D. C. Project: Slow or No Pay for Subcontractors

Companies struggle to get paid for building first new D.C. homeless family shelter

An exterior view of the Kennedy, a new homeless shelter in Northwest Washington where officials celebrated a ribbon-cutting ceremony on Sept. 26, 2018. The companies that worked to build the shelter are now locked in a payment dispute. (Fenit Nirappil/The Washington Post)

July 24 at 4:45 PM

D.C. Mayor Muriel E. Bowser (D) last fall proudly celebrated the opening of the first new homeless family shelter, part of a network of planned smaller facilities to replace the troubled D.C. General megashelter.

But almost a year later, a host of local companies that built the shelter in Northwest Washington known as the Kennedy have been struggling to get paid.

Businesses that furnished the 45-unit shelter, handled landscaping and built its heating and air conditioning system say the general contractor on the project has refused to fully compensate them.

The dispute escalated to a point in February when the D.C. government threatened to ban the developer, 5th Street Partners, and Moseley Construction, which oversaw the subcontractors, from receiving new city contracts.

At least 16 companies involved in the project started receiving checks late last week, after The Washington Post inquired about the situation, city officials said.

“We were not going to sit by idly and allow these people to not be paid,” said Keith Anderson, director of the D.C. Department of General Services, the agency overseeing the construction of new homeless shelters.

One of the family rooms available at a new homeless shelter in Ward 4, shown during a tour in September 2018. The company that furnished the shelter said it has struggled to get paid for its work for more than a year. (Fenit Nirappil/The Washington Post)

But his agency refused to detail whether the payments were partial or full and how many claims are still outstanding, saying those details are a matter between the construction company and its subcontractors.

Some of the businesses reached by The Post said their disputes have not been resolved and that the damage to their livelihoods cannot be undone.

Hugee Corporation, which installed the shelter’s heating and cooling systems, was able to secure $170,000 from the project’s bonding company, an entity that can resolve payment disputes, but is still fighting for another $80,000.

Perry Hugee, the company’s president, said any profit from working on the shelter would be wiped out by the costs of borrowing money and paying interest to suppliers while waiting for payment.

“How many minority contractors can stay alive after being owed all that money?” Hugee said. “I would have been better off telling them, ‘No thank you,’ and writing a check for $30,000 and giving it to the homeless shelter.”

On government construction projects, the city generally enters into a contract with a private business that submits the best proposal.

The city sets targets for contractors to subcontract a portion of the work such as electricity or roofing to local companies, with preferences for those owned by women or people of color. The city is not directly responsible for paying subcontractors.

The District awarded the contract to manage the $14 million Ward 4 homeless shelter project without competitive bidding to 5th Street Partners, which in turn hired Moseley Construction to oversee construction and enlist other subcontractors.


Permit Application Enhancements

June 10, 2019


Content provided by: Department of Consumer & Regulatory Affairs

Permit Application Enhancements


The Department of Consumer and Regulatory Affairs (DCRA) is streamlining the construction permitting process starting with updates to the online building permit application. This will be the first of a series of enhancements geared towards improving the customer application submittal experience.
Effective June 29, 2019, the following are required for all building permit applications at the specified time noted below:
At application submission:

  • Documentation supporting the estimated construction value


Before permit issuance:

  • Contractor, subcontractor and registered design professional information


In addition, the following changes will be made to the permit application system in the June 2019 release:

  • Editing capability for contractor, subcontractor and registered design professional information before and after application submission
  • Automatically populated information that includes building age
  • Elimination of redundant information in the “Green Building” section
  • Statistical data gathering for Opportunity Zone financing and Affordable Housing Projects


Coming soon:

  • Elimination of the requirement to submit a brand new application for permit revisions

Stay tuned to learn of additional application enhancements to come. Click here for more information and frequently asked questions.

Permit Application Enhancements FAQs

If you have any questions regarding this communication, please contact DCRA’s Customer Service Department at DCRACS@dc.gov. DCRA actively uses feedback to improve our delivery and services; please take a minute to share your feedback on how we performed in our last engagement. Subscribe to receive DCRA news and updates.


