Published Oct. 19, 2021 | Zachary Phillips
Workers brought a class action suit against one of Pennsylvania's largest road builders after the contractor pleaded no contest to charges from the state attorney general.
The legal battles continue for Glenn O. Hawbaker.
For the second time in six months, the Pennsylvania road builder faces litigation, this time in a class action lawsuit.
In addition, the state DOT is pushing for Hawbaker to be suspended from public work for three years, the AP reported. The case has been delayed after a court ruled to give Hawbaker more time to build a legal response, reported WJAC 6, a local NBC affiliate. Hawbaker received estimated payments worth $1.7 billion from the state as of 2021, making it one of the largest public works contractors in Pennsylvania.
In a lawsuit filed last week, three employees of the contractor accused Hawbaker of violating the Employee Retirement Income Security Act. Instead of placing the prevailing wage workers' retirement funds into the 401(k) account of those who earned it, Hawbaker used the funds to pay for all employee, executive and owner retirement savings, attorney Mike Donavan wrote in the lawsuit, according to the Centre Daily Times.
This resulted in prevailing wage workers being short-changed in their profit-sharing and retirement saving accounts.
The lawsuit follows on the heels of allegations made in April by Pennsylvania Attorney General Josh Shapiro, who charged Hawbaker with stealing $20 million from employees in the largest wage theft case on record.
After a three-year investigation, Hawbaker was charged with four counts of theft relating to violations of the Pennsylvania Prevailing Wage Act and the federal Davis-Bacon Act. Investigators reviewed Hawbaker's accounting records and found that, between 2015 and 2018, the contractor stole nearly $20.7 million of prevailing wage workers' fringe benefit money.
As a contractor receiving large amounts of funding from the state and federal governments, Hawbaker must pay wage rates determined by government agencies — though a portion of those wages can be provided via fringe benefits.
Same issue, new case
Hawbaker stole wages, according to investigators, 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.
In August, Hawbaker pleaded no contest — meaning the defendant does not plead guilty, but accepts conviction or sentencing as though it did — and agreed to pay more than $20 million to nearly 1,300 workers in restitution. Additionally, the company faces five years of probation, and must have a corporate monitor of their practices.
While the attorney general's investigation determined that the contractor's scheme had lasted decades, it could only be charged for the last five years due to the statute of limitations.
With this more recent case by previous employees, Hawbaker could be liable for practices as far back as September 2012. As with the no contest plea, Hawbaker has denied wrongdoing, claiming that state and federal regulators had reviewed its practices for years.
"Throughout this process, Hawbaker has fully cooperated because we always believed we were following all laws," Hawbaker said in a statement shared with Construction Dive. "We will vigorously defend any of these allegations."
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Source: HR Dive