Bellefonte, Pa. -- "The contributions didn't add up," said one previous Glenn O. Hawbaker, Inc. employee.
"I thought I was working for a family business, but it's their family, nobody else's," said another.
From pipe layers, construction workers, to truck drivers, more than 1,200 workers who were employed between 2015 and 2018 for Glenn O. Hawbaker in State College will be reimbursed for the money Attorney General Josh Shapiro said Glenn O. Hawbaker stole from them.
After a pleading no contest in court today in front of Centre County President Judge Pamela Ruest at the Centre County Courthouse, the company is ordered to pay $20,696,453 in restitution. Each employee named in the settlement will get exactly what was stolen from them, said Shapiro.
The thefts were in contributions to healthcare, retirement, and fringe benefits for employees working under prevailing wage.
"What the prevailing wage requirement means," said Shapiro, "is that workers are ensured to make a fair wage." The amount is set by state and federal agencies, and contractors must agree to those prevailing wages in order to win a state contract.
In the case of Glenn O. Hawbaker, the prevailing wage was $39 an hour. "That doesn't mean that's what employees saw on their paycheck," said Shapiro. Most would see $22 an hour in wages, and the rest is spread between health care costs, retirement benefits, and the fringe benefits.
"It was a sophisticated scheme, carefully carried out," said Shapiro. The company was spreading the money around to all Hawbaker workers in the company, so while the prevailing wage employees were laboring in the field, the executives and owners were also collecting on the wages, he explained.
The underfunded retirement accounts was "a theft that grew each and every year," according to Shapiro, as the accruals were not based on the entire amount owed to each employee.
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.
Hawbaker said they have always intended to properly pay all of its employees.
According to a statement issued after Shapiro's announcement, "Hawbaker is pleased to bring this process to a conclusion and focus on the future. Our company’s decision to plead no contest avoids protracted litigation, which could have jeopardized the livelihoods of our dedicated employees," the statement read.
"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.
"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."
Hawbaker claimed to fully cooperate in this process. "We proactively addressed concerns raised by the attorney general’s office. 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.
"We now look forward to continuing to deliver outstanding service to our customers and providing opportunities for our dedicated team members," the statement said.
It will be up to the state to decide whether they will award contracts to Hawbaker going forward, according to the AG's office, which did not opt for specific criminal liability for individuals of the company, but rather to send a message that the state will hold companies who break the law in this way accountable.
During his press conference on Tuesday, Shapiro guessed that the shceme may have been going on prior to 2015; however, presumed illegal activity prior to that time falls outside of the statute of limitations. Whether a recovery fund will be set up for employees who claim thefts against their retirement will be a decision left to the legislature, Shapiro said.