A Maryland construction company has agreed to pay $835,000 to settle a suit brought by D.C. alleging the company denied workers sick leave and other benefits by intentionally misclassifying them as independent contractors.
Maryland Applicators, which provides drywall installation services, was accused by the D.C. Office of the Attorney General of misclassifying dozens of workers it directly hired, as well as procuring the services of hundreds of other workers also improperly classified as independent contractors through subcontracts.
Misclassifying the workers as independent contractors allowed the company to deny them basic rights they would be entitled to as employees, such as the minimum wage, overtime pay and paid sick leave, according to a news release from the attorney general’s office.
It can also leave workers on the hook for a big tax bill, and deprives the District of tax revenue.
“This not only cheated the workers but gave Maryland Applicators an unfair advantage over their competitors who follow the law,” said D.C. Attorney Brian Schwalb in a news release. “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.”
Despite settling the case, the company denied that its practices violate District law, and the settlement agreement does not constitute an admission of wrongdoing.
Under the terms of the deal, the company will pay $346,000 to be used to provide restitution to workers, and another $489,000 directly to the District as a penalty. Schwalb’s office will identify workers eligible for restitution, who could receive up to $1,000 each.
The company also agreed to change its practices to ensure that all workers hired for District projects are properly classified and agreed that it would not bid on any District contracts for one year.
The D.C. Office of the Attorney General gained the authority to enforce wage theft violations in 2017, and has secured more than $18 million in settlements since then.
A 2019 report on the District’s construction industry put together by the attorney general’s office found that companies that misclassify workers avoid at least 16.7% in labor costs — and sometimes much more — compared to law-abiding companies, giving them an unfair advantage.
Workers who believe their rights have been violated, or that they have experienced wage theft or other wage and hour violations, can contact D.C. OAG by calling 202-442-9828 or emailing workers@dc.gov or trabajadores@dc.gov.
