Dive Brief

• Washington, D.C., Attorney General Karl A. Racine has announced that Florida-based electrical contractor Power Design Inc. will be mandated to pay $2.75 million in settlement to workers and the District of Columbia as part of a wage theft and worker misclassification case.
• The settlement is the result of a 2018 lawsuit alleging that Power Design and two other firms misclassified more than 500 electrical workers, listing them as independent contractors rather than employees, to reduce labor costs. The violations occurred from 2014 to 2017.
• The attorney general’s office also claims Power Design shortchanged workers out of benefits and failed to pay the district unemployment insurance taxes. The settlement is the largest sum ever levied in a wage enforcement action by the district. 

Dive Insight

No. 42 on ENR's list of the country's top specialty contractors, Power Design has an estimated annual revenue of more than $100 million and worked on at least 10 large projects in the district. JVA Services LLC and DDK Electric Inc. are the labor brokers that supplied workers to Power Design’s jobsites.

“This settlement should be a wake-up call to district employers: If you cheat workers out of wages and benefits they’ve earned, or commit payroll fraud to gain an unlawful edge, you will be held accountable,” Racine said in a statement. 

The attorney general’s office also claims that Power Design and the subcontractors did not pay workers minimum wage or overtime or provide paid sick leave. DDK Electric did not contest the allegations and received a default judgment in February 2019. Both Power Design and JVA filed answers to contest the suit. Power Design claimed the subcontractors were responsible, which JVA denied. 

The settlement will require Power Design to pay:

• $879,056 in back wages to electrical workers to compensate for not paying minimum wage, overtime and paid sick leave. A claims process for the workers will be established separately.
• $1,820,944 to the district.
• $50,000 to support local workforce development programs.  

Racine isn’t the first attorney general to levy large fines against contractors and subcontractors for wage theft. In February 2019, Massachusetts Attorney General Maura Healey levied $2.7 million in total penalties against 66 construction companies, $1.5 million of which went to restitution. One of Healey’s biggest wage violation assessments was $585,000 for restitution and fines against ERA Equipment LLC.