Skip to main content

Massachusetts governor Charlie Baker was on hand on June 14, 2018, for the groundbreaking for the North Square Apartments in North Amherst, Massachusetts. This $47.5 million development of 130 housing units is just a few miles north of the University of Massachusetts, Amherst. The developer for the project, Boston-based Beacon Communities, has built and operates more than 90 developments in 11 states and the District of Columbia. The firm has a longstanding commitment to building affordable housing, as its mission statement claims: “We create communities that serve a diverse cross-section of our society.”2

In North Square, “26 of the 130 units will be set aside for households earning up to 50% of the area median income.”3 The town of Amherst, whose population includes a proportion of well-paid professionals typical of any university town, used special legislation to grant tax incentives for developing low- and moderate-income housing. As a result the town will be providing Beacon with $2,795,009 over 10 years as an affordable housing tax incentive.4 This public-private partnership to create housing for low- and moderate-income tenants “is exactly the kind of thing we like to support,” Governor Baker told the crowd assembled at the groundbreaking.

This new development in North Amherst reflects an emerging design trend that strives to integrate housing, retail, and entertainment. In addition to 130 housing units on a 5.3-acre site that had been a sawmill and lumber company since 1741, the complex offers space for 10 businesses, a fitness center, and community use. All this is nestled with a green grocery in a renovated old barn and outdoor play spaces. A number of businesses are already in operation in a new retro building just across the street.

North Square’s website shows attractive couples ensconced in elegantly appointed rooms with modern furniture and décor—images that reinforce the tagline “blissful living starts here.”5 One-bedroom apartments start at $1,799 per month, with three-bedroom apartments topping out at $3,335. “Blissful living” does not come cheap—even in this rural part of western Massachusetts. The website says nothing about low- and moderate-income options.

Given the developer’s reputation and the way it markets this high-end complex—sited as it is in a progressive community shadowed by the university— one would expect the highest quality construction carried out by well-trained and fairly compensated construction workers. This would not turn out to be the case. When I examined how the construction was done at the North Square development and spoke to one group of workers hired for the job, I documented nothing less than a tragedy.

Beacon’s commitment to building affordable housing (and the firm’s overall progressive values) did not guide the way the development was built. Similar to scandals we have witnessed in the apparel industry, where even socially responsible designers have had their garments stitched by underage workers in the Global South, Beacon turned a blind eye to how workers were treated during the construction of the North Square.

At the outset Beacon hired Keith Construction Inc. (“KCI”) as the general contractor for the development. As is the norm for construction projects of this size, KCI in turn hired a number of subcontractors who would take charge of different components of the construction—carpentry, plumbing, electrical work, and a variety of other building trades. The contract for drywall was awarded to Combat Drywall Inc., owned and operated by Luc Gagnon, based in Billerica, Massachusetts.

Although Combat registered as a company with the Massachusetts secretary of state in 2013, the firm has no website. Its listings on a number of business webpages show only two employees and a revenue of approximately $160,000 per year.6 These figures do not seem credible, even if only factoring in the North Square project. Staff for the North Atlantic States Regional Council of Carpenters (NASRCC) who have been tracking Combat for years, report that the company has worked on multiple projects of similar size to North Square each year. But these numbers might make sense by looking at how construction has dramatically changed over the past two decades and how the work was done in the Amherst development.

In much of the postwar era, a general contractor hired a series of specialized, well-established subcontractors whose direct employees would complete the work under their supervision. Over the past decades, however, this model has been upended in residential construction by subcontractors who instead hire out the work to a whole new breed of subcontractor. Combat Drywall and its operation at North Square is the perfect example of how these new arrangements work.

Combat itself was not in charge of any actual drywall of hanging drywall either in Amherst or on the other jobs that they have signed on as a subcontractor. Instead they would subcontract the work to another company whose crew would actually do the work. This accounts for their low number of employees –although perhaps not as low as suggested online – given that the workers who actually perform the work are not their employees. The role of their employees, as we will see, is largely supervisory.

