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As the 2013 legislative session has ended, we share with you an ugly little story that
broke as our efforts to have the Commonwealth take a stand against worker misclassification
died before the House General Laws Subcommittee, on February 12, 2013.
Woodbridge, Virginia, construction company to pay $101,000
in back wages following US Labor Department investigation
A&M Drywall misclassified employees as independent contractors
WOODBRIDGE, Va.—A&M Drywall Construction Inc. has agreed to pay $101,007
in back wages to 120 employees after an investigation by the U.S. Department of
Labor’s Wage and Hour Division found that the company misclassified employees
as independent contractors and failed to pay them proper overtime compensation in
violation of the Fair Labor Standards Act and the Contract Work Hours and Safety
Standards Act. The Woodbridge company provides commercial and residential con-
struction services in the Washington, D.C., metropolitan area.
“Too often, employers are categorizing their employees as independent contractors
to avoid paying them in compliance with the FLSA, as well as other federal, state and
local laws,” said Mark Lara, director of the Wage and Hour Division’s Baltimore
District Office. “Misclassification costs employees and taxpayers millions of dollars
each year and gives unscrupulous employers an unfair competitive advantage.”
The division’s investigators determined that the company failed to pay employees
an overtime premium for hours worked in excess of 40 in a week. The company also
failed to keep time records for employees who were misclassified as subcontractors,
in violation of the FLSA. Employees were paid on a piece-rate basis, without regard
to how many hours had been worked.
These illegal practices continued during work performed by the company on a
contract with the U.S. Department of Defense to design and build a new headquarters
facility and mess hall in Quantico, Va. Failure to pay overtime at time and one-half
employees’ basic rates of pay on a government-funded construction contract is a
violation of the CWHSSA.
The misclassification of employees as independent contractors is an alarming
trend, particularly in industries, such as construction, that often employ low-wage,
vulnerable workers and in which the Wage and Hour Division historically has found
significant wage violations. The practice is a serious threat both to employees entitled
to good and safe jobs, as well as to employers who obey the law. Misclassified
employees often are deprived of overtime and minimum wages, and are forced to pay
taxes that their employers are legally obligated to pay. Misclassification also creates a
competitive disadvantage for employers who comply with the law.
Under the FLSA, employers must distinguish employees from bona fide
independent contractors. An employee – as distinguished from a person who is
engaged in a business of his or her own – is one who, as a matter of economic reality,
follows the usual path of an employee and is dependent on the business that he or
The FLSA requires that covered employees be paid at least the federal minimum
wage of $7.25 per hour for all hours worked, plus time and one-half their hourly rates
for hours worked beyond 40 per week. Additionally, accurate records of employees’
wages, hours and other conditions of employment must be maintained.
The CWHSSA applies to federal service contracts and to federal and federally
assisted construction contracts exceeding $100,000. It requires contractors and
subcontractors on covered contracts to pay laborers and mechanics employed in
the performance of the contracts one and one-half times their basic rate of pay for
all hours worked over 40 in a week. The act also prohibits unsanitary, hazardous
or dangerous working conditions on federal and federally financed and assisted
construction projects.
For more information about the FLSA and other federal wage laws, call the Wage
and Hour Division’s toll-free helpline at 866-4US-WAGE (487-9243) or its Southern
Worker Misclassification:
An Epidemic Across the Country
By Andrew A. Porter
This story about a Virginia-based
contractor is all too typical these days in the
construction industry. By classifying people
who work for the companies as contractors,
the companies cheat the State and Federal
governments out of payroll taxes, pay no
workers compensation insurance, pay no
unemployment insurance, and gain a huge
competitive advantage over contractors who
adhere to the various laws that apply. You will
note that the Federal government took action;
Virginia was not involved.
Worker misclassification is epidemic
across the Country. The 1200 employers
that we represent are forced to compete on
an uneven playing field. Most states have
addressed the problem legislatively in recent
years and Virginia needs to do the same.
ACE’s efforts to prompt similar legislative
relief in Virginia during the 2010 session
resulted in SB 377 being referred to study.
The report subsequently issued by JLARC
virtually screamed for action to be taken.
Creation of a Task Force to further study the
matter (for subsequent legislative action) took
the form of SB 879—which failed before your
Subcommittee.
The Governor and General Assembly
should put an end to this criminal behavior.
Doing nothing and maintaining the status
quo only perpetrates the fraud and aids the
unscrupulous business owner.
Andrew A. Porter is Chairman of the
Alliance for Construction Excellence,
, 703-658-4383
More information
from NPR Online
Construction Booming In Texas,
But ManyWorkers Pay Dearly
Texas Contractors Say
Playing By The Rules Doesn’t Pay
