Racine sues Florida company for allegedly denying wages, benefits to workers on D.C. projects

August 9th, 2018

 

D.C. Politics

Racine sues Florida company for allegedly denying wages, benefits to workers on D.C. projects

 

 

 

 

 

 

 

 

 

 

 

 
D.C. Attorney General Karl Racine (D). (Michael Robinson Chavez/The Washington Post)

 

By Reis Thebault August 8 at 5:33 PM Email the author

 

An electrical contractor that has worked on many high-profile projects in the District allegedly engaged in a payroll scheme that deprived hundreds of workers of sick leave, overtime pay or minimum wage, according to a lawsuit filed this week by Attorney General Karl A. Racine.

The complaint, filed Monday in D.C. Superior Court, claims that Power Design Inc., based in Florida, misclassified 535 electrical workers as independent contractors, which kept them off the payroll and allowed the company to avoid paying some D.C. taxes.

Although the workers have many of the same roles and responsibilities as Power Design employees and report to the company’s managers, the lawsuit alleges, they do not receive the paid sick leave that D.C. employers are required to give. The lawsuit says that at least 180 workers weren’t paid the required overtime rate, and that at least 64 weren’t paid minimum wage.

“Power Design cheated hundreds of District workers out of their hard-earned wages and stripped them of their legal rights,” Racine (D) said in a statement. “When companies misclassify employees as independent contractors, they steal from their workers and gain an unfair advantage over competitors that follow the law.”

[If politicians care about a rigged system, it’s time to address wage theft]

 

A spokesman for Power Design said the company — which has won D.C. contracts for high-end developments such as the Yards on the Anacostia Riverfront and publicly subsidized projects such as the Line Hotel in Adams Morgan — takes seriously its compliance with local laws and regulations and has begun an internal investigation of the allegations.

 

 

 

 

 

 

 

 

 

 

 
The Line Hotel under construction in Adams Morgan in 2017. (Marvin Joseph/The Washington Post)

The complaint says the company hires workers from third-party “labor brokers” and then lists those workers as independent contractors, rather than its own employees.

Racine’s office is seeking tens of thousands of dollars in damages, along with unpaid taxes and fines for every worker misclassified.

“This maneuver allows Power Design to slash costs, evading taxes and costs associated with payroll that are concomitant with a typical employer-employee relationship,” the complaint says. “As business in the construction industry is often awarded through a bidding process, these suppressed costs are instrumental to Power Design’s success in the District.”

D.C. Council member Elissa Silverman (I-At Large), who has raised concerns about Power Design’s business practices before, called the lawsuit a “first, important step” that shows the city takes the enforcement of its labor laws seriously.

“We’re sending a message to contractors,” she said. “You need to pay your workers fairly, or there will be consequences.”

[The Trump administration proposes allowing tip-pooling in restaurants. Critics call it stealing workers’ wages.]

 

In 2017, when Power Design applied for certification to offer apprenticeships in the city, Silverman pointed out that the company had been sued elsewhere for misclassifying workers and not paying overtime.

“I have concerns about Power Design’s labor practices, and urge you to deny their application until they can demonstrate that their business practices are in line with local and federal law,” Silverman wrote in a letter to the D.C. apprenticeship council, which oversees apprenticeship programs for the Department of Employment Services.

 

A spokeswoman for the department declined to answer questions about the lawsuit or the council’s approval of Power Design’s application.

Silverman, who chairs a committee that oversees the department, said she has pushed officials there to be more proactive in enforcing D.C. labor laws, rather than mainly responding to complaints.

“It’s about really taking a muscular approach,” she said.

Labor and community activists, who also have long criticized the company, applauded Racine’s lawsuit. “For too long, the city has passed paper tiger laws that sound wonderful, but the enforcement of them has been lacking,” said Bryan Weaver, a community leader in Adams Morgan who protested the Line Hotel project.

“I hope this hearkens a new day in the District of Columbia, where developers and contractors are going to be held to the letter of the law,” he said.

Reis ThebaultReis Thebault is a reporter covering politics in the D.C. metro area. He has worked on the local desks of the Boston Globe and the Columbus Dispatch. He joined The Washington Post as an intern in June 2018. Follow 

 

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New Amendment at DC City Council

6/7/18

A new amendment at DC City Council has been proposed affecting the garnishment of wages. On Wednesday, July 11, 2018 CM Elissa Silverman is holding a round-tablebefore the Committee on Labor and Workforce’s implementation of the Universal Paid Leave Amendment Act of 2016.  The committee will review quarterly reports due by June 30 in addition to the status of other elements implementation.

 

Please let Doug know if you wish to testify before July 9, 2018. You may also submit written statement to Ms. Royster at labor@dccouncil.us.

