Power Design of St. Petersburg settles worker pay case for $2.75 million

ST. PETERSBURG — Power Design has agreed to pay $2.75 million to settle a lawsuit in which District of Columbia officials alleged that the St. Petersburg company short-changed hundreds of workers on wages, overtime and sick pay while avoiding payroll taxes.

In 2018, the District of Columbia Attorney General’s Office sued Power Design, which is based in the Gateway area, and two Maryland-based labor brokers, accusing them of misclassifying at least 535 electrical workers as independent contractors instead of as employees.

As a result, according to the lawsuit, those electrical workers did not receive overtime, sick pay or, in dozens of cases, even the minimum wage. Officials also said the companies also failed to pay unemployment insurance taxes.

The settlement was the largest for the district Attorney General’s Office in a wage enforcement action.

“If you cheat workers out of wages and benefits they’ve earned, or commit payroll fraud to gain an unlawful edge, you will be held accountable,” District of Columbia Attorney General Karl A. Racine said in an announcement of the settlement. In addition to Power Design, the agency has launched more than 30 payroll fraud investigations over the last three years against KFC franchises, a construction company, a sheet metal fabricator, a home health care provider, a cell phone retailer and a cafe chain.

Officials said that from 2014 to 2017 Power Design, an electrical contractor that’s completed more than 1,000 projects nationwide, worked at least 10 large construction projects in the District of Columbia, among them the edgy LINE hotel and several luxury apartment complexes.

In the settlement, Power Design denied that it had committed the violations, but agreed to pay:

• $879,056 in back wages.

• $1.82 million to the district.

• $50,000 to support apprenticeships, job training or workforce development programs for District of Columbia residents.

Power Design also must adopt policies and procedures to comply with district laws on worker classification and pay and must report to District of Columbia officials on the new policies as well as its use of subcontractors during this year and next.

“We are pleased to have reached this agreement with the District of Columbia, which we believe is in the best interest of our employees, contractors and subcontractors with whom we work,” Power Design vice president David Redden said in an email to the Tampa Bay Times. “Power Design always strives to put our team members first, whether they are our own employees or workers associated with our subcontractors. We believe this agreement allows us to uphold our commitment to our employees, while correcting any mistakes made by two of our former subcontractors.”

Redden also said the $50,000 it will pay to help establish apprenticeships is “important to us” and that the company "will continue our commitment to ensure that our subcontractors meet the same standards of fair pay, in accordance with applicable laws and regulations, that we set for our own employees.”

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In April, Power Design was ranked second among large companies in the Times’ annual Top Workplaces survey of employees at local companies. It was the eighth year the company made the Top Workplaces list.