Attorney General Brian L. Schwalb announced that Diverse Masonry Corporation (Diverse Masonry) has agreed to pay $191,750 to settle claims that it improperly classified 59 workers as independent contractors instead of employees, thereby denying them legally mandated benefits such as paid sick leave.

A 2019 economic analysis by the Office of the Attorney General (OAG) highlighted that worker misclassification in the construction industry allows companies to reduce labor costs by between 16.7% and 40%, creating an unfair competitive advantage over businesses that comply with the law. These unlawful practices contribute to widespread suppression of labor costs in an industry where contracts are often secured through competitive bidding.

“Diverse Masonry was not only exploiting workers to illegally boost its profit margins, but it was also seizing an unfair competitive advantage over law-abiding companies,” said Attorney General Schwalb. “The District’s development and growth depends in large part on the hard work of the construction trades, whose workers are particularly vulnerable when benefits are withheld in illegal misclassification schemes. As the District’s independent Attorney General, I will continue to have workers’ backs and ensure that all businesses compete on a level playing field.”

Diverse Masonry, a Virginia-based firm specializing in masonry and bricklaying, operates across the DMV region. Under District law, construction workers employed by companies like Diverse Masonry are presumed to be employees unless proven otherwise. As part of the settlement, Diverse Masonry must:

• Provide $59,000 in compensation to affected workers.
• Pay $132,750 in civil penalties to the District.
• Adjust its business operations to comply with worker classification laws, ensuring employees receive paid sick leave and other entitled benefits.
• Submit certified payroll reports to the District for two years to verify proper worker classification and require subcontractors to do the same.
• Notify OAG within 30 days of any potential subcontractor noncompliance with wage-and-hour or payroll tax laws.
• Implement an electronic record-keeping system and confidential reporting channel for workers and subcontractors to report wage-and-hour violations.
• Display notices at all District worksites informing workers of their employment rights and how to report violations to OAG.

A copy of the full settlement agreement is available for review.

This case was handled by Assistant Attorney General Christian Whitmer, former Assistant Attorney General Zack Hill, Investigator Kenithia Alston, Paralegal Diego Pereira, and Graham Lake, Section Chief of the Workers’ Rights and Antifraud Section.

Understanding Worker Misclassification

Under DC law, employees must be paid a minimum wage of $17.50 per hour, receive overtime pay, accrue paid sick leave, and have employer contributions toward their federal and state taxes. Independent contractors, on the other hand, bear sole responsibility for their own taxes, lack coverage under most labor laws, and do not qualify for workers’ compensation or unemployment insurance.

Legal standards dictate when a worker can be classified as an independent contractor. However, some businesses misclassify employees to cut costs, evade taxes, and strip workers of legal protections. The DC Workplace Fraud Act mandates that most construction workers be classified as employees, with violations resulting in significant monetary penalties.

OAG’s Commitment to Protecting Workers

The OAG’s Workers’ Rights and Antifraud Section is dedicated to preventing wage theft and safeguarding workers’ rights. Since January 2023, the section has recovered over $19 million for workers and the District, with a total of more than $35 million secured since gaining wage theft enforcement authority. OAG’s efforts prioritize industries with high concentrations of vulnerable workers, such as construction, hospitality, healthcare, and the gig economy.

Reporting Wage and Hour Violations

Workers who suspect they have been subjected to wage theft or other violations can report concerns to OAG by calling (202) 442-9828 or emailing workers@dc.gov or trabajadores@dc.gov.

Originally reported by Office of the Attorney general for the District of Columbia.