Washington L&I investigates alleged wage theft at Lynnwood construction site

The Washington State Department of Labor and Industries has launched an investigation into alleged wage theft and worker exploitation at the Enso Apartments construction project in Lynnwood after workers reported that subcontractors withheld overtime pay and other benefits.

Representatives of the Western States Regional Council of Carpenters say the case reflects a broader industry problem and are calling for requiring oversight and accountability requirements for contractors.

The allegations involve subcontractor GMH Drywall LLC, which workers say routinely denied them legally required overtime pay and sick leave — violations of state law.

Matt Ross, public affairs manager for the Department of Labor and Industries, confirmed the investigation but said he could not release further details until it is complete.

Union representatives Zach McCown, Victor Ochoa and Luis Aroche said workers reported being denied overtime pay despite working up to 50 hours a week — sometimes 10 hours a day, six days a week. Though the workers were not union members, the council visits nonunion job sites to ensure employees know their rights.

At its peak, the job site employed 50 to 60 workers. Council representatives believe most of them were shorted on overtime and benefits, a practice they allege is common for that contractor.

Workers were often unaware of their right to time-and-a-half pay after 40 hours, Ochoa said. According to the council, contractors manipulated pay by offering small hourly increases — for example, $32 instead of the $30 base rate — to make employees believe they were being compensated for overtime. Workers were also allegedly denied sick pay.

Aroche said such practices are part of the “underground economy,” where contractors “cheat the system” through tax fraud, cash payments and worker misclassification. McCown added that payroll fraud is also a concern, noting that while deductions for Social Security and Medicare may appear on pay stubs, those funds are sometimes never sent to the government — especially when workers are classified as 1099 independent contractors.

“These jobs are a crime scene in my opinion,” Ochoa said. 

Many workers have been reluctant to speak out due to fear of retaliation or losing their jobs. On private projects like Enso, those who file complaints with the Department of Labor and Industries cannot remain anonymous, which McCown said discourages whistleblowers. He urged the department to allow anonymous reporting to protect workers.

GMH Drywall has not publicly addressed the allegations. The project’s developer, American Construction Group, reportedly said four or five workers had been affected and have since been paid. Aroche disputed that number, saying many more workers reported missing wages. He believes the subcontractor may have paid only those suspected of reporting violations.

The council’s goal, the representatives said, is to “clean up the industry,” including a push for better laws on the matter and a full audit by the state Attorney General’s Office.

Currently, there are no measures in place to ensure contractors and subcontractors are treating employees fairly and complying with the law. McCown said he hopes state lawmakers will pass “up-the-chain” responsibility legislation to hold contractors accountable. 

“The job ultimately gets done, but the person at the bottom doing it is the one getting cheated,” McCown said. “Until we can hold the general contractors and developers financially accountable… there’s no way this ever gets better.”

While Snohomish County and Everett have advanced local workforce policies, McCown said the City of Lynnwood has yet to implement Project Labor Agreements or Community Workforce Agreements. These agreements require general contractors to hire responsible firms, use apprenticeships and employ local workers, including women-, veteran- and minority-owned businesses. The Lynnwood City Council earlier this year discussed requiring such agreements for city projects, but has yet to take action. 

In September 2024, the City of Lynnwood granted contractors a $6.2 million Multi-Family Tax Exemption for the Enso project. 

“The citizens of Lynnwood may not understand that they’re the ones that foot this bill,” Ochoa said. 

At the end of the day, ethical labor agreements, especially for publicly funded projects, benefit the entire community, McCown said.

“If citizens of Lynnwood are building a project in Lynnwood that taxpayer dollars from Lynnwood are funding, it’s a really good win for everyone,” he said. 

“It costs too much to not get paid enough,” McCown continued. “These workers that are getting cheated are now having to worry about getting groceries on their table, putting gas in their tank, the bare necessities that some people take for granted. These are the people who are building the city, this is just wrong on so many levels.” 

Those experiencing or know someone who has experienced workforce exploitation can reach out to the carpenters council directly. Contact details and other information can be found on the council’s website. Those interested can also visit togetherforourrights.com for more resources. 

— Contact Ashley at ashley@myedmondsnews.com.