District of Columbia Attorney General Brian L. Schwalb announced a $3.75 million settlement on July 29, 2024, resolving the District’s lawsuit over alleged misclassification of construction workers. The headline figure—$1,742,000—is the portion designated for worker restitution, while the remainder covers civil penalties and attorneys’ fees. The consent order says the settling defendants denied the allegations and that the agreement is not an admission of wrongdoing or liability.
What the $1.7 million represents
The worker payment is one component of a larger settlement with Power Design, Inc., John Moriarty & Associates of Virginia, K&K Electric & Construction, and JLH General Services. The District’s announcement said more than 1,200 workers would be eligible for restitution. The consent order allocates the total as follows:
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| Settlement component | Amount | Recipient or purpose |
|---|---|---|
| Worker restitution | $1,742,000 | Affected workers identified through the claims process |
| Civil penalties | $1,128,000 | District of Columbia |
| Attorneys’ fees | $880,000 | Fees specified in the consent order |
| Total | $3,750,000 | Overall settlement |
The figures come from the District attorney general’s July 29, 2024 announcement and the Superior Court consent order and exhibits.
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The lawsuit, District of Columbia v. Power Design, Inc., et al., Civil Action No. 2022 CA 001977 B, alleged that construction workers were treated as independent contractors when they should have been classified as employees. The OAG said the alleged arrangements could avoid obligations involving paid sick leave and payroll taxes, and could deprive workers of other wage-and-hour protections.
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The District identified claims under the Workplace Fraud Act, Wage Payment and Collection Law, Minimum Wage Revision Act, and Sick and Safe Leave Act. These remain allegations resolved by settlement—not findings after a trial. Power Design and Moriarty disputed and denied the claims, stated that they complied with District law, and agreed that the consent order is not an admission of liability.
Which companies are covered
The consent order names four settling parties: Power Design, Inc.; John Moriarty & Associates of Virginia; K&K Electric & Construction; and JLH General Services. Other entities mentioned in the original litigation should not automatically be treated as settling defendants. The order states that MBJ Electric and LAF General Contractors were not parties to this consent order. It also describes BI&R Services’ separate procedural status, including a default judgment.
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How worker restitution is administered
The order establishes a process rather than proving that every dollar has already reached a worker. A claims ledger is to list claimants, contact information, subcontractors and payment amounts. A third-party settlement administrator is responsible for distribution and outreach, including contacting workers who have not cashed checks.
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Operational reforms for contractors and subcontractors
Power Design requirements
The OAG said Power Design agreed to reform subcontracting and payroll practices, including stopping the use of labor brokers that the District found had misclassified electrical workers or failed to provide paid sick leave to properly classified employees. The consent order adds enhanced oversight of downstream worker classification, payroll-record retention, reporting duties and a worker hotline for potential violations. Power Design must submit certified compliance reports to the OAG for three years.
Moriarty requirements
Moriarty agreed to include District wage-and-hour compliance language in future District project subcontracts. It must also gather specified information through the contracting chain, including payroll-provider and worker information, and post notices of worker rights in English and Spanish at District jobsites.
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Practical compliance lessons
- Do not rely solely on a contract label such as “independent contractor”; review how the work is directed and performed under applicable District law.
- Maintain payroll, subcontractor and worker records long enough to satisfy the order or other applicable retention rules.
- Build classification checks and wage-and-hour certifications into every tier of a construction contracting chain.
- Give workers clear, on-site information about wage, leave and reporting rights.
Why classification changes workers’ rights
The OAG’s release explained that employees generally receive protections such as minimum wage, overtime, accrued paid sick leave and employer tax contributions. Independent contractors generally handle their own tax obligations and do not receive most employee labor-law protections, workers’ compensation or unemployment insurance through the business. The release also stated that the District’s Workplace Fraud Act requires construction companies to classify workers as employees in most cases.
The announcement printed a District minimum wage of $17.50 per hour as of July 2024. That is a dated figure from the 2024 release, not a verified current rate; employers and workers should check the District’s current rules for present obligations.
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Broader enforcement context
The OAG described the settlement as the largest workers’ rights enforcement recovery in District history at the time of announcement. It also reported that the agency had recovered more than $30 million in wage-theft cases since receiving wage-theft enforcement authority, including more than $14 million since January 2023. Those are agency-reported totals in the 2024 announcement, not independently audited statistics.
Schwalb said: “Worker misclassification harms hardworking Washingtonians, deprives the District of tax revenues needed to fund critical city-wide programs, and unfairly undercuts law-abiding competition.”
Where workers can seek help
The OAG release directed workers who believe they experienced wage theft or another wage-and-hour violation to the District OAG Workers’ Rights and Antifraud Section at (202) 724-7730, [email protected] or [email protected]. Contact details can change, so confirm the current information on the official District page before sending personal documents or relying on a deadline.
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