More than 1,200 construction workers will receive restitution for lost compensation and sick leave as part of the largest workers’ rights settlement in the District’s history, according to the D.C. Office of the Attorney General.
Under the terms of the settlement, a construction firm that has worked on more than 200 projects in the region has agreed to pay out $3.75 million in back pay, civil penalties and attorney’s fees as part of a broader push by the attorney general’s office to enforce D.C. wage laws.
“The landmark settlement reflects the ongoing commitment of my office to holding accountable any company that exploits its workers to gain an unfair competitive advantage,” said the D.C. Attorney General.
The Attorney General’s Office alleged that Power Design and general contractor John Moriarty & Associates of Virginia worked with subcontractors to misclassify hundreds of construction workers as independent contractors instead of employees. According to the filed Complaint, the structure allowed the companies, which have denied wrongdoing, to skirt payroll taxes and avoid having to pay the workers sick leave.
Though the lawsuit does not allege which projects made use of the improperly classified workers, the company’s website lists a number of D.C.-based partnerships with John Moriarty & Associates, including apartment buildings in rapidly developing neighborhoods such as Union Market, NoMa, and Navy Yard, along with student housing building by Georgetown’s law school.
Typically, according to the attorney general’s lawsuit, John Moriarty & Associates would hire Power Design to install electrical systems in the projects. In turn, Power Design worked with labor subcontractors to find electrical workers—whom they improperly classified as independent contractors, denying them proper overtime pay and other benefits, the lawsuit states. The lawsuit alleged that Power Design should be held accountable for its subcontractors’ alleged violations of D.C.’s wage laws because it exercised control over both the companies and the workers they employed.
“Worker misclassification harms hardworking Washingtonians, deprives the District of tax revenue needed to fund critical citywide programs, and unfairly undercuts law-abiding competition,” said the D.C. Attorney General. The companies denied the claims against them throughout the course of litigation and argued they followed all D.C. wage laws.
The companies alleged actions follow a pattern of wage theft that is common in the construction industry, according to a 2019 industry analysis conducted by the Attorney General’s office. Because construction work is awarded by competitive bid, companies are rewarded for cutting costs—which can incentivize them to misclassify workers. According to the analysis, companies can save anywhere from 16 to 40 percent in labor costs when they classify workers as independent contractors instead of employee.
If you believe you are a victim of wage theft or have questions about your rights as a worker, contact the attorneys of Pechman Law Group at 212-583-9500. We have recovered over $30 million for victims of wage theft.
