Attorney General Karl A. Racine today announced that Dynamic Contracting, Inc., a construction company that specializes in drywall installation, will pay $1,075,070 to workers and the District to resolve allegations that it engaged in a scheme that enabled the company to avoid paying workers their full wages by misclassifying them on construction projects throughout the District.
“The development of our city too often comes at a cost to workers. Rampant wage theft prevents workers from receiving their hard-earned wages,” said AG Racine. “Employers who misclassify workers as independent contractors unlawfully cheat workers of their fair wages and benefits, including overtime pay and paid sick leave, and strip them of crucial labor protections and programs such as workers’ compensation and unemployment insurance. My office will continue to root out the mistreatment of workers in construction and other industries.”
The settlement with the Office of the Attorney General (OAG) resolves a 2021 lawsuit against Dynamic; two of Dynamic’s general contractors, Gilbane Building Company and Consigli Construction Company, Inc.; and four of Dynamic’s labor subcontractors for allegedly reducing their costs through misclassifying workers as independent contractors. This scheme deprived workers of overtime pay and paid sick leave, resulting in unlawfully suppressed labor costs that benefited Dynamic and its general contractors.
According to an OAG report, District construction companies that misclassify workers unlawfully avoid at least 16.7% in labor costs, and their savings at the expense of workers can exceed more than 40% if the company engages in other forms of wage theft. These workers’ rights issues may exacerbate inequity in the labor market; according to a report from the Economic Policy Institute, low-wage workers have been particularly hard hit during the COVID-19 pandemic, as less than 75% of low-wage workers in 2019 were still working in 2020. Meanwhile, more than 90% of high-wage workers were still working.
As part of the settlement, Dynamic is required to:
- Pay $460,070 to affected workers: Dynamic is required to pay $460,070 total in restitution to over 450 workers. These workers will receive a minimum payment of $500.
- Pay $615,000 to the District: Dynamic is required to pay $615,000 to resolve all allegations of worker misclassification and other forms of wage theft.
- Implement measures to comply with the District’s wage-and-hour laws: Dynamic must implement new policies and procedures to ensure compliance with the District’s minimum wage, overtime, paid sick leave, and worker misclassification laws. Specifically, Dynamic will require its subcontractors in the District to submit certified payrolls confirming compliance with the District’s wage-and-hour laws, conduct randomized audits to ensure compliance, and submit annual reports to the District for the next three years regarding subcontractor compliance.
A copy of the settlement is available here.
OAG’s Efforts to Protect Workers
Since gaining independent authority to investigate and bring wage theft cases in 2017, OAG has launched more than 50 investigations into wage theft and payroll fraud. OAG uses its enforcement authority to bring lawsuits and has taken action against a home health care provider, KFC franchises, a cell phone retailer, multiple construction companies, a security company, a café chain, and other businesses that harmed District workers. AG Racine also testified before Congress to highlight findings from an OAG report about how worker misclassification hurts workers, undercuts law-abiding businesses, and cheats taxpayers. In January 2020, OAG secured its largest wage theft settlement to date, requiring Power Design—a major electrical contractor—to pay $2.75 million to hundreds of harmed workers and the District over wage theft and worker misclassification claims. In September 2021, AG Racine hosted a roundtable discussion with workers and advocates to help workers understand their rights. In February, OAG sued Azure Healthcare Services, a company operating supported-living facilities, and its former owners for denying frontline workers their full wages during the pandemic.
AG Racine has also worked to hold gig economy companies accountable to the same laws as brick-and-mortar businesses, including wage-and-hour laws. OAG sued food delivery service, DoorDash, for misleading and encouraging consumers to tip for food deliveries, and then pocketing those tips instead of passing them along to workers. OAG recovered $1.5 million in restitution that was returned to DoorDash drivers to replace tips the company kept for itself. OAG also sued Instacart for including “service fees” on its platform that looked much like a tip for workers, but instead went to profit Instacart. OAG recovered $950,000 in restitution to car owners that experienced theft or damage to their vehicles while listed on the platform from Getaround, a car-sharing company, for failing to pay its taxes and misrepresenting its safety and security features. In January, OAG sued Arise Virtual Solutions, a customer service support company, and Comcast Cable Communications Management for failing to pay legally due wages to customer service agents.