Power Design to Pay $2.75 Million to Resolve Wage Theft Lawsuit (DC)

Posted by National Alliance for Fair Contracting on

D.C. Office of the Attorney General alleges national electrical contracting company misclassified more than 500 workers as independent contractors. This settlement is OAG’s largest recovery to date in a wage enforcement action.

January 23, 2020

Attorney General Karl A. Racine recently announced that Power Design, Inc., a national electrical contractor headquartered in St. Petersburg, Fla., will be required to pay $2.75 million to workers and the District as part of a settlement in a wage theft and worker misclassification case. The settlement with the Office of the Attorney General (OAG) resolves a 2018 lawsuit against Power Design and two subcontractors that staffed its worksites for allegedly misclassifying more than 500 electrical workers as independent contractors instead of employees to cut labor costs. OAG also alleged that Power Design cheated workers out of wages and benefits and failed to pay District unemployment insurance taxes.

Under the terms of the settlement, Power Design will be required to: …

  • Pay $50,000 to support apprenticeships, job training, or workforce development opportunities to District residents.
  • Implement new policies and procedures to ensure compliance with the District’s minimum wage, overtime, paid sick leave, and worker misclassification laws.

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Illegal Labor Practices in the Philadelphia Regional Construction Industry: An Assessment and Action Plan (PA)

Posted by National Alliance for Fair Contracting on

Authors: Russell Ormiston, Stephen Herzenberg
Publication Date: January 11, 2019

This brief, buttressed by the companion national literature review by Professor Russell Ormiston of Allegheny College, presents multiple sources of complementary evidence that point to a single, simple conclusion: US and Pennsylvania labor law and labor standards are routinely violated by many contractors in the Southeast Pennsylvania regional construction industry. These violations threaten to transform growing shares of the construction sector-an industry that still provides significant numbers of well-paid jobs to highly skilled non-college workers-into low-wage, low-skill jobs, further undermining the region’s middle class and increasing already-gaping inequality.

Labor standards violations victimize workers and their families, taxpayers, law-abiding contractors, and construction customers including public sector entities.

* Workers get cheated of the pay they have earned and need to support their family.

* Local businesses suffer because lower-wage workers, some from outside the region, consume less.

* Taxpayers lose because worker victims of wage theft pay less in taxes. Taxpayers also lose in some cases because irresponsible contractors win public contracts awarded to low bidders and then use “change orders” to increase project cost beyond the original bid.

* As well as losing income, workers and their families may suffer because of injuries suffered on the job. Such injuries are more common among contractors who violate labor standards and, in some cases, rely on informal labor markets essentially outside the purview of labor law.

* Law-abiding contractors lose business and profits-and pay higher unemployment insurance taxes and workers compensation premiums-because their competitors underpay. Law-abiding contractors also face pressure to begin violating standards and cheating workers themselves-in a potential “if you can’t beat ’em, join ’em” downward spiral that spreads destructive competition.

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