In this case they subcontracted the actual hanging of drywall work to Jimy Reyes d/b/a/Alvarez Drywall, a labor broker operating in drywall. Alvarez is not registered with the Secretary of State in Massachusetts as a business, has no website, no phone number, and no real company identity. Alvarez finds the workers to do drywall and pays them. Combat primarily supervises workers on the job but Alvarez will pay the workers, but in fact both Combat and Alvarez considered the workers to be independent contractors, not direct employees. To complicate matters, for workers to be legitimately considered as independent contractors they must be issued an IRS form 1099, yet for the North Square work, Alvarez paid cash, without 1099s.

In this way Jimy Reyes, who the workers knew as Poncho, was just a labor broker, simply bringing workers as individuals to the job site. He provided no tools, no ladders, and no rolling scaffolding (what in the industry are known as Bakers, the brand name of an early manufacturer). Workers provided their own basic tools, including a screw gun to affix the drywall to the studs, knives to cut the sheetrock, and routers to make holes for light switches and receptacles. The big equipment, Bakers and ladders, was provided by Combat, not Alvarez.

Employers (illegally) misclassify workers as independent contractors for only one reason: to save money. If not considered employees, companies do not have to pay federal or state taxes, social security, workers compensation unemployment premiums, and similar charges, saving, on average, 30% of their labor costs. While this practice dramatically increases the profitability of subcontractors and labor brokers, it cheats the federal and state government and therefore the taxpayers. Also, because subcontractors and labor brokers do not pay social security taxes, workers’ compensation, or unemployment premiums, workers are deprived access to any of these benefits.

I met one evening in the Carpenter’s Union hall in Worcester, Massachusetts, with five of the crew that worked for Alvarez on the Amherst development. It was getting close to 7:00 p.m. when they arrived—they had driven from another job site where they were now working. I could see by the way they moved just how tired they were. Over pizza and sodas poured from large bottles, we sat around a long table with an assortment of chairs in what appeared to be a well-used room in the back of the union hall. Several large whiteboards mounted on the walls listed area construction jobs as well as the general contractors, subcontractors, and labor brokers working on them. I saw Combat’s name on the boards in several places.

The drywall workers gathered were all undocumented immigrants from Honduras. There was one older man, but the rest were very young, mostly in their early 20s. I asked them their impression of the Amherst job when they first started in the spring of 2019. I was surprised when one of the workers who speaks a bit of English told me (in Spanish) that they thought the work looked good. Others nodded. When I followed up by asking what he meant by “good,” he replied, “It looked good in terms of we were working a lot of hours, ten-hour days, six days a week.”7

As immigrant workers often do, he was judging the work not by the actual quality of the job, but by how many hours of work the job would offer, and how much money he and the others could earn given their precarious position as undocumented workers—especially because many of them still send money back home. Although US employment law requires employers to pay time and a half after 40 hours worked in a week, the North Square drywallers received only regular pay for all hours worked, when paid at all. This has become the standard practice (although illegal) in nonunion residential construction.

Despite the plentiful hours, work deteriorated quickly. A supervisor from Combat had been directing their work, but Combat owner Luc Gagnon was not happy with the pace. As one worker told me:

So, Gagnon actually put his tools on and came into work with us, He wanted to see how many sheets it would take to do one apartment. … The pressure was unbelievable. Like he was really cracking the whip on us to go, go, go, go, go. Don’t worry about anything, just go, go, go, go. We felt a lot of pressure—the way he was trying to get the job done not with more people but … to increase the workload. It was bad.8

Another worker explained how Gagnon had posted outside each room how many sheets the room would take, and that he “wanted to increase the amount of sheets that they were hanging each day.”9

A worker sitting at the end of table spoke up that that he felt very nervous with Gagnon’s presence at the site, “especially every time he walked up and down the hallways. We were feeling the pressure. We were really afraid to lose our jobs when this guy was there and pushing us all the time. It was nerve-wracking.”10 Another worker chimed in, “We felt a lot of pressure, and Gagnon even worked with me one day.” 11

While this level of direct supervision and ongoing scrutiny of their work was highly unusual, these workers and so many other undocumented workers in the industry, as we will see, were not unfamiliar with the grueling pace of the work that was expected of them. But the pace turned out not to be the real problem.

