Att. Gen. Karl Racine Sues Power Design for Allegedly Cheating Workers Out of Wages and Benefits

Washington, DC (WorkersCompensation.com) - The District of Columbia is suing power Designs Inc., an electrical contractor based in Florida, for allegedly misclassifying more than 500 employees as independent contractors and shortchanging them of out thousands of dollars in both wages and benefits.

According to a press release from Att. Gen. Karl A. Racine’s office, the lawsuit was filed recently in DC Superior Court, and the suit also names DDK Electric Inc. and JVA Services LLC, which are two Maryland-based labor brokers. Both companies are said to have been hired to staff Power Design worksites.

In the release, Racine said, "When companies misclassify employees as independent contractors, they steal from their workers and gain an unfair advantage over competitors that follow the law. Today's lawsuit is about protecting employees and businesses that play by the rules and punishing businesses that do not."

David Redden, General Counsel for the company, told WorkersCompenation.com, “We have begun a thorough investigation of the allegations in the complaint filed with a goal of swift resolution. Power Design is a company that prides itself on delivering superior service in compliance with all applicable laws and regulations. Our reputation in the industry is very important to us, and it is paramount to that reputation to make sure any worker on a Power Design project is properly paid. We will pursue our investigation into these allegations to find out who these workers are and whether or not they were properly paid. The worker comes first.”

To misclassify a worker as an independent contractor is a violation of the Work Place Fraud Act in Washington DC. A company has to prove that their workers are operating independently for any company to classify a worker as an independent contractor. Also, that contractor must be self-employed, and the work they conduct has to not fall within the primary business of that company. 

The complaint filed by the District Attorney’s office alleges that approximately 535 workers were misclassified, and 64 of those employees were paid less than minimum wage. 180 employees allegedly did not receive overtime pay. 

The complaint states that Power Design, along with JVA Service and DDK Electric, violated the District of Columbia’s Workplace Fraud Act, which applies to the construction industry, Minimum Wage Revision Act, Unemployment Compensation, and Sick and Safe Leave Act from 2014 to 2017. 

Power Designs have worked on sizeable construction projects in the DC area which include several apartment complexes at the Line DC hotel. Racine is looking to penalize the construction company “tens of thousands of dollars,” consisting of wage relief for employees and employment insurance taxes that have gone unpaid. It also includes $1000-$5000 for each worker that was misclassified, and failure to keep records of payroll, which could add up to millions of dollars in the end.

The AG’s office did not return requests for comment by press time.

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