Subcontractor on General Assembly construction project agrees to fine on worker misclassification – Richmond Times-Dispatch

Dry Wall Contractor

A wide-ranging push to crack down on worker misclassification on public construction projects bore its first fruit this week with the conviction of a drywall subcontractor on felony embezzlement charges for failing to pay state taxes and workers’ compensation benefits to employees working on construction of a new General Assembly Building in Richmond.

Richmond Drywall Installers Constructors Inc. pleaded guilty and agreed to pay $21,000 in fines and restitution for misclassifying its employees as independent contractors on the high-profile construction project next to Capitol Square in the heart of Virginia’s seat of government.

It was the first conviction won by a new worker protection unit in the office of Attorney General Mark Herring, who investigated the charges with the Office of the State Inspector General.

Labor organizations have been pushing for Virginia to protect workers from being misclassified as independent contractors, which deprives them of full wages and the state of taxes for benefits such as unemployment insurance and workers’ compensation.

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Herring brought the charges in October against RDIC and GTO Drywall LLC, another drywall contractor, after a multi-jurisdictional grand jury indicted each of the companies on 10 counts of felony embezzlement. The pending case against GTO has been continued until February, the attorney general’s office said Wednesday.

“Businesses that take advantage of their workers through misclassification, wage theft, or payroll fraud are not only stealing from their hardworking employees, but they are also stealing from the commonwealth,” Herring said in announcing the guilty plea on Wednesday. “I am committed to rooting out worker exploitation in Virginia and protecting our workers from abuse and mistreatment by their bosses.”

State Inspector General Michael Westfall said, “It is the first time worker misclassification charges were brought by the [Attorney General’s] new worker protection unit, and I am proud that our special agents were part of the investigation that brought this issue to the forefront.”

The inspector general’s office said it began the investigation at the request of the attorney general in late January.

The guilty plea came as a surprise to Capital Interior Contractors Inc., which had hired the drywall subcontractors. The company and subcontractors are defendants in a federal lawsuit filed last December by workers who said they had been deprived of fair wages and other benefits because of being misclassified as independent contractors instead of employees.

“Capital Interior Contractors learned today that one of its subcontractors, RDIC, has 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,” Nathaniel Story, the company’s lawyer said in a statement on Wednesday.

“Capital does not condone such practices,” Story said. “Capital continues to investigate this issue and is committed to legal compliance and fair wage practices.”

Story had no comment on the federal lawsuit, which …….


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