Attorney General Schwalb Secures Nearly $200,000 from Construction Company for Violating District Labor Laws

OAG Alleged that Diverse Masonry Misclassified Dozens of Workers as Independent Contractors to Avoid Paying Full Benefits


Attorney General Brian L. Schwalb today announced that Diverse Masonry Corporation (Diverse Masonry) will pay $191,750 to resolve allegations that the company failed to provide 59 of its workers with benefits, including paid sick leave, as required under District law, by systematically misclassifying them as independent contractors instead of employees.

OAG’s 2019 economic analysis of misclassification in the construction industry found that companies that illegally misclassify workers as independent contractors do so to reduce their labor costs by anywhere from 16.7 to 40 percent. These ill-gotten savings give employers who cheat the system a competitive edge over law-abiding companies and wrongfully suppress labor costs throughout the entire construction industry, where contracts are often awarded through competitive bidding.

“Diverse Masonry was not only exploiting workers to illegally boost its profit margins, but it was also seizing an unfair competitive advantage over law-abiding companies,” said Attorney General Schwalb. “The District’s development and growth depends in large part on the hard work of the construction trades, whose workers are particularly vulnerable when benefits are withheld in illegal misclassification schemes. As the District’s independent Attorney General, I will continue to have workers’ backs and ensure that all businesses compete on a level playing field.”

Diverse Masonry is a Virginia-based construction company that provides masonry and bricklaying services across the DMV. Under District law, construction workers like those employed by Diverse Masonry are presumed to be employees, not independent contractors. Under the terms of the agreement, Diverse Masonry must:

  • Pay $59,000 to impacted workers.
     
  • Pay the District $132,750 in civil penalties.
     
  • Correct its business practices to ensure compliance with District workers’ rights laws by properly classifying their workers and providing them with paid sick leave and other benefits they are legally entitled to.
     
  • Submit to the District certified payroll reports ensuring compliance and correct worker classification for two years and require any subcontractors it hires to do the same.
     
  • Notify OAG within 30 days of any potential subcontractor noncompliance with wage-and-hour or payroll tax laws.
     
  • Create an electronic record keeping system and confidential reporting system for workers and subcontractors to report actual or suspected wage-and-hour violations.
     
  • Post at every District worksite a notice that informs workers of their employment rights under District law and how to contact OAG to report suspected violations.

A copy of the settlement is available here.

This matter was handled by Assistant Attorney General Christian Whitmer, former Assistant Attorney General Zack Hill, Investigator Kenithia Alston, Paralegal Diego Pereira, and Graham Lake, Section Chief of the Workers’ Rights and Antifraud Section.
 

What is Worker Misclassification?

Under DC law, businesses must 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. Businesses do not have the same responsibilities to 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.

Businesses must meet specific legal requirements to classify workers as independent contractors instead of employees. However, some companies misclassify workers as independent contractors to reduce costs, evade taxes, and strip workers of labor protections. DC’s Workplace Fraud Act requires construction companies to classify workers as employees in most cases. Those who violate this law can face significant monetary penalties.

OAG’s Efforts to Protect Workers and Level the Playing Field for Businesses   

OAG’s Workers’ Rights and Antifraud Section is dedicated to fighting wage theft and protecting District workers. Since January 2023, OAG has secured more than $19 million for workers and the District. In total, since gaining wage theft enforcement authority, OAG has secured over $35 million 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. 

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 workers@dc.gov or trabajadores@dc.gov.