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Hawbaker Issued Second Class-Action Lawsuit

Friday, October 29, 2021

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For the second time in the past six months, State College, Pennsylvania-based contractor Glenn O. Hawbaker, Inc. has been issued a class-action lawsuit.

According to the Centre Daily Times, Hawbaker has been accused by three employees for violating the Employee Retirement Income Security Act in that the contractor used prevailing wage workers' retirement funds to pay for all employee, executive and owner retirement savings.

“Instead of putting all of the prevailing wage workers’ retirement funds into the profit sharing and 401(k) account for the worker who actually earned it, GOH stole that money and used it to pay for all GOH employees’, executives’ and owners’ retirement savings,” Attorney Mike Donavan wrote in the 39-page lawsuit. “As a result, the company’s prevailing wage workers have been left with—and continue to be left with—vastly short-changed profit sharing and 401(k) accounts.”

Marilyn Nieves / Getty Images

For the second time in the past six months, State College, Pennsylvania-based contractor Glenn O. Hawbaker, Inc. has been issued a class-action lawsuit.

Donavan reports that the allegations could date back as far as September 2012.

Previous Suit

In April, Pennsylvania Attorney General Josh Shapiro announced what was being called the largest prevailing wage criminal case on record, a multi-million theft charge against Hawbaker.

At the time, Hawbaker was 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.

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.

The 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 has gone on for “decades.” According to the AG, however, due to a statute of limitations, Hawbaker was 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 noted that it was cooperating fully with the years-long investigation.

Some months later, in August, Hawbaker was reported to have pled no contest and was sentenced for theft relating to violations of the Pennsylvania Prevailing Wage Act and the federal Davis-Bacon Act. The plea required Hawbaker to pay more than $20 million to nearly 1,300 workers in restitution, five years of probation and required corporate monitoring of the company’s practices.

“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 at the time.

“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.”

The following month, the Pennsylvania Department of Transportation asked an administrative hearing officer to sanction Hawbaker in addition to the issued charges. At the time, a PennDOT spokesperson said the proposed administrative action is not common but can be prompted by criminal prosecutions in public contracting. In this case, the Department was seeking for Hawbaker’s status as a prequalified contractor to be suspended on account of the company’s theft charges.

What Now

In a more recent case issued by previous employees, Hawbaker has been accused of violating the Employee Retirement Income Security Act, potentially dating back as far as September 2012.

According to the lawsuit, Hawbaker stole wages by using money marked for just prevailing wage workers' retirement funds and health and welfare benefits to contribute to all workers retirement funds—including owners and executives—and subsidize the cost of a self-funded health insurance plan to cover all employees.

While the contractor had pleaded no contest in its previous case, it was reported to push back against the new allegations.

“Throughout this process, Hawbaker has fully cooperated because we always believed we were following all laws. Our belief is supported by state and federal regulators, who reviewed our practices for years,” the company said. “We resolved our issues with the Office of Attorney General. As a part of that resolution, we are working proactively with the corporate monitor appointed by the court to meet our restitution obligations under the agreement with the attorney general’s office. We will vigorously defend any of these allegations.”

   

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

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