RICHMOND, Va. (WRIC) — Three companies that worked on high-profile construction projects in Virginia, including the new General Assembly building, have reached a settlement with employees who claimed they were not paid what they were owed.
A lawsuit filed by two workers in December 2020 accused the Richmond-based drywall company Capital Interior Contractors and two subcontractors it hired as labor brokers, Richmond Drywall Installers Constructors Inc. (RDIC) and GTO Drywall LLC (GTO), of violating the federal Fair Labor Standards Act by not paying them overtime wages they earned.
Capital Interior hired GTO and RDIC to find laborers to work on the new Virginia General Assembly building, an adult outpatient facility for Virginia Commonwealth University, the Altria headquarters in Richmond and other projects, according to court documents.
One plaintiff, Gilberto Rosales, claimed in the lawsuit that he was hired by GTO to work on the General Assembly construction site but “generally did not receive paystubs” and sometimes worked more than 40 hours a week without getting “the legally required one-and-one-half times his regularly hourly rate for hours worked over forty.”
The settlement agreement approved in January secured different payments for each of the 22 plaintiffs in the collective action lawsuit. Some workers got $500 while others were eligible to collect thousands, including one plaintiff who received nearly $22,000.
The 22 plaintiffs received $54,326 in total. Under the settlement agreement, GTO paid 13 workers a total of $37,135 and RDIC paid six employees $15,691. Capital Interior paid three workers $500 each. Mr. Rosales got $1,715 from GTO.
The companies denied all of the workers’ allegations and noted in the settlement that the agreement and all related documents should not be construed as an admission “of any fault, liability, wrongdoing, employer or joint employer status, or any other fact or legal conclusion.”
Matthew B. Kaplan, one of the attorneys who represented the workers, told 8News he thought it was a “fair agreement” for his clients. He added that wage theft cases involving multiple subcontractors are hard to settle, but harder to litigate.
“These types of cases run rampant, especially in Virginia where there is weak employment legislation,” Kaplan said. “Typically, a general contractor will hire a subcontractor or multiple subcontractors as these labor brokers and basically their existence is to provide cheap labor.”
While legislation to toughen the penalties for wage theft was approved in the Virginia General Assembly, Kaplan says more can be done to ensure general contractors are held responsible for subcontractors they hire that violate labor laws but don’t have the money to pay out settlements.
In a three-month span, the U.S. Eastern District Court of Virginia approved the settlement agreement and RDIC and GTO both pleaded guilty to felony embezzlement charges for misclassifying workers they hired for the General Assembly project as independent contractors to avoid paying state income taxes.
The attorney that represented GTO and RDIC said the companies did not have a comment regarding the settlement. Nathaniel L. Story, counsel for Capital Interior Contractors, did not respond to a request for an interview or comment.
“Capital Interior Contractors recently learned that one of its subcontractors, RDIC, pled guilty to charges related to its failure to remit Virginia state income tax withholding funds for ten workers for a period of July through December 2020,” Story wrote in an email on Dec. 8, 2021. “Capital does not condone such practices. Capital continues to investigate this issue and is committed to legal compliance and fair wage practices.”
The Virginia Employment Commission conducted an investigation that found several workers on the General Assembly building had been misclassified as independent contractors, former Virginia Secretary of Labor Megan Healy said in July. A Virginia Employment Commission spokesperson told 8News the report detailing the investigation’s findings is now in the hands of the attorney general’s office.
A work group led by Healy sent a report to state lawmakers last December recommending changes to strengthen Virginia’s labor laws.
Finding that widespread problems exist, the group recommended policies in its report to address the prevention and enforcement of labor law violations — several of which require the General Assembly’s approval.
According to the report, Virginia should require firms vying for state contracts to certify compliance with labor laws, make it easier for workers to file complaints and consider creating an interagency council to combat misclassification and wage theft. Lawmakers did approve measures this year to replace the provisions of the Virginia Overtime Wage Act, but it’s unclear whether any of the proposals from the work group will become policy.