Caddell Construction to Pay $35M Over Milan Labour Probe

Caddell Construction has formally committed to pay roughly thirty-one million euros, about thirty-five million dollars, to settle a Milan labour probe into alleged exploitation of the workers building the new United States consulate in Milan. The commitment appears in a document the Alabama-based builder submitted to Milan prosecutors and reviewed by Reuters.

The company specializes in building US embassies and military facilities, and it has not admitted any wrongdoing. In a letter to prosecutors signed by executive officer Michael Angelo Ranieri, Caddell stressed that the payments do not amount to an admission of wrongdoing and do not mean it accepts the authorities' legal and factual assessments, according to Reuters. The deal resolves the company's exposure in the Milan labour probe without conceding liability.

How the Milan labour probe started

Milan prosecutors and Italy's Carabinieri police accused Caddell's Italian unit of recruiting workers in India through an intermediary based in New Delhi and putting them to work on exhausting shifts, underpaid, without safety protections and under the constant threat of dismissal. The Italian unit was placed under investigation for alleged labour exploitation and put under judicial administration on May 29. A judge upheld that measure two weeks later in a thirty-eight-page ruling.

The judge found that the treatment of workers did not look like the result of occasional initiatives but rather a sort of corporate practice, Reuters reported. A judicial administrator was appointed to work alongside management and report to the judge every three months, tasked with ensuring labour law compliance and regularising the existing workforce under the Milan labour probe.

The Milan labour probe was launched about six months before the June arrests, prosecutors said. Separate reporting by the Associated Press added detail to what workers endured: the agency interviewed five former employees and reviewed their employment letters and pay stubs. Some workers said they were paid less than two dollars an hour after being promised fair wages. The probe involved around seventy workers, most of them from India, who worked ten-hour days six days a week. Room and board were deducted from their pay, leaving some with five hundred euros a month, while the minimum wage for construction workers in Milan starts at thirteen euros and thirty-nine cents an hour, the Associated Press reported.

Two Caddell managers in Italy were arrested on suspicion of labour exploitation in the Milan labour probe, one while boarding a flight to leave the country and the other while apparently planning to flee, prosecutors said.

Where the money goes

Close to twenty million euros of the settlement will go to workers in overtime, accommodation reimbursements and compensation for non-material damages, according to the document reviewed by Reuters. More than seven million euros will go to Italy's social security agency, INPS, and almost four million euros to the Labour Inspectorate under the terms of the Milan labour probe deal.

Two sources with direct knowledge of the matter said the Milan labour probe agreement involves regularising around five hundred workers. Italy will also recognize residence permits for two hundred seventy foreign workers and grant unemployment benefits to sixty workers who had been dismissed. Once the payments are complete, Milan prosecutors are expected to seek dismissal of the case against Caddell's Italian unit. The sources said prosecutors are expected to pursue plea bargain agreements with the two executives arrested as part of the investigation.

A broader crackdown

The Milan labour probe is part of a series of labour exploitation investigations led in recent years by Milan prosecutor Paolo Storari. Those probes have forced companies to grant fuller employment rights to more than sixty thousand workers and enabled authorities to recover more than one billion euros. They have also fuelled a debate in Italy over whether the judiciary is overstepping its role.

Italy's labour minister Marina Calderone called the outcome of the Milan labour probe one of the most significant crackdowns on labour exploitation in recent years. She said the result strengthens Italy's reputation internationally and sends a clear message that the state does not abandon its most vulnerable workers.

Construction on the consulate started in 2022 under a contract worth almost two hundred ten million dollars. Work was initially scheduled to finish in 2025 but has been put back to 2028. A US State Department spokesperson said in June that US law enforcement was cooperating with the Italian authorities and that the US government does not tolerate labour exploitation, a position that also surfaced in the recent Super 8 trafficking verdict covered in our Social Justice section. Caddell did not respond to a request for comment on the payment; in a statement issued in June it said it was proactively cooperating with judicial authorities and was committed to treating and paying workers fairly.