Richmond Times-Dispatch: Federal Lawsuit Alleges Wage Theft by Subcontractors on New General Assembly Building

Dec 02, 2020

By Michael Martz

Two laborers have filed a federal class-action lawsuit against a Richmond drywall company and two Chesterfield County labor brokers for alleged unfair labor practices on almost three dozen major construction projects in Virginia, including the new General Assembly Building in Richmond.

The lawsuit, filed Tuesday in U.S. District Court for the Eastern District of Virginia, alleges that Capital Interior Contractors Inc. used GTO Drywall Inc. and RDIC Inc. to supply laborers whom they treated as independent contractors instead of employees entitled to wage protections and benefits.

“Worker misclassification is a form of wage theft and payroll abuse where workers that should be classified as employees are illegally classified as independent contractors,” the lawsuit states.

“By misclassifying workers, employers deny employees their lawful wages (including premiums) and benefits, while simultaneously underfunding social insurance programs like Social Security, [Medicare], unemployment insurance and workers’ compensation.”

A spokesman for Capital Interior said Wednesday that the company had not been served with the lawsuit, so it could not comment on the allegations. The agent for GTO Drywall, registered as a limited liability company at the State Corporation Commission, declined to comment until consulting with his attorney, and the agent for RDIC did not return a request for comment.

Two law firms, based in the District of Columbia and Arlington County, filed the suit on behalf of Gilberto Rosales, one of 60 laborers allegedly affected by the practices on the General Assembly Building project, and Hector Jose Polanco-Alvarez, as well as “similarly situated” workers in other projects named in the suit.

It alleges that Capital Interior employs GTO and RDIC, among other labor brokers, to supply workers for the projects, but the subcontractor “maintains many of the traditional functions of employment relationship with these workers, including setting the workers’ schedules, providing the workers with direct and indirect worksite supervision, setting and influencing workers’ rates of pay, and maintaining, as a practical matter, the power to fire or demote workers.”

The suit alleges violations of overtime pay requirements in the federal Fair Labor Standards Act and state law against misclassification of workers as independent contractors. It seeks unpaid wages and damages for both men and other “similarly situated” laborers under both federal and state law, as well as employment and other benefits denied them because of alleged misclassification.

It also seeks an injunction against the companies from “further violations of these laws.”

The lawsuit names 34 high-profile projects on which Capital Interior worked as a subcontractor. Among them, in addition to the General Assembly Building, the suit alleges unfair labor practices in construction performed on three floors at the SunTrust Center in Richmond; Fort Lee in Prince George County; Virginia Commonwealth University in Richmond and John Tyler Community College in Chester; the American Civil War Museum and Topgolf facility in Richmond; the Westminster-Canterbury retirement community and the Virginia United Methodist Homes in Henrico County; and Chippenham, St. Mary’s and Henrico Doctors’ hospitals in South Richmond and Henrico.

It also names construction projects for major companies in the Richmond region, such as Altria Corp. in Henrico and Capital One at West Creek in Goochland County, as well as work for Amazon, Drury hotels and Lidl supermarkets.

Outside of the Richmond area, the suit names construction projects at Hampden-Sydney College near Farmville, the Emily Couric Cancer Center at the University of Virginia in Charlottesville and Sentara Princess Anne Hospital in Virginia Beach.

The property owners or general contractors for the projects are not defendants in the lawsuit, which said GTO and RDIC “are some of the labor brokers that Capital Interior used on the Virginia projects.” The suit specifically names GTO as the labor broker for the General Assembly Building and workers such as Rosales.

The lawsuit is not the first filed on behalf of laborers on construction projects at VCU and other public colleges and universities. The push is supported by the Eastern Atlantic States Regional Council of Carpenters, based in Philadelphia. It contends that illegal labor practices hurt companies that abide by federal and state labor law by putting them at a competitive disadvantage with those that do not.

The issue was magnified when Del. Paul Krizek, D-Fairfax, raised concerns at the House Appropriations Committee budget retreat last month about potential wage theft and other labor law violations on the General Assembly Building project, which is part of a $300 million package of major capital projects around Capitol Square in downtown Richmond.

“What concerns me most is that this is the people’s house that is being built,” Krizek said. “And we don’t want to move into a building that is using labor that is being exploited.”

Joe Damico, executive director of the Virginia Department of General Services, told legislators he had been unaware of specific labor law violations, but promised to address the alleged violations with the Office of the State Inspector General if presented with evidence.

Dena Potter, spokesperson for the state real estate and construction agency, said Wednesday that the department “is not a party to the lawsuit, and it would be inappropriate for us to discuss pending litigation.”

Damico told the House committee that his agency is participating in a work group investigating issues of employee misclassification, based on a budget provision that requires the panel to report its findings to the General Assembly on Dec. 15.

The assembly also adopted legislation this year requiring the Department of Labor and Industry to set “prevailing wage” rates for workers on public projects and another bill that stiffened penalties for wage theft.

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