In the construction industry workers typically work for a week and are paid at the end of week. Although Combat was supervising the drywall hanging, the workers were supposed to be paid by Alvarez in cash. When payday came, Alvarez (Jimy Reyes) told the workers “that they were going to have to wait two, three weeks for him to pay them.” Alvarez said that Combat Drywall had not paid him, for reasons that had something to do with an expired workers’ comp policy. As one worker explained, “This guy Alverez says, ‘You’re going to have to wait for two, three weeks before I get caught up, and you know, get the workers’ comp up and running and then I’ll be able to pay you guys … [so] keep on working.”12

From experience the workers knew that these kinds of delays were not uncommon. They were getting plenty of hours on a major project, so they did keep on working. It continued to be a tough process with lots of direct supervision. But as the weeks dragged on and payment was nowhere in sight, one of the workers went to talk to Gagnon. “What’s going on? Why are you not paying Alvarez?” he asked. And Gagnon said, ‘I’ve been paying him in full. I just gave him a check of 42 thousand and another 45 thousand dollars.’”13

While we have no way to verify Gagnon’s self-report, it suggests that $87,000 was transferred to Alvarez, and workers had still not received any payment for their work. Having already invested a number of weeks of their time, they knew that walking away would make it very difficult to stake claims on the substantial amount they were owed, so yet again they stayed on the job.

Several of the workers also reached out to Frank Gomez, an organizer with the Carpenters Union, based out of Worcester, Massachusetts, on June 14, 2019. Some of the workers on the Amherst project had also worked for Combat and Alvarez on a Plumb House project in Weymouth, a city in the eastern part of the state, and another case Gomez had been investigating because Alvarez hadn’t paid his workers properly.

I went to Weymouth and I saw all of them working over there. And I show up, and I said, ‘Look, this guy you’re working with is going to rip you off sooner or later. And here’s my card. I want you guys to know you should not trust this guy. I know you guys have a job right here, but this is what’s going on. I have a case, you know, right now, where he owes money to other people, and I don’t want that to happen to you guys.’”14

For a number of years, the North Atlantic States Regional Council of Carpenters (NASRCC) has employed organizers like Gomez who work full time assisting nonunion workers in the industry combating wage theft. They have become a known presence in the nonunion residential industry in the North Atlantic states. 

Combat’s owner, Luc Gagnon, was no stranger to Gomez. “He is a repeat offender,” Gomez acknowledges. “He’s been doing it over and over. And I caught him before and I went after him before, and in the past, they end up paying the guys.”15 Organizers like Gomez use a variety of informal and sometime formal processes to get workers the wages they are owned. Initially, these organizers often choose more informal approaches to get a quick settlement on worker wages by pressuring the offender through picketing the job site, reaching out to community supporters and elected officials, and threatening more formal action. They mostly see filing wage complaints with the Massachusetts Attorney General’s office as the last resort, given the lengthy timeline it takes to adjudicate them and the uncertainly of the outcome.

The Carpenters Union has been very successful in these efforts each year getting settlements for workers who have been cheated out of their wages. Although this work has an immediate positive impact on the workers who receive their back wages, informal settlements do not help develop a precedent or a practice that can be utilized against the employer in a future matter. As Gomez suggests:

Our priority is to get the guys paid. But we also want the records because, let’s say we go in front of any municipality or city councilors, and then they’re trying to do a public work and we say, “Look, this is a guy who’s using the underground economy … labor brokers and ripping off immigrants.” And they say, “Well, show me the proof. Where’s the paperwork?”16

By the time Frank Gomez became involved in the Amherst project, nine 13 workers had worked five six-day weeks averaging ten hour a day. The workers estimated they had hung one half of the sheet rock for the North Square apartments17 and had not been paid one penny by Alvarez Drywall or any other entity. This is classic wage theft: namely, failing to pay earned wages to some of the most vulnerable workers in America. All of this in a development built by a socially conscious developer underwritten by the taxpayers of the town of Amherst.

Gomez got nowhere with his efforts to reach an informal settlement, so he filed a Wage Complaint with the Massachusetts Attorney General’s office on July 28, 2019. The complaint reads, “The workers who performed drywall and related duties at the Beacon Properties, Cowls Road, Amherst, MA, project were hired at the rate of $26.00 per hour for straight time. These workers worked a total of 1,361 straight-time and 303 overtime hours during the [period] listed.”18 The total owed amounted to $50,713—$35,386 for straight time and $15,327 for overtime—and not a single worker had been paid for this work.

