Contractor Agrees to Pay $1.7M for Worker Misclassification Scheme

construction workers

Frederick, Maryland-based W.G./Welch Mechanical Contractors, LLC will pay more than $1.7 million to settle a District of Columbia lawsuit accusing it of misclassifying about 500 construction workers as independent contractors, DC Attorney General Brian Schwalb announced. Under the consent order, Welch must pay $1 million in penalties to the District and $691,450 to the affected workers, who were left without minimum wage guarantees, overtime pay, sick leave or workers’ compensation insurance.
The 2024 lawsuit alleged Welch used third-party labor brokers to classify workers as independent contractors, cutting labor costs and gaining an unfair advantage when bidding on major local projects.
Over half of the affected employees worked on the City Ridge mixed-use development on Wisconsin Avenue NW, where Welch handled plumbing and HVAC installation. General contractor Whiting-Turner Contracting Company was also part of the settlement.
Welch must now conduct random audits and require certified payroll reports from its subcontractors. It is also barred from working with certain subcontractors previously tied to misclassification unless they prove to the city that they have cleaned up their practices. Whiting-Turner reached a separate agreement to enforce stricter record-keeping and oversight across its subcontracting chain.

The North Carolina Court of Appeals ruled Oct. 7 in an unpublished opinion that a worker must undergo recommended shoulder surgery or lose his temporary total disability benefits, affirming the Industrial Commission’s Feb. 18, 2025, opinion and award. If Galich refuses, he is deemed to have reached maximum medical improvement and SIPA North America and its carrier are no longer required to pay the weekly benefits. The court said his personal fear of the procedure has no bearing on the reasonableness test.
The worker, a field service engineer for SIPA, hurt his right shoulder tightening bolts on a machine in February 2020. The claim was accepted, and he began receiving $1,066 a week from New Hampshire Insurance Company. An MRI showed a Type 2 labral tear, and two of his treating doctors recommended biceps tenodesis surgery. Both testified it is low risk with an 80% to 90% chance of significant improvement.
The worker declined the surgery and has sought no further treatment or returned to work since June 2021, though he continued to receive benefits. He also backed out of a different procedure recommended by two other doctors after researching the surgeon.
The Commission found his refusal unreasonable because the surgery is not of serious magnitude and risk, does not involve much pain and suffering and is not of uncertain benefit.

Mental health conditions were the primary injury in about 35,000 of the 12.9 million paid workers’ compensation claims the Workers Compensation Research Institute analyzed across 31 states over 10 years. The claims remain rare, about three in every 1,000, but their frequency rose 47% over the decade. The study excluded claims in which a physical injury was the primary diagnosis and a mental health condition followed.
Higher-paid workers accounted for a disproportionate share. Workers in the top quarter of wages filed mental health claims at more than four times the rate of the lowest-paid 10%. Top earners account for 15% of all comp claims in the study but 32% of mental health claims.
Women accounted for 59% of mental health claims, compared with 42% of workers’ compensation claims overall, and their mental health claim rate was twice that of men.
Mental health claims also made up a larger share of claims among longer-tenured employees, peaking at four to eight years of service, and among workers ages 35 to 44. Workers under 25 had the lowest share.