In an unprecedented workers' rights enforcement action, Attorney General Brian L. Schwalb has secured a substantial settlement from Power Design, a major construction firm, as reported by the Office of the Attorney General (OAG). Under this agreement, Power Design will pay out $3.75 million, which includes over $1.7 million in restitution to more than 1,200 construction workers who were affected by the company's misclassification practices, and an additional sum in civil penalties and legal fees to the District of Columbia.
The lawsuit surfaced allegations against Power Design, John Moriarty & Associates of Virginia (Moriarty), and several labor brokers for misclassifying employees as independent contractors, a tactic allegedly used to sidestep the obligations of paying sick leave and payroll taxes, said Schwalb, and "Worker misclassification harms hardworking Washingtonians, deprives the District of tax revenues needed to fund critical city-wide programs, and unfairly undercuts law-abiding competition," in a statement obtained from the OAG's announcement. The settlement also mandates significant operational overhauls for Power Design and its subcontractors, and includes three years of compliance monitoring to ensure adherence to labor laws within the District.
In addition to Power Design's stipulations, general contractor Moriarty is also required to reform their subcontracting practices within D.C., demanding future subcontracts to comply strictly with wage and hour laws and to collect comprehensive payroll information from subcontractors, according to the OAG's release. Furthermore, they must also post notices in both English and Spanish on job sites, clearly outlining the rights of workers under District wage and hour laws.
The issue at the heart of this legal battle is the illicit strategy of worker misclassification, which allows companies to evade taxes and deny labor protections to unlawfully designated independent contractors, vulnerable workers who are then left without benefits like minimum wage, overtime pay, workers' compensation, or unemployment insurance. OAG's Workers’ Rights and Antifraud Section is actively committed to addressing these violations, evidencing strenuous efforts with over $30 million recovered from errant employers, and more than $14 million since January 2023 when Attorney General Schwalb took office, targeting industries known for high-vulnerability worker populations such as construction, restaurants, hospitality, healthcare, and the gig economy.
A complete copy of the settlement agreement is available for public viewing via the OAG's website.
