Tag: Worker Misclassification

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Construction has been booming in Washington, DC, in recent years — especially residential and mixed-use apartment buildings following the Covid-19 pandemic. But at several projects, workers were allegedly misclassified as independent contractors, depriving those workers of the pay and benefits that they deserve.

That’s according to the Washington, DC, Office of the Attorney General (OAG). On December 9, 2025, Attorney General Brian Schwalb announced that “Brothers Mechanical Inc., a construction company that has worked on large development projects in NoMa, Navy Yard, and other DC neighborhoods, will pay $1.5 million to resolve allegations that the company and its subcontractors misclassified hundreds of workers as independent contractors.”

As explained by Chuck Sewell, marketing director at SMART Local 100 (Washington, DC-area), worker misclassification doesn’t just affect the misclassified employees. It negatively impacts the union contractors that employ SMART members.

“When companies illegally label employees as independent contractors, or misclassify them to a lower standard, they avoid paying proper wages, benefits, workers’ compensation, and payroll taxes. This is all-too common in the construction industry, and creates an uneven playing field where law-abiding contractors, who invest in trained workers and follow all regulations, are undercut by those cutting corners,” Sewell said in the OAG press release. 

Previous coverage of the work of SMART Local 16 and SMART Local 100 to combat wage theft.

Brothers Mechanical specializes in the design, installation and service of HVAC, plumbing and control systems, the OAG release said, and has worked on a number of mixed-use and residential buildings in recent years. According to the OAG, from 2020 through 2025, evidence showed that “Brothers Mechanical entered into agreements with subcontractors to provide about 500 construction workers to staff its projects, and that these workers were illegally misclassified as independent contractors.”

As a consequence, the release explains, these workers were not paid overtime premiums when they worked over 40 hours a week, they didn’t get the paid sick leave they earned, and they were excluded from unemployment insurance and workers’ compensation, among other things.

To resolve the OAG’s wage theft investigation, Brothers Mechanical must pay $500,000 to workers; pay $1 million in penalties to the District; make significant changes to ensure compliance with DC wage and hour laws — requiring any subcontractors to submit certified weekly payroll information, randomly auditing subcontractor payrolls on DC projects and training workers to identify suspected wage and hour violations — and submit to three years of compliance monitoring by OAG.

“DC workers are the backbone of our economy, and especially at a time when the cost of living in DC continues to rise, I will continue to prioritize ensuring that workers receive the wages and benefits they have earned,” Attorney General Schwalb said in the press release. “This settlement puts money back in the pockets of hundreds of construction workers and sends a clear message that businesses will face consequences when they break the law, cheat workers, and undercut law-abiding competitors.”

“We thank Attorney General Schwalb and his team at the OAG’s office for working to ensure the industry is safe and fair for all contractors and workers in the District,” Sewell concluded.

On Tuesday, January 9, the United States Department of Labor (DOL) issued its final rule to help workers and employers better understand how to analyze who is an employee or independent contractor under the Fair Labor Standards Act (FLSA). This rule, which went into effect March 11, 2024, makes it harder for companies to misclassify workers, expanding access to employee protections such as overtime pay, Social Security benefits and more.

“Unions like SMART have long fought against the sordid practice of worker misclassification in the construction industry, where bad-faith companies categorize their workers as independent contractors in order to deprive them of the protections, benefits and pay they deserve — including minimum wage, overtime pay and workers’ compensation,” said SMART General President Michael Coleman on the day the rule was issued. “This anti-worker practice has been particularly harmful to immigrants and members of underrepresented communities. The final rule issued by the DOL today will protect tens of thousands of workers across the country, and all of us at SMART applaud Acting Labor Secretary Julie Su and the Biden administration for taking action.”

Watch to learn more about SMART local unions’ efforts to combat worker misclassification.

