Dive Brief:
- Pennsylvania road and bridge contractor Glenn O. Hawbaker has pleaded no contest to and been sentenced in the largest prevailing wage theft case in U.S. history, according to an announcement from state Attorney General Josh Shapiro.
- Charges were brought against Hawbaker in April. Last week, the State College, Pennsylvania, contractor agreed to pay nearly $20.7 million in restitution to 1,267 workers, according to the announcement.
- In addition, the firm faces five years of probation and other conditions, such as the appointment of a corporate monitor.
Dive Insight:
Hawbaker allegedly violated the Pennsylvania Prevailing Wage Act and the Davis-Bacon Act, which seek to protect workers by ensuring all contractors working on state or federally funded jobs pay the same wage rates, determined by state and federal agencies. Contractors can satisfy a portion of the required wage by providing "fringe benefits" such as healthcare and retirement contributions.
After a three-year investigation, Hawbaker pleaded to four felony counts of wage theft from its workers. The no contest plea means the defendant does not plead guilty, but accepts conviction or sentencing as if it did.
Shapiro’s office said that the violation occurred when Hawbaker contributed to retirement accounts for all of its workers — including owners and executives — using money intended for prevailing wage workers' retirement funds.
Shapiro also brought charges for stealing funds meant for prevailing wage workers' health and welfare benefits, using them to subsidize the cost of the self-funded plan that covers all employees. The company covered up the scheme by artificially inflating costs by millions of dollars and claiming credit for prohibited costs, according to Shapiro's office.
When charges were first brought in April, investigators determined that Hawbaker's practices had lasted decades, but the contractor could only be charged for the last five years due to the statute of limitations. Founded in 1952, Hawbaker is one of the biggest contractors to complete projects for the Pennsylvania government, receiving an estimated $1.7 billion in contracts between 2003 and 2018.
In a statement shared with Construction Dive, Hawbaker said it had followed advice from attorneys and had federal regulators review their practices on jobs, leading company officials to believe they had followed all laws.
"Our company's decision to plead no contest avoids protracted litigation, which could have jeopardized the livelihoods of our dedicated employees," the statement said. "We continue to believe that we followed all requirements regarding fringe benefits."
