers who are being exploited are immigrants and aren’t being hired as direct employees. Rather, they are being treated as independent contractors and being paid cash.

Hernandez added that the demonstrations aren’t in any way an attempt to encourage the non-union employees working on the project to become members of his group.

“Our aim is, again, to inform the public of these business practices,” Hernandez said. “This isn’t about organizing, it’s about workers being exploited.”

Chris Schmidt, owner of Schmidt Building Co., denied the union’s accusations.

“We are not paying anyone cash and we comply with all tax laws,” Schmidt said in a text message.

Neither of the demonstrators handing out flyers and helping to hold up a protest banner at the site last week claimed to be a member of the North Central State Regional Council of Carpenters. Jim Morris, 58, said he has struggled to find work for years after a car accident shattered his leg 14 1/2 years ago, leaving him unable to get around without a wheelchair. He learned of the demonstrations while attending therapy sessions, where he met a member of the carpenters union whom he asked about job opportunities.

Morris, an Army veteran, said the carpenter officials he eventually got in touch with told him his disability would probably prevent him from joining the trades but said they could pay him to help them protest labor practices at Northwestern Mutual’s 7Seventy7 project. Morris said he has been taking part in the demonstrations since December, traveling most weekdays to downtown Milwuakee from the transition home he’s living in Janesville.

“I’m trying to get a job,” he said. “I’m disabled and I’m a veteran. It seems like every time I see a job opportunity, the door gets slammed on me.”

The other demonstrator last week, Rick Bachleitner, said he decided to take part in the protests after seeing the carpenters union’s banner one day and inquiring what was happening. Bachleitner, a professional technical writer, said he is upset with Northwestern Mutual because of recent layoffs at the company’s corporate offices.

Hernandez said the demonstrators are being paid $15 an hour and acknowledged that some of them are not members of the carpenters union. He said it’s not uncommon for unions practice to pay people, some of whom might be unemployed or underemployed, for what he called “community outreach.”

“We are helping them get their lives together and help them get an opportunity to possibly get in the craft, not just to use as banner holders,” he said.

– Managing editor Dan Shaw contributed to this article Follow @alexzank