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PA Charges Contractor in 'Largest Prevailing Wage Case'

Thursday, April 15, 2021

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In what is being called the largest prevailing wage criminal case on record, Pennsylvania Attorney General Josh Shapiro announced a multi-million theft charges against a State College, Pennsylvania contractor.

According to the announcement, Glenn O. Hawbaker, Inc., has been charged with four counts of theft relating to violations of the Pennsylvania Prevailing Wage Act and the federal Davis-Bacon Act. Hawbaker is one of the largest contractors to complete projects on behalf of the Commonwealth, receiving an estimated $1.7 billion in funding as of 2021.

“This is the largest prevailing wage criminal case on record—under Pennsylvania prevailing wage law and across the United States under federal law,” said Shapiro. “My focus now is on holding Hawbaker accountable for breaking the law and getting these workers their money back.”

Marilyn Nieves / Getty Images

In what is being called the largest prevailing wage criminal case on record, Pennsylvania Attorney General Josh Shapiro announced a multi-million theft charges against a State College, Pennsylvania contractor.

The AG charges that Hawbaker took advantage of the “fringe benefit credit” that’s part of the wage laws. Allegedly, Hawbaker used its workers’ fringe benefit funds to lower benefit costs, and thereby increase profits for the company and company’s owners.

“This is the third in a series of prosecutions related to wage theft and misclassification over the last few months—and it isn’t the last. Too often, the workers that get stolen from are underpaid, have been denied benefits, and have been put into dangerous situations without appropriate training. My Office is committed, with our partners in law enforcement, to keep fighting until workers are treated right,” said Shapiro.

These charges conclude a three-year investigation into the company’s practices for calculating and claiming fringe benefit credits. According to the AG, investigators discovered that the company stole wages from its workers by using money intended for prevailing wage workers’ retirement funds to contribute to retirement accounts for all Hawbaker employees—including the owners and executives. As a result, workers received less money in their retirement accounts than what was owed.

Hawbaker is also accused of stealing funds intended for prevailing wage workers’ health and welfare benefits and used them to subsidize the cost of the self-funded health insurance plan that covers all employees. The company allegedly disguised its scheme by artificially inflating its records of benefit spending by millions of dollars each year and claiming credit for prohibited costs. Those measures created the appearance that it provided employees with benefits that far exceeded the cost of those that it actually did.

Investigators believe that the behavior has gone on for “decades,” according to the AG, however, due to statute of limitations, Hawbaker is only being charged with the last five years.

No individuals were charged, and charges were filed by Supervisory Narcotics Agent Thomas Moore. The case is being prosecuted by Deputy Attorneys General Philip McCarthy and Lisa Eisenberg, Senior Deputy Attorney General Anthony Forray, and Chief Deputy Attorneys General Nancy A. Walker and Kirsten Heine.

In a statement from the company’s attorneys, the company notes that it has cooperated fully with the years-long investigation.

“While we believe that we have always acted in accordance with all state and federal laws, in an abundance of caution, the company immediately changed its prevailing wage practices,” the company’s attorneys wrote. “These changes remain in effect today as we continue to do what’s right for our employees, both past and present.”


Tagged categories: Business matters; Ethics; Fraud; Good Technical Practice; Laws and litigation; Lawsuits; NA; North America

Comment from Gregory Stoner, (4/15/2021, 11:47 AM)

I find it surprising that this could have gone on long enough that the statue of limitations had been exceeded in some part. The duty of pension fiduciary’s should have caught deceptive practices early on which could have warned other entities to this much earlier. Hopefully lessons will have been learned to keep other companies from doing the same things. Realizing that business is the business of business it should be governments job of overseeing them.

Comment from Ken Donnelly, (4/16/2021, 8:56 AM)

I'm shocked, shocked to find that gambling is going on in here!

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