The Attorney General for the District of Columbia announced that a construction company that misclassified workers as independent contractors agreed to pay $835,000 of which $346,000 will be paid to the workers.
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.