RICHMOND, Va. (WRIC) — Laborers hired to work on some of Virginia’s major construction projects, including the new General Assembly Building and Virginia Commonwealth University’s new outpatient facility in Richmond, are accusing the subcontractors that employed them of wage theft in two federal lawsuits.
Since mid-October, two federal class-action lawsuits alleging unfair labor practices by multiple companies in the commonwealth have been filed in the U.S. District Court for the Eastern District of Virginia.
Two law firms, Handley Farah & Anderson and the Kaplan Law Firm, filed both lawsuits on behalf of workers who say they were not paid overtime after being intentionally misclassified as independent contractors instead of employees.
The most recent lawsuit, submitted on Dec. 1, alleges that Capital Interior Contractors, a Richmond-based commercial construction company that specializes in drywall, used two labor brokers in Chesterfield, GTO Drywall Inc. and RDIC, Inc., to hire workers for its projects. It argues that these laborers did not engage “in work that is customarily an independently established trade,” but instead had an employer-employee relationship with Capital Interior and its subcontractors.
“Labor brokers or labor subcontractors provide workers to Capital Interior, but Capital Interior maintains many of the traditional functions of the employment relationship with these workers,” the lawsuit claims, “including setting the workers’ schedules, providing the workers with direct and indirect worksite supervision, setting or influencing worker’s rates of pay, and maintaining, as a practical matter, the power to fire or demote workers.”
According to Virginia code, which the lawsuit claims was violated by the defendants, an individual who performs services for money is presumed to be an employee of the person who pays them, unless it is determined that they are an independent contractor under guidelines from the Internal Revenue Service.
“The general rule is that an individual is an independent contractor if the payer has the right to control or direct only the result of the work and not what will be done and how it will be done,” the IRS’ guidelines state.
Matthew B. Kaplan, one of the attorneys representing the plaintiffs in the lawsuits, told 8News that workers being misclassified as independent contractors is “extraordinarily widespread in the construction industry.”
The suit lists 34 projects in Virginia that Capital Interior was subcontracted to work on over a three-year period, including the construction of the new Virginia General Assembly Building, the Altria building, multiple projects for VCU, hospitals and commercial businesses.
The complaint alleges that the plaintiffs named in the class-action lawsuit, Gilberto Rosales and Hector Jose Polanco-Alvarez, did not get one and one-half times their regular hourly rate when working over 40 hours a week, a violation of the Federal Fair Labor Standards Act.
“Defendants violated the FLSA by knowingly failing to pay Plaintiffs and other similarly situated individuals one and one half times their regular hourly rate for hours worked in excess of 40 hours in any one work week,” the suit claims.
Rosales, the lawsuit contends, was employed by Capital Interior and GTO for construction work on the new General Assembly building, VCU’s adult outpatient facility on 599 North 10th Street in Richmond, the Altria building at 6601 W. Broad Street and Capital One West Creek buildings in Henrico from July to November. The complaint states that Rosales was required to take a drug test, as all workers on the General Assembly project were, had to sign two sign-in sheets, one for Capital Interior and another for GTO, each day, and “was typically given daily work instructions and supervised by an employee of Capital Interior.”
The class-action suit asserts Polanco-Alvarez was employed by Capital Interior and RDIC and worked on the Amazon facility on Bellwood Road in Richmond and VCU’s adult outpatient facility from January to July. According to the lawsuit, Polanco-Alvarez alleges he was regularly paid in cash and did not receive any paystubs.
All three companies have been named as defendants in the lawsuit. GTO Drywall, formed in 2011, is listed as a limited liability company on the Virginia State Corporation Commission’s site. RDIC was established in 2016, according to the commission.
“Because Capital Interior hasn’t been served with the lawsuit, we can’t comment on the allegations that might be contained in the complaint,” a company spokesman told 8News. GTO and RDIC did not respond to requests seeking comment.
A spokeswoman for the state’s Department of General Services, Dena Potter, said Monday that “DGS is not a party to the lawsuit. It would be inappropriate for us to comment on pending litigation.” A VCU spokesman declined to comment, citing the fact that the university was not party to the litigation.
The lawsuit seeks unpaid wages, liquidated damages, owed employment benefits resulting from the alleged misclassification, attorney fees and any additional relief the court decides.
Kaplan said that it is unclear how many other laborers will join the class-action lawsuit, but added that it would “probably be a significant number.” He also said that with no state overtime wage law in Virginia, there is no legal mechanism to make general contractors on these projects liable for subordinate contractors, many of which can’t afford to pay legal fees when they are sued.
On Oct. 22, a class-action lawsuit was filed on behalf of two Virginia residents who were employed to work on the Fine Arts Center of Christopher Newport University in Newport News. The plaintiffs, Douglas Moran and Yoleissy Mansfarrol, allege in the suit that Agent Wall Systems, Inc., a Norfolk-based construction company, and B&A Construction Services, a labor subcontractor in North Chesterfield, violated FSLA and the Virginia Wage Payment Law by not providing overtime rates when they worked over 40 hours a week.
The lawsuit also claims that Agent Wall Systems and B&A Construction misclassified them as independent contractors and not employees, despite having day-to-day control of what the plaintiffs did on the construction site.
“By misclassifying workers, employers deny employees their lawful wages and benefits while simultaneously underfunding social insurance programs like Social Security, Medicaid, unemployment insurance, and workers’ compensation. One way in which misclassification and other forms of wage theft are perpetrated is through the use of subcontractors who fail to follow federal and state wage/hour and misclassification laws.”
Kaplan said the misclassification of these workers take hundreds of millions of dollars in tax revenue away from state governments.
Agent Wall Systems was subcontracted to work on the CNU project, a VCU residence hall on Main Street, grocery stores in Chesapeake and Hampton and a Virginia Beach hotel. Adam Taubman, Agent Wall Systems’ owner and vice president, declined to comment. B&A Construction did not respond to requests seeking comment.
“The university is not a party to the lawsuit and has no knowledge about what is being alleged,” CNU spokesman Jim Hanchett told 8News.
This class-action lawsuit seeks unpaid wages, employment benefits, funds for attorney fees and two times the amount of unpaid wages as damages.