Glenn O. Hawbaker Inc. to pay $21 million after pleading no contest to wage theft charges

By Jenny LescohierAugust 06, 2021

Pennsylvania Attorney General Josh Shapiro

One of Pennsylvania’s biggest contractors will pay nearly $21 million in restitution after pleading no contest to stealing from over a thousand of its employees in what is being called the biggest prevailing wage fraud case in U.S. history.

Glenn O Hawbaker Inc., a road and bridge contractor based in State College, PA, was charged with four felony counts after a three-year investigation. Pennsylvania Attorney General Josh Shapiro described the violations of the Pennsylvania Prevailing Wage Act and the federal Davis-Bacon Act as a “complex and well-disguised sleight of hand.” 

Hawbaker is a third-generation family-owned construction company with a non-union workforce that’s been in business for 70 years. It is estimated the company has worked on $1.7 billion worth of contracts between 2003 and 2018.

“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,” Attorney General Shapiro said during a press conference. 

The Pennsylvania Prevailing Wage Act and the Davis-Bacon Act were enacted to level the playing field and protect workers by ensuring that all contractors working on projects that receive state or federal funding pay the same wage rates, which are determined by state and federal agencies. Contractors are permitted to satisfy a portion of the required wage by providing so-called fringe benefits, such as health care and retirement contributions to employees.

The prosecution’s complaint said Hawbaker 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.

The complaint also said the company stole 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 complaint further stated the company 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.

As an example of alleged malpractice, in their affidavit of probable cause, investigators calculated that in 2018 Hawbaker claimed it cost $18.65 an hour to cover workers’ health and welfare costs, when in reality it cost $6.67.

“Hawbaker used its workers’ fringe benefit funds to lower their costs, and thereby increase profits for the Hawbaker family,” the attorney general’s office claimed.

“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,” concluded AG Shapiro.

A statement from the company said, “Hawbaker has always intended to properly pay all of its employees. Through the years, both state and federal regulators extensively reviewed our Prevailing Wage Act and Davis Bacon Act practices on jobs and did not find any wrongdoing. This led us to believe we were properly following all laws, and we did not plead guilty. We fully cooperated in this process and proactively addressed concerns raised by the attorney general’s office.”

Glenn O. Hawbaker is sentenced to five years’ probation and agreed to several other conditions including appointment of a corporate monitor to oversee payment of $20,696,453 to the restitution of 1,267 affected workers.

USA
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