Centre County company Glenn O. Hawbaker to pay $20.7M in restitution to more than 1,200 workers
Glenn O. Hawbaker Inc. was ordered to pay nearly $21 million in restitution to workers after pleading no contest to wage theft charges during Tuesday morning’s hearing in front of Centre County President Judge Pamela Ruest.
The Centre County-based construction company was charged in April with four felony counts of theft by failure to make the required disposition of funds, after an investigation into the company’s practices for calculating and claiming fringe benefit credits concluded. Pennsylvania Attorney General Josh Shapiro said the business stole more than $20 million from workers for more than three decades.
During Tuesday’s hearing at the Centre County Courthouse, Deputy Attorney General Philip McCarthy said prosecutors provided the court with 250 victim impact statements — some of those people were in the courtroom — and the company’s “crimes greatly impacted over 1,000 workers,” leaving them with “far less in retirement funds.”
At a press conference held Tuesday afternoon in Harrisburg, Shapiro said 1,267 affected workers will receive restitution payments.
In addition to the $20,696,453 restitution payment, the company will have a court-appointed corporate monitor. Alfred B. Robinson Jr. will serve in that role for the duration of the probation term. Hawbaker will have to pay all fees and costs associated with it. Robinson will submit quarterly reports during the first year of oversight, then as he deems necessary for the remainder of probation.
D. Michael Hawbaker, executive vice president of Glenn O. Hawbaker, was present for the plea and said that though the company is not pleading guilty, it does agree to pay the restitution and to have the corporate monitor to ensure state laws are followed.
As part of the probation requirements, the company must ensure the corporate monitor has access to all internal and third party documents he may need, and provide information requested. It will also follow his advice regarding Hawbaker’s prevailing wage practices.
Hawbaker is also required to pay the attorney general’s office $240,562 for investigative costs.
Hawbaker requested a fine not be imposed, due to the “substantial restitution” and oversight. Ruest did not impose a fine, saying she was happy with the restitution payment. The restitution will be paid within 120 days of Tuesday’s sentencing.
In a statement, Hawbaker said it was pleased to move forward and explained its decision to plead no contest to all counts.
“Our company’s decision to plead no contest avoids protracted litigation, which could have jeopardized the livelihoods of our dedicated employees. We continue to believe that we followed all requirements regarding fringe benefits. The fringe benefit practices challenged by the Office of Attorney General were based upon advice provided by the company’s former attorneys. Hawbaker has always intended to properly pay all of its employees.”
The company believed it was properly following all laws, the statement continued.
“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. ... We fully cooperated in this process and proactively addressed concerns raised by the attorney general’s office.”
During his press conference, Shapiro thanked employees for coming forward, resulting in the “largest prevailing wage criminal restitution award in the history of the United States of America.”
“Because you noticed that something didn’t add up and you calmly, but diligently, did something about it, you’ve won back the retirements and payments and so much more for so many people across this Commonwealth,” Shaprio said. “Your voices truly made a difference.”
Shapiro explained that the prevailing wage for an individual highway painter in Centre County is about $39. That doesn’t mean the worker is paid $39/hour; they could be earning $22 in wages. The law requires that the individual worker receive health care, retirement and “fringe benefits” that have to add up to that $39, the prevailing wage for their job.
That’s where Hawbaker stole from its employees, he said. The company reported making health care and retirement payments that people never got. Shapiro said Hawbaker told the state and federal agencies that they put half of that fringe amount into the retirement accounts of prevailing wage workers. Instead, they were spreading that money around all of the employees, regardless of the type of work they did.
“So the men and women doing the backbreaking work on Pennsylvania roadways had their retirements stolen from them by the C-suite executives who were sitting in their cozy offices on those hot summer days,” Shapiro said. “They underfunded employee retirement accounts to the tune of about $15 million between 2015 and 2018. That left employees nearing retirement with less than they had legally earned in those prevailing wage contributions, a theft that grew each and every year, as they missed out on the growth of their retirement accounts.”
He spoke of Tim Lewis, who worked for Hawbaker. Lewis went to his accountant to plan for retirement, Shapiro said.
“He gave her — the accountant — his 401(k) statements, and she couldn’t believe her eyes. She told him that the money in his account couldn’t possibly be all the money he had earned during this time working at Hawbaker,” Shapiro said.
Hawbaker also overstated the cost of its health benefits by millions of dollars, Shapiro said, to pretend that workers receive thousands of dollars in health care that they never did.
By overstating the cost of its health care plan, it allowed Hawbaker to report that they met the prevailing wage, even though they didn’t. Shapiro said when the investigation began in 2018, the company claimed that it cost them $18.65/hour to cover the health and welfare benefits of their employees. In reality, it only cost them $6.67.
In a press release, U.S. Secretary of Labor Marty Walsh said the violation of Davis-Bacon and related acts in this case is clear.
“Today’s plea and sentencing of Hawbaker Inc. is a victory for the more than 1,200 workers whose hard-earned money was stolen. Ensuring workers get all the money owed them is a priority for the U.S. Department of Labor, and our partners in state government, when they act with courage and conviction as Pennsylvania Attorney General Josh Shapiro has in this case, can help us secure more just outcomes for workers,” Walsh wrote.
Hawbaker is also defending against a class-action lawsuit brought on by a former employee. In addition to being one of Centre County’s largest employers, Hawbaker is one of the largest contractors to complete projects on behalf of the commonwealth, receiving an estimated $1.7 billion in contracts between 2003 and 2018.
This story was originally published August 3, 2021 at 11:31 AM.
