Systemic Wage Theft Exposed in D.C. Affordable Housing Sector

A recent report by the Washington Lawyers’ Committee for Civil Rights and Urban Affairs, titled "A Rotten Foundation: Wage Theft in the District of Columbia’s Affordable Housing Construction," has brought to light systemic wage theft in Washington, D.C.'s affordable housing sector. The report, released on September 5, 2025, highlights the misclassification of workers and inadequate enforcement of wage laws, undermining the city's substantial investments in affordable housing.

Over the past decade, D.C. has allocated significant resources toward affordable housing, including a $1.4 billion investment under Mayor Muriel Bowser's administration. Despite these efforts, the report reveals that wage theft remains pervasive, with contractors frequently misclassifying workers as independent contractors. This practice allows employers to evade obligations such as overtime pay, benefits, and payroll taxes, depriving workers of rightful earnings and resulting in significant tax revenue losses for the District.

The report identifies several contractors and subcontractors as repeat offenders in wage theft cases. Notably, in August 2023, Prestige Drywall agreed to pay over $600,000 in restitution and penalties for misclassifying workers, leading to unpaid overtime and benefits. The company was also barred from operating in D.C. for five years. Similarly, in July 2024, Power Design paid $3.75 million to settle allegations of misclassifying over 1,200 construction workers, marking the largest recovery in a workers’ rights enforcement action in D.C. history.

The report also highlights a March 2023 case where the U.S. Department of Labor recovered $633,029 in back wages for 84 workers denied their full wages and benefits by subcontractors involved in the construction of an affordable housing development in Southeast D.C. These cases underscore a troubling pattern of wage theft in publicly funded projects aimed at alleviating poverty.

D.C. Attorney General Brian L. Schwalb emphasized the broader implications of such practices, stating, "Worker misclassification harms hard-working Washingtonians, deprives the District of tax revenue needed to fund critical citywide programs, and unfairly undercuts law-abiding competition." The report suggests that while D.C. has robust wage theft laws, lax enforcement contributes to the problem, with contractors often viewing lawsuits as a cost of doing business.

The Washington Lawyers’ Committee's report recommends several measures to address wage theft in the affordable housing sector:

• Enhanced Enforcement: Implementing more rigorous on-the-ground enforcement of wage laws to ensure compliance.

• Audits: Conducting regular audits of the D.C. Housing Production Trust Fund to ensure funds are used appropriately.

• Increased Funding: Allocating additional resources to the D.C. Office of Attorney General’s Workers’ Rights Section to bolster enforcement capabilities.

• Inter-Agency Collaboration: Improving coordination among various agencies to address wage theft comprehensively.

• Strengthening Laws: Amending existing wage theft laws to close loopholes and enhance worker protections.

• Union Contractors: Encouraging the hiring of union contractors to promote fair labor practices.

The report underscores the need for systemic reforms to protect workers and ensure the integrity of D.C.'s affordable housing initiatives. By addressing wage theft, the District can better fulfill its commitment to providing quality housing for low-income residents while upholding fair labor standards.