When I met with the workers in early 2020, it had been almost six months since the complaints had been filed with the Massachusetts Attorney General. Despite repeated inquiries by Gomez and other staff and leaders from the Carpenters Union, no action had yet taken by the AG. As the actual work on North Square moved toward completion and the date for occupancy approached, these nine workers had still not received any pay for five long weeks of hanging drywall at a blistering pace.

Gomez and a number of his colleagues in the Carpenters Union are 14 concerned that cases involving construction workers are a lower priority in the AG’s office than those involving workers earning minimum wage. Why is that? Because construction workers have a considerably higher wage rate than many of the other workers making claims. He explains, “Part of the problem is that when it comes to the Attorney General in Massachusetts … they deal with a lot of cases in restaurants, in minimum wage, and hospitality cases [where] people make very little money. … So, when we bring our cases that are construction-related … [where] they’re getting paid 25 dollars an hour, they think, ‘Wait a minute. These people are making more money than the minimum wage. How is this a priority?’”19

Joanne F. Goldstein, the former Massachusetts Secretary of Labor and Workforce Development, now serves as Director of Special Projects for the North Atlantic States Regional Council of Carpenters (NASRCC). As she describes the situation,

I don’t think there’s a lot of public support for our position that immigrant workers who are earning $20 an hour should earn the statutorily required time and one half for overtime. I had a guy the other day say to me, “If I was on a jury, and you came to me with a case, and the guy was earning 20 bucks an hour, and you were saying he didn’t get the $30 an hour for overtime, never mind how I’d vote, I’d jump out of the jury box and take the job.” … While the Carpenters Union is sympathetic to those minimum wage workers, we want the AG to consider unpaid construction workers a priority as well. If wage rates in construction are reduced, the whole industry will be affected, and it will reduce this pathway to the middle class.20

The AG refused offers from NASRCC to help speed up the investigation, and the Amherst case was stalled.

Meanwhile, Beacon Communities continued their work, moving on to other 15 developments, carrying with them their claimed progressive values of providing low-cost housing. Current federal and state law does not readily hold developers responsible for the behavior of their contractor and subcontractors. It is challenging to demonstrate owner liability for wages, so Beacon was not formally charged in this matter or assessed any part of the back wages owed. And it’s not as if Beacon was unaware of the illegal misclassification and wage theft on the Amherst project.

Goldstein, on behalf of the Carpenters, had been in touch several times with Howard Cohen, Chairman of the Board of Beacon Communities. In these exchanges, Beacon was advised that there were workers on the Amherst job who had not been paid for the work they performed covering many hours a week for a number of weeks. “I’ve been having this rather interesting email exchange with Howard Cohen of Beacon—urging him to rectify the matter,” Goldstein acknowledged. “Beacon professed that it was not sure what it could do despite hearing that it could (1) pay the owed wages for workers on their site and (2) develop a requirement of accountability for the contractor and subs on future sites.”21 Goldstein suggested to Cohen that based on Beacon’s professed mission and alleged adherence to doing it right, Beacon should have ensured that the owed wages were paid.

Carpenters Union organizer Frank Gomez is outraged that Beacon remains untouched by all of this. “The owner of Beacon [Properties], is a philanthropist, is an extremely wealthy guy. … They get federal money; they get municipal money; and they just go up and about, you know, being very 16 respectable people, but you know, this is modern-day slavery.”22

I asked the drywall workers sitting around the table in Worcester how they decided to stop working at North Square after those long hard five weeks. One of the workers lamented, “We had no choice. We got to go—move on to get money, to pay the bills, we can’t just get stuck, we’re working not getting paid. We got to move on.”23 I asked how they survived without income for those five weeks—how did they pay the rent, feed their families? Their responses were muted. Rather than expressing their anger at Alvarez or Combat, it was almost as if they were embarrassed or ashamed about this situation. Is this how their status as undocumented workers and how they have been treated plays out? One of the workers diffused the tension, laughing, “We had to come up with, somehow, the money.” He continued, “Sometimes [we] relied on friends and people around us who have been generous enough to lend us money, or give us food.”24

