Approximately 500 construction workers will receive compensation under a settlement addressing alleged worker misclassification on construction projects across Washington, D.C. W.G./Welch Mechanical Contractors LLC has agreed to pay up to $1,706,450 and revise its subcontracting and payroll procedures to resolve a lawsuit brought by the District of Columbia's Office of the Attorney General.
The settlement follows allegations that Welch and other parties improperly classified workers as independent contractors, depriving them of employment protections and benefits. The case highlights the financial and compliance risks associated with workforce classification and subcontractor management in the construction industry.
Under the consent order, Welch will pay $691,450 to approximately 500 affected construction workers and $1 million in penalties to the District. Up to $15,000 will cover settlement administration, bringing the total payment to as much as $1,706,450.
Eligible workers are expected to be contacted by a settlement administrator within 60 days after the consent order is entered.
The lawsuit, filed in 2024, named Welch, three labor brokers and general contractor Whiting-Turner Contracting Company. The District alleged that workers supplied through labor brokers were improperly classified as independent contractors while performing construction work, reducing labor costs and denying workers benefits required by law.
The alleged losses included minimum wage and overtime compensation, paid sick leave and access to workers' compensation insurance. The settlement resolves the claims against Welch under the consent order.
Welch performs mechanical construction services, including HVAC installation, plumbing and sheet metal work. Its projects in the District have involved hundreds of workers and contracts worth tens of millions of dollars. More than 250 workers were involved in its work on the City Ridge mixed-use development along Wisconsin Avenue NW.
As part of the settlement, Welch must take steps to ensure workers on its District projects are correctly classified as employees. The requirements include collecting certified payroll reports from subcontractors and conducting random subcontractor audits.
Welch must also stop working with certain subcontractors previously associated with misclassification unless they provide documentation to the District demonstrating compliance or enter into settlement agreements resolving the allegations.
Whiting-Turner has reached a separate agreement to improve oversight across its subcontracting chain on District projects. Its commitments include requiring notifications from subcontractors, retaining records concerning workers at its project sites and incorporating contractual provisions intended to prevent misclassification.
The settlement underscores the importance of verifying worker classification throughout a construction project's subcontracting chain. General contractors and construction owners can face operational, financial and reputational exposure when labor arrangements fail to comply with applicable employment laws.
Certified payroll documentation, periodic subcontractor audits, accurate worker records and clear contractual requirements can help construction businesses identify potential compliance problems. The case also illustrates how labor practices can affect competitive bidding: improperly reducing employment costs can give noncompliant businesses an advantage over companies that follow the law.
The District's enforcement action is part of a broader effort to address wage theft and protect workers across industries, including construction. For contractors operating in Washington, D.C., the settlement reinforces the need to treat workforce classification and subcontractor oversight as core compliance responsibilities.
Source: OAG DC Gov.
