Press Release: AG Racine Sues Construction Companies for Misclassifying Workers and Violating Workers’ Rights

News Release — DC Office of the Attorney General

FOR IMMEDIATE RELEASE:

October 18, 2021

MEDIA CONTACT: 

Office of Communications

Contractors Made Millions at the Expense of District Workers by Misclassifying Workers, Failing to Provide Overtime & Paid Sick Leave 

WASHINGTON, D.C. – Attorney General Karl A. Racine today announced a new lawsuit against Dynamic Contracting, Inc., a construction company that specializes in drywall installation, two of Dynamic’s general contractors, and four of Dynamic’s labor subcontractors for engaging in a scheme to reduce their costs through the systemic and widespread misclassification of workers on construction projects throughout the District.

Specifically, Dynamic and its general contractors repeatedly completed projects by relying heavily on workers employed by labor subcontractors, who were consistently misclassified as independent contractors. This scheme denied workers their right to overtime pay and paid sick leave, resulting in unlawfully suppressed labor costs that benefited all parties in the contracting chain—including the labor subcontractor, Dynamic, and its general contractors.  

“Since 2018, these construction companies have engaged in a pattern of deceit, cheating their employees out of their hard-earned wages, and violating their rights,” said AG Racine. “These workers have children to raise, families to feed, and bills to pay, and they deserve the wages and benefits they rightfully earned. My office will not tolerate businesses who undermine their workers and will continue to hold accountable those who violate District law.” 

In the District, businesses are legally required to pay employees a minimum wage, pay employer-side taxes, and provide overtime pay and other benefits. Businesses do not have the same responsibilities to independent contractors, who are not protected by most employment laws, and are often excluded from workers’ compensation or unemployment insurance programs. Misclassification occurs when an employer treats employees as independent contractors, thereby depriving these workers of critical protections and benefits. Numerous studies have documented that employee misclassification schemes are pervasive in the construction industry, including a 2019 report issued by AG Racine.  

Dynamic regularly performs drywall projects in the District and has generated millions of dollars in revenue. Dynamic has repeatedly done businesses with and has entered into dozens of contracts totaling over $22 million in contract value with the general contractors Gilbane Building Company and Consigli Construction Company, Inc. These general contractors are national businesses that conduct large construction projects throughout the U.S., including multiple large-scale construction projects in the District.  

Dynamic provides drywall construction services in the District, and its business model relies heavily on scores of drywall workers supplied by its labor subcontractors. Dynamic’s labor subcontractors include GSA Construction, Inc. (GSA), P&CM Construction Group, Inc. (P&CM), JC Drywall, Inc. (JC), and AVE Contractor, Inc. (AVE).  These labor subcontractors operate at the bottom of the contracting chain, and they provide cheap labor to construction sites by misclassifying employees as independent contractors.  

Gilbane and Consigli, the general contractors named in the lawsuit, have controlled D.C. worksites where rampant worker misclassification has taken place, and they have reaped the benefits of that unlawful practice in the form of cheaper subcontracts for construction services.  

• For example, from 2020 to 2021, Gilbane was the general contractor for a renovation of a student residence hall at Georgetown University. For this project, Gilbane entered into two contracts totaling over $1.8 million with Dynamic to install drywall. Dynamic, in turn, relied heavily on workers provided by labor subcontractors GSA and P&CM. The two labor subcontractors supplied over 35 misclassified workers to provide drywall installation services onsite.  
• Similarly, since 2018, Consigli has subcontracted with Dynamic to complete drywall work for numerous construction projects in the District, including but not limited to the renovation of a luxury fitness club, a museum, and an academic building at George Washington University. Together, these contracts totaled more than $2.1 million in value. Like the Georgetown Project, Dynamic relied heavily on misclassified workers supplied by labor subcontractors, turning repeatedly to JC and AVE to complete Consigli projects.  

OAG’s complaint alleges that Dynamic, Gilbane, Consigli, GSA, P&CM, JC, and AVE violated the District’s Workplace Fraud Act, Minimum Wage Revision Act, and Sick and Safe Leave Act by:  

• Misclassifying workers: The Workplace Fraud Act prohibits employers from improperly classifying workers as independent contractors when they should be classified as employees. By misclassifying their workers supplied to Dynamic construction projects as independent contractors when they should have been classified as employees, the defendants are liable for violating the Act.  
• Failing to pay overtime: The Minimum Wage Revision Act requires employers to pay employees a wage rate of at least 1.5 times the employee’s regular rate for hours worked in excess of 40 hours per week. By failing to pay overtime rates to employees for hours worked in excess of 40 hours per week, the defendants violated the minimum wage law. 
• Failing to provide paid sick leave: The Sick Leave and Safety Act requires employers to provide employees with accrued paid sick leave. By failing to provide employees with accrued paid sick leave, the defendants violated the law.  
• Failing to keep payroll records: The minimum wage law requires employers to provide employees with pay stubs showing the hours worked during each pay period. The law also requires employers to provide employees at the time of hire a form providing information regarding the employer and the employee’s rate of pay. By failing to keep and provide these records, the defendants violated the law. 

In this lawsuit, OAG is seeking an injunction against the defendants to stop them from engaging in workers’ rights violations. OAG is also seeking damages and penalties against the defendants for violating District law. 

A copy of the complaint is available here. 

OAG’s Efforts to Protect Workers

Since gaining independent authority to investigate and bring wage theft cases in 2017, OAG has launched more than 50 investigations into wage theft and payroll fraud. OAG uses its enforcement authority to bring lawsuits and has taken action against a home health care provider, KFC franchises, a cell phone retailer, multiple construction companies, a security company, a café chain, and other businesses that harmed District workers. AG Racine also testified before Congress to highlight findings from an OAG report about how worker misclassification hurts workers, undercuts law-abiding businesses, and cheats taxpayers. In January 2020, OAG secured its largest wage theft settlement to date, requiring Power Design—a major electrical contractor—to pay $2.75 million to hundreds of harmed workers and the District over wage theft and worker misclassification claims. In September 2021, AG Racine hosted a roundtable discussion with workers and advocates to help workers understand their rights. 

AG Racine has also worked to hold gig economy companies accountable for following the same laws as brick-and-mortar businesses, including wage and hour laws. OAG sued food delivery service, DoorDash, for its practice of misleading and encouraging consumers to tip for food deliveries, and then pocketing those tips instead of passing them along to workers. OAG recovered $1.5 million in restitution that was returned to DoorDash drivers to replace tips the company kept for itself. OAG has also sued Instacart for including “service fees” on its platform that looked much like a tip for workers, but instead went to profit Instacart.  

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