Another Carpenters organizer, Ricardo Xavier, who was also involved with the workers on the Amherst job, is visibly upset when he talks about what’s going on. “These poor workers—working for five weeks with the promise that they would get paid. One of the women—she’s a single mom that came from Honduras—she was devastated because she’s two months behind on rent. She’s got a kid. She’s got a babysitter that she can no longer afford. So she was there in limbo, ‘Please help me. I really need the money.’”25 Xavier continues, “And that’s another whole side when you talk to these workers; they’re struggling so much, and you don’t understand how much they struggle until you talk to someone who’s a single mother, two months behind on rent and can’t afford a babysitter to go to work.” Now, because the single mother can’t pay her rent it makes it seems like the workers “are the bad people now.”26

About the developer, Beacon Communities, Xavier had this to say: “They want to wash their hands. … They say, ‘I brought this much work to this city or town, and, you know, this is what I’m doing.’ And nobody’s really paying attention to the construction guy. Construction is something that people drive by, and it’s like they really don’t care what’s going on inside or what is happening to the workers.”27

It’s common for many of us who pass a new building site to somehow assume that the glass and steel on the exterior is reflective of the work is being done inside. But when we look inside at the actual construction of a modern upscale building like North Square, we find undocumented workers toiling at a blistering pace in primitive working conditions, carefully hidden from view. Work takes place behind closed doors and fences, and construction sites are no different that sweatshop factories.

After going without five weeks of income, the rush was on to find new jobs. “We actually go work somewhere to try to pay back the people that lend the money and to keep up with the bill,” one worker noted. “And we’re hoping, and we pray to God, that we finally did get paid and put an end to this chapter.”28 Another worker I sat at the table with told how he was “trying to find work— anything—and then paying [his bills] little by little.” He recalled how over the years, “I actually saved a little bit of money, sent some money to Honduras. Then I had to bring that money back in order to pay my bills.” All of these workers were desperate to find a job: “Anything we can, you know, so that … sometimes it’s just going back and working for less.”29 Frank Gomez added, “They had to go to loan sharks and … borrow money at high interest.”30 I saw several heads nod.

Not until April 16, 2020, did the Massachusetts Attorney General’s office act on this case, issuing three citations for Violation of Massachusetts Wage and Hour Laws. The AG cited Alvarez Drywall, Inc. for “failure to make timely payment of wages from 4/22/2019 to 5/4/2019,” and ordered to pay nine employees $11,686 in restitution and to pay a civil penalty of $2,500.31 They were also cited for “Failure to furnish true and accurate payroll records to the GAO on 9/2/2019” and assessed a civil penalty of $15,000.32

In most cases the attorney general’s practice has been to charge only the labor broker for these wage theft violations. In this case, however, the AG’s office also charged Combat Drywall with “failure to make timely payment of wages and owing from 5/06/2019 to 5/25/2019,” it ordered them to pay a restitution of $12,291.85 and a civil penalty of $2,000.33 Charging the subcontractor Combat and not just the labor broker Alvarez is a significant development and recognition of the role of the subcontractor in facilitating the kind of wage theft we saw at the North Square Apartments in Amherst.

At the same time, however, after ten months of waiting, the nine Combat workers will potentially receive only $23,977.85—less than one half of what they were owed for the work they performed. They may not actually receive all these funds because labor brokers, who are not really companies at all, are notorious for not making restitution and paying fines, often closing their operations and reopening up under new names to avoid liability. For example, in another case the Carpenters Union worked on at Pulte homes, less than 10% of the back wages and penalties were ever paid by a number of labor brokers who were charged by the Massachusetts AG’s office.34

The restitution agreement did not indicate why the workers would receive such a small amount. In what way does this provide justice to these workers who were cheated out of their wages? And it must be noted that the civil penalties are also incredibly small. The $2,000 penalty for Combat was little more than a slap on the hand, and the $17,500 the AG assessed Alvarez can be more than covered by the money he stole from workers and not included in the restitution he was ordered to pay. In no way do these very small penalties deter employers like Combat and Alvarez, or others like them, from repeating the illegal practices they used in the North Square Apartments in Amherst, Massachusetts.

We should remember, however, that the Combat workers were luckier than most undocumented workers cheated out of their wages. They had the support and advocacy of Frank Gomez and other staff from NASRCC who filed the case and advocated with the AG’s office on their behalf. Without any assistance by a union or a workers’ center, many undocumented workers would have to just accept the theft of their wages and move on.

