The Pennsylvania Attorney General’s Office on Thursday accused a major State College-based contractor of stealing $20 million in wages from thousands of employees dating back to 2015.
Glenn O. Hawbaker Inc. was charged with four felony counts of theft by failure to make required disposition of funds following a three-year investigation.
Hawbaker is accused of violating the Pennsylvania Prevailing Wage Act and the federal Davis-Bacon Act, laws that require companies hired for public projects to pay workers a set rate determined by state and federal agencies.
Attorney General Josh Shapiro said it is the largest prevailing wage criminal case on record.
“My focus now is on holding Hawbaker accountable for breaking the law, and getting these workers their money back,” Shapiro said.
Hawbaker, a family-owned company that has been in business for 70 years, is one of the largest construction contractors in Pennsylvania and between 2003 and 2018 the company was awarded $1.7 billion in contracts from PennDOT alone.
“Upon learning of the Attorney General’s investigation in 2018, we have cooperated fully. 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” a statement from Glenn O. Hawbaker Inc. said. “These changes remain in effect today as we continue to do what’s right for our employees, both past and present. Our company will continue to work constructively with the Attorney General’s office to reach a swift resolution. Since 1952, Glenn O. Hawbaker’s mission has been to build, serve and advance local communities, and that will never change.”
Under prevailing wage laws, all of the set rate must be paid to the worker in the form of wages and fringe benefits.
Shapiro alleges that Hawbaker was “engaged in a massive, unprecedented fraud on two distinct fronts.”
The company is accused of using money intended for prevailing wage workers’ retirement funds to contribute retirement accounts for all Hawbaker employees, “essentially taking from one group of workers to pay for the rest of the company,” Shapiro said. That resulted in workers receiving less money in their retirement accounts than they were owed.
The company also allegedly took funds that should have gone to prevailing wage workers’ health and welfare benefits and used them to subsidize the cost of a self-funded health insurance plan that covers all employees.
Hawbaker artificially inflated “its records of benefit spending by millions of dollars each year and [claimed] 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,” according to the Attorney General’s Office.
Shapiro said that in 2018 the company claimed it cost $18.65 an hour to cover prevailing wage workers’ health and welfare costs but in reality it was $6.67. The difference should have gone to the employees’ wages and benefits, Shapiro said.
“Keeping this money allowed them to do the following: They could underbid honest companies by using the money they were stealing from workers to offset their other costs,” he said.
Investigators allegedly found Hawbaker employed the practices for decades, but because of the statute of limitations could only be charged back to 2015.
Shapiro noted that Hawbaker has been cooperative with the investigation.
The Attorney General’s Office will be reaching out directly to individuals who allegedly lost wages, but also encourage those who believe they were affected to call a special hotline established at 814-746-3518.
The company waived a preliminary hearing and a formal arraignment is scheduled for May 12.
Hawbaker is the second Centre County contractor to face criminal charges related to prevailing wage law violations. Last month, Goodco Mechanical and its owner pleaded guilty to misdemeanor theft charges following accusations that they deliberately misclassified workers on prevailing wage jobs to pay a lower rate.
“Employers across this commonwealth, you are on notice: if you steal from your employees, if you misclassify workers, if you violate our labor laws, we are going to find out, we are going to hold you accountable, and we will do all we can so Pennsylvania workers receive the wages and benefits owed to them under the law,” Shapiro said.
