Hundreds of construction workers to be paid in misclassification settlement

WASHINGTON — Over a thousand construction workers will be paid restitution after the Office of the Attorney General announced the largest recovery in a workers’ rights enforcement action in D.C. history.

Major construction firm Power Design, along with its general contractor John Moriarty & Associates of Virginia and multiple labor brokers, were sued for illegally misclassifying hundreds of construction workers as contractors instead of employees, allowing the companies to avoid paying sick leave and payroll taxes.

“Worker misclassification harms hardworking Washingtonians, deprives the District of tax revenues needed to fund critical city-wide programs, and unfairly undercuts law-abiding competition,” Attorney General Brian Schwalb said in a press release. “This landmark settlement reflects the ongoing commitment of my office to holding accountable any company that exploits its workers to boost profits or gain an unfair competitive advantage.”

Under the terms of the settlement agreement, Power Design will pay $3.75 million total, including $1.7 million in restitution to over 1,200 construction workers who were misclassified or unlawfully denied paid sick leave. Power Design has also agreed to significantly reform its subcontracting practices, submit to three years of compliance monitoring and stop working with any labor brokers that have misclassified construction workers. 

The general contractor that worked closely with Power Design, Moriarty, has also agreed to terms in the settlement agreement. Moriarty must include language in all future subcontracts for DC projects that strictly adheres to all District wage and hour laws, collect detailed payroll and employment information from subcontractors and inform all D.C. workers of their rights in both English and Spanish.

In D.C., businesses are legally required to pay employees a minimum wage of $17.50 per hour, provide overtime pay, allow workers to accrue paid sick leave and contribute toward their federal and state taxes. But they are not required to do the same for independent contractors, who must pay all their own taxes, are not protected by most labor laws and do not have access to workers’ compensation or unemployment insurance. Workers can only be considered independent contractors if the business meets specific requirements.