WASHINGTON, DC – Attorney General Brian L. Schwalb today announced that Maryland Applicators, a construction company that operates throughout the District of Columbia, will pay $835,000 to the District to resolve allegations that the company intentionally misclassified its employees as independent contractors to avoid providing them sick leave and other employment benefits to which they were legally owed. As part of the settlement, the company also agreed not to bid on or provide work under any District government contracts for one year.
“Maryland Applicators denied District workers the sick leave and other employment benefits they had earned by misclassifying them as independent contractors rather than employees. This not only cheated the workers but gave Maryland Applicators an unfair advantage over their competitors who follow the law,” said AG Schwalb. “My office is committed to protecting District workers, ensuring they receive the wages and benefits they are legally owed, and leveling the playing field for all law-abiding District businesses.”
Maryland Applicators is a Maryland corporation that provides construction services on projects in the District of Columbia. It employed dozens of misclassified workers and also procured the services of hundreds of additional misclassified workers through subcontracts with other companies.
Misclassification is a form of wage theft that reduces costs for companies at the expense of employees. Misclassifying employees as independent contractors deprives them of rights that employees are entitled to, such as the minimum wage, overtime compensation, and paid sick leave. Illegal misclassification also deprives the District of tax revenue, unemployment insurance premiums, and workers compensation contributions. District construction companies that misclassify workers unlawfully avoid at least 16.7% in labor costs compared to law-abiding companies, providing an unfair advantage over their competition.
As a result of OAG’s action, Maryland Applicators must:
- Pay $835,000 divided as follows:
- $489,000 will be paid to the District;
- $346,000 will be paid to affected workers.
- Change its practices to ensure that all workers hired for projects in the District are properly classified in compliance with District law and receive the wages and benefits they are legally owed.
- Refrain from bidding on or providing work on contracts paid by the District government in the District for one year.
The full settlement agreement is available here.
This matter was handled by Assistant Attorney General Sarah Levine, former Assistant Attorney General Taylor Larson, Assistant Section Chief Randy Chen, and Section Chief Graham Lake.
OAG’s Efforts to Protect Workers
In 2021, OAG established the Workers’ Rights & Antifraud Section, which is dedicated to fighting wage theft and protecting District workers. Since gaining wage theft enforcement authority in 2017, OAG has secured over $18 million for workers and the District by bringing investigations and lawsuits against employers who violate District law. OAG’s wage theft enforcement efforts have focused on industries with high populations of vulnerable workers, such as construction, restaurants and hospitality, healthcare, and the gig economy. OAG also released a report about how worker misclassification hurts workers, undercuts law-abiding businesses, and cheats taxpayers. This past September, OAG released a Labor Day report highlighting efforts to protect DC workers.
Click here to view a more comprehensive list of OAG’s legal victories standing up for workers’ rights.
How to Report Wage and Hour Violations
Workers who believe that their rights have been violated, or that they have experienced wage theft or other wage and hour violations, can contact OAG by calling (202) 442-9828 or emailing email@example.com or firstname.lastname@example.org.