On Tuesday, January 9, the United States Department of Labor (DOL) issued its final rule to help workers and employers better understand how to analyze who is an employee or independent contractor under the Fair Labor Standards Act (FLSA). This rule will make it harder for companies to misclassify workers, expanding access to employee protections such as overtime pay, Social Security benefits and more. In response, SMART issued the following statement:

“Unions like SMART have long fought against the sordid practice of worker misclassification in the construction industry, where bad-faith companies categorize their workers as independent contractors in order to deprive them of the protections, benefits and pay they deserve – including minimum wage, overtime pay and workers’ compensation. This anti-worker practice has been particularly harmful to immigrants and members of underrepresented communities. The final rule issued by the DOL today will protect tens of thousands of workers across the country, and all of us at SMART applaud Acting Labor Secretary Julie Su and the Biden administration for taking action.” 

Wage theft and worker misclassification are forms of exploitation that litter the construction industry, where unscrupulous employers take advantage of employees to pay them less than what they are owed. A recent Economic Policy Institute (EPI) study found that construction workers lose out on as much as $16,729 per year in income and job benefits; the EPI also reported that wage theft costs American workers as much as $50 billion per year — more than annual robberies, burglaries and motor vehicle thefts combined.

SMART locals are fighting against such practices from coast to coast – helping workers win the pay that they deserve.

Watch coverage of victories against wage theft and worker misclassification by SMART local unions.

“Wage theft is occurring everywhere in the construction industry, and employers will take advantage of those people who may not know what their rights are or have any idea of what prevailing wages are,” SMART Local 16 (Portland, Oregon) Business Manager Brian Noble explained in a recent episode of SMART News. “That’s who they prey on.”

SMART Local 16 has filed 10 prevailing wage complaints against 360 Sheet Metal, an aggressively anti-union contractor in Vancouver, Washington, whose workers previously went on strike after joining Local 16. The company was paying workers $12 to $15 an hour for fabricating duct in its shop, at a time when the prevailing wage (which applies to fabrication of ductwork in the state) was more than $65 an hour.

The Washington Department of Labor & Industries has resolved four of the 10 complaints so far.

“In those four cases,” Noble said, “they found that [the owner of 360 Sheet Metal] owed over $200,000 in back wages to 20 workers, and they assessed $115,000 in penalties for failing to pay prevailing wage in the shop.”  

In Virginia, meanwhile, SMART Local 100 filed a complaint with the U.S. Department of Labor (DOL) alleging that a nonunion contractor on the Potomac Yards Metro Station project had misclassified sheet metal workers performing metal roofing work on the station. This resulted in them being paid approximately 60% less than the prevailing wage – hurting those workers and taking work away from Local 100.

“Misclassification is pretty rampant across the country,” explained Local 100 Marketing Director Chuck Sewell to SMART News. “Our contractors have to abide by certain rules, they have to pay certain rates, they know what the rates are, so that’s how they bid the projects. If you have these low-wage contractors come in and undercut everybody and get the project, it takes work hours from the local.”

The DOL investigation, which ended in the fall of 2022, found that the employees in question were, in fact, misclassified, resulting in more than $288,000 in back wages being recovered for eight workers.

Such wins against wage theft and worker misclassifications are critical for employees, ensuring that they are fairly compensated for their labor. They also demonstrate the crucial role unions play in representing all workers, including those who have yet to be organized.

“It’s important that we make sure all workers are represented and get what they deserve,” Noble concluded. “[It’s vital] that we stop these employers from undercutting our contractors and the industry, and most importantly, that these underrepresented workers are getting what’s truly owed to them.”

A new analysis by the Eco­nomic Policy Institute (EPI) estimates that misclassified construction workers lose out on as much as $16,729 per year in income and job benefits compared with what they would have earned as employees. The study, which broadly focuses on worker misclas­sification across multiple industries, not only demonstrates the economic cost faced by workers when their employer denies their basic rights on the job; it also reaffirms the need for Congress to pass pro-worker laws like the Protecting the Right to Organize (PRO) Act.

Worker misclassification is one of the more common ways bad-faith employers deprive workers of their rights and fair compensation. By incorrectly classifying an employee as an independent contractor, employers deprive workers of, among other things:

  • Overtime wage and hour protections;
  • The right to earn a minimum wage;
  • Eligibility to participate in state and federal unemployment insurance systems or qualify for workers’ compensation insurance;
  • National Labor Relations Act protections that guarantee workers’ rights to form a union and bargain collectively for better pay and benefits.

