Former workers for Second Chance have settled a federal lawsuit with the Baltimore architectural salvage store, its founder and CEO, and a subcontractor.

The settlement, announced Monday by the workers’ attorneys, follows a September 2024 lawsuit that alleged Second Chance denied workers overtime pay and other wages because they were misclassified as independent contractors.

Dozens of workers joined the class action lawsuit, but only seven will receive $173,000 in unpaid wages and damages.

“Prolonged litigation to prove the case was without merit regarding Second Chance was not a prudent financial decision,” Second Chance founder and CEO Mark Foster said in a statement. “We chose instead to focus our energy and resources on continuing our service to the community.”

The plaintiffs worked as “deconstruction workers,” removing furniture, fixtures and other materials from residential properties along the East Coast that would later be resold at Second Chance’s store at 1700 Ridgely St. in South Baltimore.

The workers claimed that the nonprofit controlled most of their work, including location and schedules, but that they were paid through its subcontractor, 300 Painting and Remodeling LLC. The workers drove Second Chance’s vans and wore vests with the nonprofit’s logo on them, The Banner previously reported.

The plaintiffs also said they worked up to 70 hours per week, but did not receive overtime pay as required by state and federal law.

“We are truly happy with the results obtained after so many months in this process,” said Francis Betancourth in a press release on Monday, speaking on behalf of herself and the other plaintiffs.

Second Chance also is in a legal battle with the Internal Revenue Service. The federal agency found that the nonprofit had been overestimating the value of gifts from its donors in an attempt to avoid paying taxes.

The IRS began investigating Second Chance in 2021 and audited 22 donors, The Banner reported. The donors’ deductions were denied, and Second Chance and Foster were fined $1,000 per donor for a total of $22,000.

Foster also came under scrutiny last year after The Banner reported that he had used the nonprofit’s resources to build the home he lives in.

Second Chance is planning for major growth.

The organization sold 6 acres of its land for $15.5 million in 2024 to help fund its expansion and create 75 to 100 jobs, and then paid $4.5 million to acquire about 5 acres a few blocks from its showroom and warehouse for a second store.

Foster said the organization plans to open more stores, including one in Philadelphia, modeled after the Baltimore operation, in the coming years.