Power Design Must Pay $2.75 Million to Settle Misclassification Suit

Thursday, January 30, 2020 | 0

One of the nation's largest electrical contractors must pay $2.75 million to settle a lawsuit brought by the District of Columbia over the company's alleged misclassification and wage-theft practices.

Attorney General Karl Racine

It's the largest settlement ever for the district for a payroll fraud action and will provide almost $880,000 to workers and $1.8 million to the local government, D.C. Attorney General Karl Racine said in a statement.

“This settlement should be a wake-up call to district employers: 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. “The district has strong laws on the books to protect district workers from exploitation and ensure that businesses can compete on a level playing field, and the Office of the Attorney General is committed to enforcing them.”

Power Design, headquartered in Florida, is listed as the 15th-largest electrical contractor in the country, with thousands of workers. Racine sued the company and two others in 2018, charging that they had misclassified more than 500 workers as independent contractors, depriving them of workers' compensation benefits, minimum wages and overtime. The firm also failed to pay D.C. payroll taxes for unemployment insurance, the attorney general said.

The consent order for Power Design and the other firms is here.

Racine has become known as an activist against companies that misclassify workers. In a report published last fall, he noted that for every $100 in payroll, unscrupulous contractors can avoid more than $16 in workers' comp premiums, overtime and taxes.