The EPI study analyzed the 11 professions most likely to be misclas­sified by employers, including home health aides, landscapers, truck drivers, janitors and nail salon workers. (Notably, the analysis pointed out, “people of color and immigrant workers are more likely to be in occupations where misclassification is common.”) For construction workers, the disparities for misclassified workers — especially when compared to the wages and benefits negoti­ated in a union contract — could mean the difference between a family-sustaining career and living paycheck to paycheck.

The devastating effects of worker misclassification demonstrate how important it is that SMART members and locals work to bring unorga­nized workers into the union.

“According to our calculations, illegal misclassification costs the typical construction worker between $10,177 and $16,729 per year,” the EPI wrote in its study. “These esti­mates are both conservative because we have not attempted to place a monetary value on the worker’s loss, when misclassified as an indepen­dent contractor, of rights guaranteed by the National Labor Relations Act, including the possibility of union representation.”

The EPI added: “Policymakers should establish or expand the use of a strong, uniform protective legal test for determining employee status and pass the Protecting the Right to Organize (PRO) Act, which would make it harder for employers to misclassify employees in order to prevent them from forming a union and bargaining collectively.”

The devastating effects of worker misclassification demonstrate how important it is that SMART members and locals work to bring unorga­nized workers into the union.

“Contractors who misclas­sify their employees aren’t just depriving those workers of pay, benefits and protections; they are actively bringing down the wages and working conditions in local areas, and exploiting working families in order to strengthen their market share — taking jobs from SMART members in the process,” said SMART General President Joseph Sellers. “By fighting against misclassification and bringing those workers into SMART, we lift all workers up — including our current and future members.”

A new analysis by the Economic Policy Institute (EPI) estimates that misclassified construction workers lose out on as much as $16,729 per year in income and job benefits compared with what they would have earned as employees. The study, which broadly focuses on worker misclassification across multiple industries, not only demonstrates the economic cost faced by workers when their employer denies their basic rights on the job; it also reaffirms the need for the United States Congress to pass pro-worker laws like the Protecting the Right to Organize (PRO) Act.

Worker misclassification is one of the more common ways bad-faith employers deprive workers of their rights and fair compensation. By incorrectly classifying an employee as an independent contractor, employers deprive workers of, among other things:

  • Overtime wage and hour protections;
  • The right to earn a minimum wage;
  • Eligibility to participate in state and federal unemployment insurance systems or qualify for workers’ compensation insurance;
  • National Labor Relations Act protections that guarantee workers’ rights to form a union and bargain collectively for better pay and benefits.

“Contractors who misclassify their employees aren’t just depriving those workers of pay, benefits and protections; they are actively bringing down the wages and working conditions in local areas, and exploiting working families in order to strengthen their market share – taking jobs from SMART members in the process.”

The EPI study analyzed the 11 professions most likely to be misclassified by employers, including home health aides, landscapers, truck drivers, janitors and nail salon workers. (Notably, the analysis pointed out, “people of color and immigrant workers are more likely to be in occupations where misclassification is common.”) For construction workers, the disparities for misclassified workers – especially when compared to the wages and benefits negotiated in a union contract – could mean the difference between a family-sustaining career and living paycheck to paycheck.

“According to our calculations, illegal misclassification costs the typical construction worker between $10,177 and $16,729 per year,” the EPI wrote in its study. “These estimates are both conservative because we have not attempted to place a monetary value on the worker’s loss, when misclassified as an independent contractor, of rights guaranteed by the National Labor Relations Act, including the possibility of union representation.”

The EPI added: “Policymakers should establish or expand the use of a strong, uniform protective legal test for determining employee status and pass the Protecting the Right to Organize (PRO) Act, which would make it harder for employers to misclassify employees in order to prevent them from forming a union and bargaining collectively.”

The devastating effects of worker misclassification demonstrate how important it is that SMART members and locals work to bring unorganized workers into the union.

“Contractors who misclassify their employees aren’t just depriving those workers of pay, benefits and protections; they are actively bringing down the wages and working conditions in local areas, and exploiting working families in order to strengthen their market share – taking jobs from SMART members in the process,” said SMART General President Joseph Sellers. “By fighting against misclassification and bringing those workers into SMART, we lift all workers up – including our current and future members.”

View the entire study here.