Yet even with the support of the Carpenters, the settlement in the Combat case reveals how inadequate current state laws and regulations—never mind how ineffective the practices of the AG’s office—in stopping wage theft. In no way did the settlement provide workers what they earned but lost in wages or compensate for the injustice they and their families suffered from not being paid for five weeks during which they worked very hard. And in no way does this settlement punish employers for illegal practices against some of the most vulnerable workers in the commonwealth. Besides Combat and Alvarez walking away from this debacle undeterred, the developer Beacon Communities was never held responsible for the illegal and immoral activity of the contractors, subcontractors, or labor brokers building their properties. Not having to pay ultimately improved their bottom line in a manner that conflicts with their progressive values and their willingness to accept tax breaks from the citizens of Amherst.

Changes clearly need to be made to attack this epidemic of wage theft. A number of communities across Massachusetts are not waiting for remedies enacted at the state level but instead are relying on local wage theft ordinances. If, for example, an ordinance similar to the one recently enacted in Somerville had been in place in Amherst during the time the North Square apartments were under construction, this wage theft would have been prohibited, and the project could have been shut down until the Combat workers had been paid. Passing new anti-wage theft bylaws in Amherst will inhibit this kind of situation occurring ever again in that town, and it will forward the momentum pushing the Commonwealth to enact legislation to make wage theft illegal.

 


2 Beacon Communities, “About Us,” n.d., https://www.beaconcommunitiesllc.com/about-us/mission/

3 Merzback, Scott. “Baker Breaks Ground on Amherst’s New $47.5M Mixed-Use Project, Daily Hampshire Gazette, June 14, 2018. https://www.gazettenet.com/Groundbreaking-on-mixed-useproject-in-Amherst-18146095

4 Letter from Amherst Town Manager Paul Bockelman to begin community's development, February 7, 2017. https://www.amherstma.gov/DocumentCenter/View/37884/Town-Manager-Letter-Approving-TaxIncentive-02-07-17?bidId=

5 https://www.northsquareapartments.com/

6 https://www.manta.com/d/mb4vc00/combat-drywall-inc

7 Combat Workers, interview by author, January 9, 2020: 2.

8 Combat Workers, interview by author, January 9, 2020: 7.

9 Combat Workers, interview by author, January 9, 2020: 7.

10 Combat Workers, interview by author, January 9, 2020: 8.

11 Combat Workers, interview by author, January 9, 2020: 8.

12 Combat Workers, interview by author, January 9, 2020: 9.

13 Combat Workers, interview by author, January 9, 2020: 10.

14 Frank Gomez, interview by author, January 9, 2020: 15.

15 Frank Gomez, interview by author, January 9, 2020: 5.

16 Frank Gomez, interview by author, January 9, 2020: 5.

17 Combat Workers, interview by author, January 9, 2020: 10.

18 Wage Complaint filed by Frank Gomez, NERCC, on behalf of nine workers, July 28, 2019.

19 Frank Gomez, interview by author, January 9, 2020: 3.

20 Joann Goldstein, interview with author July 10, 2019, 33.

21 Joann Goldstein, interview with author July 10, 2019, 33.

22 Frank Gomez, interview by author, January 9, 2020: 10.

23 Combat Workers, interview by author, January 9, 2020: 14.

24 Combat Workers, interview by author, January 9, 2020: 11.

25 Ricardo Xavier, interview with author, July 10, 2019: 11.

26 Ricardo Xavier, interview with author, July 10, 2019: 11-12.

27 Ricardo Xavier, interview with author, July 10, 2019: 15.

28 Combat Workers, interview by author, January 9, 2020: 12.

29 Combat Workers, interview by author, January 9, 2020: 12.

30 Combat Workers, interview by author, January 9, 2020: 12.

31 Citation for Violation of Massachusetts Wage and Hours Laws, Alvarez Drywall, 4/16/2020.

32 Citation for Violation of Massachusetts Wage and Hours Laws, Alvarez Drywall, 4/16/2020.

33 Citation for Violation of Massachusetts Wage and Hours Laws, Combat Drywall, 4/16/2020.

34 The Epidemic of Wage Theft in Massachusetts, Labor Center Working Paper, https://dev.www.umass.edu/labor/epidemic-wage-theft-residential-construction-massachusetts-check-links