 

On another subject, Council members Grosso, Nadeau, Bonds, Silverman, Evans, and White are sponsoring this amendment to prevent wage garnishment from individuals making less than the DC living wage, to limit the amount that (more…)

Testimony from DC Employment Services – Labor & Workforce Development

 

 

Full Video

 

“Testimony related to the District of Columbia Department of Employment Services (DOES) at the DC Council Committee on Labor & Workforce Development’s Budget Oversight Hearing on April 18th

 

Please note- testimony from Fred Codding and Vic Cornellier can be witnessed at time 2 hour 07 mins – 2 hour 27 mins.  

ACE Chairman, Andy Porter Nominated for SUBBY Award

American Subcontractors Association of Metro Washington is celebrating 54 years of building together! On Saturday, February 24th, 2018, will host their 2018 SUBBY Awards at the Omni Shoreham Hotel in Washington, DC!

Andrew Porter, ACE Chairman, has been nominated for the distinguished Special Achievement Award to be presented at the (more…)

ACE Sends Letter to Metropolitan Washington Airports Authority

Mr. John E. Potter, President & CEO
Mr. William S. McDermott, Chairman, Board of Directors
Metropolitan Washington Airports Authority

Dear Misters Potter and McDermott:
The Alliance for Construction Excellence (ACE*), is in receipt of your letter to the American Subcontractors Association of Metro Washington (ASAMW) dated March 27, 2017 in response to their letter dated four (4) months earlier, November 8, 2016. The lateness of the response, coupled without an explanation as to why it took four (4) months to respond to our mutual serious concerns, is deeply troubling and disrespectful to our business community.

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Know What You Are Bidding

Recent projects in the DC region have led the American Subcontractors Association (ASA) of Metro Washington to make sure its members and all subcontractors are aware of the inherent risks in bidding projects that include an Owner Controlled Insurance Policy (OCIP) and other terms.  Specifically:

Owner Controlled Insurance Policy (OCIP) often include a transfer of risk to subcontractors:

  • OCIP terms and conditions often flow down from Owner by the GC to subcontractors.
  • OCIP general liability deductible: What is reasonable and how will you cover this deductible in case of a loss?
  • OCIP general liability claim costs: How will you cover investigative costs, court costs, attorney fees, cost of defense?
  • OCIP builders risk deductibles: What level are you prepared to cover if there is a flood, pollution or other items not covered?
  • OCIP’s sometimes will not reimburse subcontractors for profit, tax, overhead, insurance, or bonds attributable to repair or replacement work regardless of who is at fault.

Terms and conditions in the General Contractor’s subcontract:

  • Be aware of phrases that hold all subcontractors collectively responsible for OCIP deductibles in the event of an Act of God.
  • Be aware of phrases that hold all subcontractors collectively responsible for OCIP deductibles in the event the responsible party is not determined.

Change order mark ups flow down from Owner by General Contractor to subcontractors:

  • Changes due to design defects: What is the mark up on change orders and how will you recover your costs?  If not in the bid then you will have to live with the amounts allowed in the subcontract.
  • Changes due to differing site conditions: What is the mark up on change orders due to differing site conditions?  Again, how will you recover your costs?

Know what you are bidding – protect yourself and your company.

Subcontractor Payment is Becoming More Fair

For years, subcontractors have learned to live with slow payments. Most of us expect to pay after we receive a service, have a project completed or obtain an item – like a meal or a new tool, or even a new building. But in the world of construction subcontractors, the company completes its work, pays its employees, vendors, etc and then waits around for 60, 90 days or even longer for payment. One group is trying to make this practice fair. That group is the American Subcontractors Association of Metro Washington.

The result of their efforts is taking shape in the District of Columbia as its Department of General Services prepares to reveal a Website that lists all payments made by the Department of Governmental Services. Once Subcontractors are aware that their prime contractor has been paid, then they can pursue available legal avenues to obtain timely payment for completed work. This results from legislation passed in 2016 that is likely to be a model for similar public displays of payments across the nation.

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CyrusOne Data Center: a Hyper-Scaled Project Built in Part by the Powering America Team

The demand for better Internet coverage, higher speeds, and data storage is at an all time high. Not only do we want these solutions available to us, we want them now. CyrusOne’s Data Center in Sterling, Virginia is dedicated to providing those solutions.

Together with the Powering America Team of Rosendin Electric and IBEW Local 26, CyrusOne completed one of the fastest data center builds in history. This hyper-scaled project was no problem for these highly-skilled & professional electricians and technicians; in less than a year, it is in the process of completing a combined 340,000 sq. ft. of space that provides 30-megawatts of high speed Internet to the world.