Power Design Inc., a large St. Petersburg, Fla., electrical contractor, has agreed to a $2.75-million settlement with the Washington, D.C., attorney general that will compensate craftworkers and the city to resolve allegations the firm and two subcontractors underpaid workers by misclassifying them as independent contractors.
City Attorney General Karl A. Racine had alleged in a 2018 lawsuit that Power Design and subcontractors JVA Services LLC and DDK Electric Inc., which were hired to staff some D.C.-area projects, allegedly reduced labor costs by failing to report more than 500 workers as employees between 2014 and 2017. Power Design has worked on “at least 10 large” city hotel and residential projects, according to Racine’s office.
The firm and subs allegedly failed to pay minimum wage and overtime or provide paid sick leave. They also did not pay local unemployment insurance tax.“If you cheat workers out of wages and benefits they’ve earned, or commit payroll fraud to gain an unlawful edge, you will be held accountable,“ Racine said. Power Design ranks No. 42 on ENR’s Top 600 Specialty Contractors list, reporting $575.1 million in 2018 revenue.
Court documents said that while Power Design and JVA originally contested the allegations, they “agree to the relief set forth” in the settlement. DDK Electric received a default judgment last year after failing to respond to the claim. Power Design agreed to pay more than $1.8 million to the city, nearly $880,000 in back wages to workers and $50,000 to develop apprenticeships for local residents. It also must report on new compliance policies and on its use of subcontractors in 2020 and 2021. The pact “allows us to uphold our commitment to our employees, while correcting any mistakes made by two of our former subcontractors,” David Redden, a company vice president wrote in an email to ENR. JVA dissolved last year, according to court documents.