(The Center Square) – A contractor in State College was sentenced this week in what’s considered the largest prevailing wage criminal case in U.S. history.
Attorney General Josh Shapiro said Glenn O. Hawbaker on Tuesday pleaded to four felony theft charges for stealing $20 million in wages and health benefits from its workers since 2015, though a complex scheme that has gone on for decades longer.
“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,” Shapiro said. “A few minutes ago, I was able to tell them that we made good on that promise.”
The company was sentenced to five years probation and paid $20.7 million in restitution to 1,267 affected workers, Shapiro’s office said.
“We took on one of the largest construction companies in the state and now 1,267 people will have a better shot at retirement,” Shapiro said. “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.”
In a statement, the company said its decision to plead no contest on the charges "avoids protracted litigation, which could have jeopardized the livelihoods of our dedicated employees."
The company said its former attorneys advised that the "fringe benefits practice" used was not improper – a belief reaffirmed by reviews from state and federal regulators that "found no wrongdoing."
"We fully cooperated in this process and proactively addressed concerns raised by the attorney general’s office," the company said. "As stated by the attorney general, we are making past and present employees whole. This process will be conducted under the direction of an independent monitor."
According to court documents, a 2018 probe of Hawbaker’s financial records revealed that money was siphoned from thousands of workers’ retirement accounts to pay pensions for executive-level employees to the tune of $15 million over the past six years. The statute of limitations prevents his office from charging for any theft before 2015.
The company also inflated health care expenses through fraudulent billing to appear as if workers were receiving benefits owed to them under the state’s labor laws. Instead, Shapiro said, Hawbaker pocketed the difference.
Shapiro’s office said the company claimed its health and welfare benefits cost between $14 and $17 per hour – far higher than the $4 to $7 an hour the company actually paid.
The company maintains that it "followed all requirements regarding fringe benefits" and that it "has always intended to properly pay all of its employees."
Hawbaker received more than $1.7 billion from the Pennsylvania Department of Transportation between 2003 and 2018 for road and bridge construction projects across the state, often undercutting other companies’ bids because of the accounting gimmicks it used to shortchange workers.
And it’s far from the only contractor to do so, Shapiro said in April, noting that his office is “actively” investigating other cases where companies violated prevailing wage laws, which set a rate workers on state-funded construction projects must be paid through a combination of salary and benefits.
“This is the third in a series of prosecutions related to wage theft and misclassification over the last few months, and it isn’t the last," he said.
In March, Centre County contractor Scott Goode pleaded guilty to stealing more than $64,000 in wages and benefits from his workers on a $16 million PennDOT project in Clearfield County dating back to 2014.
“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,” Shapiro said Tuesday. “That’s why my office and our partners in law enforcement are committed to this work.”
He encouraged workers who suspect their employer violated the state’s prevailing wage to contact his office his for help.
“We will advocate for you,” he said. “If we find another business employing these kinds of schemes, we will fight to get the full paychecks you’ve earned.”