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HomeContractingContractor, four subs to pay $350,000 to settle "illegal worker misclassification scheme"

Contractor, four subs to pay $350,000 to settle “illegal worker misclassification scheme”

Washington Construction News staff writer

Tricon Construction, Inc. will pay $350,000 to resolve allegations that the company and four of its subcontractors engaged in an illegal worker misclassification scheme that denied sick leave and other benefits to approximately 200 District construction workers, Attorney General Brian L. Schwalb said in an April 3 statement.

The District’s Workplace Fraud Act (WFA) provides heightened protections for workers in the construction industry, including a presumption that they should be classified as employees rather than independent contractors, the AG’s news release said.

Tricon is a framing and drywall installation company that entered into agreements with numerous subcontractors to complete construction projects in the District. However, four of those subcontractors—Zepeda Drywall Inc., RJA Construction, G&O Drywall Inc., and SGA Construction Corp.—misclassified their workers as independent contractors instead of employees in violation of the WFA and the District’s Sick and Safe Leave Act.

“Under District law, construction workers are presumed to be employees, not independent contractors, and therefore are entitled to receive employee benefits like paid sick leave,” Schwalb said in the statement.

“Tricon and its subcontractors unlawfully took advantage of workers by misclassifying them as independent contractors, depriving them of benefits to which they were legally entitled. Contractors and subcontractors that skirt the law are cheating both their employees and their competitors. My office is committed to standing up for all District workers and ensuring that businesses complete on a level playing field.”

This settlement builds on OAG’s efforts to crack down on the use of “labor brokers” in the construction industry. “Labor brokers” are subcontractors whose business involves providing upstream construction companies with laborers to complete construction projects.

Workers employed by labor brokers are frequently misclassified and denied their employment rights under District law, including minimum wage, overtime, and paid sick leave. By ramping up enforcement on this issue, OAG seeks to level the playing field and prevent construction companies from subcontracting out their liability through labor brokers.

Under the terms of the agreement:

  • Tricon must pay $200,000 to impacted workers.
  • Tricon must pay the District $150,000 in civil penalties.
  • Tricon and its subcontractors agree to correct their business practices to ensure compliance with DC’s workers’ rights laws by properly classifying their workers and providing them with paid sick leave and other benefits they are legally entitled to.
  • Tricon must require subcontractors to submit certified payroll reports ensuring compliance and correct worker classification for four years.
  • Tricon must conduct regular audits on all subcontractors hired for projects in the District and submit annual reports to the District from 2024 through 2027 with information verifying that all its subcontractors are in compliance with District workers’ rights laws.
  • Notably, in addition to Tricon, subcontractors Zepeda, RJA, G&O, and SGA are also parties to the settlement agreement. Expanding the settlement’s coverage to multiple parties in the contracting chain broadens the scope of the agreement’s robust compliance terms and prospective effect.

Eligible workers will be contacted over the next several months regarding the process by which to submit claims.

Mark Buckshon
Mark Buckshonhttps://washingtonconstructionnews.com
Mark Buckshon is the publisher and interim editor of Washington Construction News. He is also president of the Construction News and Report Group of Companies. He combines a journalism and business background, and has published construction trade publications for more than 30 years, after an earlier career in journalism, which culminated when he lived through the transition from Rhodesia to Zimbabwe in 1978-80 as a sub-editor for the Bulawayo Chronicle and a correspondent for a Canadian news service.

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