Standing Up for District Workers

May 13, 2019

Standing Up for District Workers


From the Office of the Attorney General


A study by the Economic Policy Institute found that low-wage workers lose an average of $64 per week—or more than $3,300 per year—when employers refuse to pay employees what they are rightfully owed. This is called “wage theft” and it is illegal in the District of Columbia.











In instances where employers take advantage of their workers, the Office of the Attorney General (OAG) can take legal action to hold them accountable. Last week, we announced our largest wage theft win to date. OAG secured a settlement with Airway Sheet Metal Co. that will provide more than $100,000 in unpaid wages to 40 workers. Our investigation found evidence that, from 2015 to 2017, Airway failed to properly pay its workers overtime rates and failed to provide them with any paid sick leave, as required by District law.

Last year, OAG stepped up wage theft enforcement after working with the D.C. Council on legislation granting the agency independent authority to investigate and bring these cases. To date, OAG has obtained over $250,000 in judgments and settlements against businesses that have stolen wages from District workers.

If you believe your rights have been violated by your employer, report it to OAG at (202) 442-9854 or submit a complaint to the Department of Employment Services. Workers can also learn about their rights to fair wages, overtime pay, and sick leave with our free resources.

OAG will continue to hold employers accountable when they fail to pay workers what they have rightfully earned.




Karl A. Racine
Attorney General

Honoring Mr. David Bailey & his political efforts in the Commonwealth of Virginia

April 19, 2019

ACE representatives where among the large group of legislative clients, elected representatives, friends, and family members who attended a tribute honoring David Bailey of David Bailey Associates on April 16, 2019 in Richmond, Virginia. Mr. Bailey was recognized for his 40+ years of non-partisan involvement in the political process within the Commonwealth.

ACE Legislative Dinner – February 6th

April 6th, 2019


The Alliance for Construction Excellence (ACE) hosted a legislative dinner in early February 2019. The ACE Committee had the opportunity to mingle and eat dinner with important members of the Maryland General Assembly, the Senate Finance and House Economic Matters Committee.

Attendees shared visions with influential members of the legislature and discussed pertinent issues that affect our contractors. This dinner was a huge success and we look forward to continue to develop the relationships that we formed with these important leaders and stakeholders.












Construction Industry Tax Rip-Off Estimated at $2.6 Billion -1.2 Million Construction Workers Paid Off-the Books

March 15, 2019

United Brotherhood of Carpenters and Joiners of America (UBC)


Matt Capece

Special Representative to the General President


For Media Inquiries:

Justin Weidner



For immediate release –

March 14, 2019


Construction Industry Tax Rip-Off Estimated at $2.6 Billion

-1.2 Million Construction Workers Paid Off-the Books-


Washington, D.C. – The tax fraud epidemic in the construction industry is costing state and federal taxpayers in the United States at least $2.6 billion a year, according to a new estimate done by Smart Cities Prevail for the United Brotherhood of Carpenters (UBC).


“It is a conservative estimate,” said Frank Spencer, UBC General Vice President. “We found 1.2 million construction workers are paid off the books each year.  Another 300,000 are called independent contractors when they’re really employees, so no tax deductions and they’re stripped of protections.  That’s shocking.  Think about it: The number of construction workers forced to work off-the-books is about four times greater than the number of misclassified workers. There’s no mistaking the blatant tax fraud.”


D.C. board won’t penalize company at center of massive wage-theft case


September 3, 2018

D.C. Attorney General Karl A. Racine is suing a Florida-based electrical contractor that has worked on some of the city’s most high-profile construction projects, saying the company is at the heart of the largest wage-theft case his office has ever prosecuted.

But a District regulatory board that vets contractors says it won’t penalize the company, Power Design, and will continue to allow it to participate in an apprenticeship program highly valued by companies in the building trades.

The allegations against Power Design are concerning, said Fred Howell, chair of the D.C. Apprenticeship Council, which considers applications to the program. But because the lawsuit doesn’t involve workers in the apprenticeship program, the council isn’t responsible for holding the company accountable, he said.

“Under our purview, we can only go so far and deal with so much,” Howell said at a council meeting Thursday.

