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PA Contractor Sentenced in Wage Case

Thursday, August 12, 2021

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A Pennsylvania contractor has pleaded no contest and has been sentenced in what’s being called the largest prevailing wage theft case in U.S. history. According to a press release from Attorney General Josh Shapiro, the plea for Glenn O. Hawbaker, Inc., includes paying more than $20 million in wages to more than a thousand workers.

“A month ago, I met with some of the men and women who had their wages and retirements stolen by Hawbaker—and I told them that we will do everything we can to get them every cent they are owed under the law. A few minutes ago, I was able to tell them that we made good on that promise,” said Shapiro.

“We took on one of the largest construction companies in the state, and now 1,267 people will have a better shot at retirement; they will get the paychecks they earned under the law; and they will have their work and their livelihoods protected and respected, instead of ignored.”

Case Background

Hawbaker was charged in April 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.

Marilyn Nieves / Getty Images

A Pennsylvania contractor has pleaded no contest and has been sentenced in what’s being called the largest prevailing wage theft case in U.S. history. According to a press release from Attorney General Josh Shapiro, the plea for Glenn O. Hawbaker, Inc., includes paying more than $20 million in wages to more than a thousand workers.

“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 at the time. “My focus now is on holding Hawbaker accountable for breaking the law and getting these workers their money back.”

The AG charged 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 concluded 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 was 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 went on for “decades,” according to the AG, however, due to statute of limitations, Hawbaker was only charged with the last five years.

No individuals were charged, and charges were filed by Supervisory Narcotics Agent Thomas Moore. The case was 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 in April, the company noted 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.”

The Plea/Sentencing

Hawbaker pleaded to four felony counts of Theft by Failure to Make Required Disposition of Funds Received. The company was sentenced to five years’ probation and agreed to several other conditions including the appointment of Corporate Monitor Alfred B. Robinson, Jr., former acting administrator for the U.S. Department of Labor Wage & Hour Division, and the payment of $20,696,453 in restitution to 1,267 affected workers.

This case was heard before the Honorable President Judge Pamela A. Ruest of the Centre County Court of Common Pleas.

“I’ve heard directly from contractors that follow the law that this enforcement helps their business, and exposing these flagrant examples of wage theft and misclassification will deter employers from engaging in the same illegal schemes. That’s why my office and our partners in law enforcement are committed to this work,” said AG Shapiro.

   

Tagged categories: Ethics; Finance; Good Technical Practice; Laws and litigation; Lawsuits; NA; North America; Regulations

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