He said the council can’t be “an empirical governing body on everything that happens.”

But another member of the Apprenticeship Council asked his colleagues to consider rescinding Power Design’s apprenticeship program until the lawsuit is resolved.

“We as a council are sanctioning them on behalf of the District government,” Steve Lanning said at the meeting. “Serious issues have been raised now about the business practices that I think, we as a council, we don’t want to just greenlight this.”


D.C. sues electrical contractor for allegedly cheating workers out of pay, benefits

The electrical company that worked on the Line DC hotel, among other projects, has been sued by D.C. Attorney General Karl Racine.

By  – Digital Producer, Washington Business Journal

Key story highlights:

  • D.C. Attorney General Karl Racine is suing an electrical contractor and two “labor brokers” for misclassifying employees to save costs.
  • Power Designs allegedly defined its employees on about a dozen D.C. projects as independent contractors.
  • The lawsuit, if successful, could result in millions in back pay due plus penalties.

The District is suing Florida-based electrical contractor Power Designs Inc. for allegedly misclassifying more than 500 employees as independent contractors, stripping them of thousands of dollars in wages and benefits.

The lawsuit filed Monday in D.C. Superior Court is also levied against JVA Services LLC and DDK Electric Inc., two Maryland-based “labor brokers” that were allegedly hired to staff Power Design work sites, according to a press release from D.C. Attorney General Karl A Racine‘s office.

“When companies misclassify employees as independent contractors, they steal from their workers and gain an unfair advantage over competitors that follow the law,” Racine said in the release. “Today’s lawsuit is about protecting employees and businesses that play by the rules and punishing businesses that do not.”

Power Design spokesperson Rachel Podos said in an email the company has “not been served or heard anything yet” but that “Power Design believes we are in compliance with all applicable laws and regulations in D.C.”

In the District, it is a violation of the Workplace Fraud Act to misclassify a worker as an independent contractor, Racine said. To classify a worker as an independent contractor, a company must prove that worker operates independently, is typically self-employed and their work falls outside of the core business of that company.

Companies are not required to pay independent contractors minimum wage, contribute toward their state and federal taxes or provide overtime pay and other benefits, per an OAG release.

The complaint claims Power Design, JVA Service and DDK Electric violated the District’s Workplace Fraud Act, which applies only to the construction sector, Minimum Wage Revision Act, Sick and Safe Leave Act and the Unemployment Compensation Act from 2014 to 2017. Specifically, 535 workers were misclassified, it alleges, while at least 64 employees were paid less than the minimum wage and 180 were not paid overtime.

The complaint estimates that Power Design brings in $100 million in annual revenue. It has worked on 10 large construction projects in the region, including the Line DC hotel in Adams Morgan and several apartment complexes.

Racine is seeking “tens of thousands of dollars” worth of damages, including wage relief for the workers and unpaid employment insurance taxes, plus penalties between $1,000 and $5,000 for each misclassified worker and for each failure to keep payroll records, potentially adding up to millions more dollars in fines.

Employment Services Department

The DC Department of Employment Services has issued proposed regulations for the Universal Paid Leave Program. A copy of those proposed rules is attached. Should you wish to provide comments on the proposed regulations please do so prior to the deadline. Since the rules were published in the D.C. Register in early April, they will remain open for public comment in not less than thirty (30) days after publication of the notice. Deadline is Monday, May 7th.

The bill which passed on April 7, 2017, covers anyone working in the District even though the company is domiciled in Maryland or Virginia. The Act provides covered employees with 8 weeks of paid parental leave, 6 weeks of paid family leave, and 2 weeks of paid personal medical leave.  The paid leave will be funded by a 0.62% increase in DC employer payroll taxes.

Employers need to be aware that this bill covers District residents as well as those from Maryland and Virginia if they are working in the District. However, it does not cover a District resident who is working in another jurisdiction. Under the Act, “eligible individuals” may request paid leave following the occurrence of certain qualifying events, subject to a one-week waiting period during which time no benefits are payable. “Eligible individuals” include: (1) individuals who have been “covered employees” during some or all of the 52-week period preceding the occurrence of a qualifying event; or (more…)