PennDOT paving crews (Commonwealth of Pennsylvania photo)
PennDOT contractor G.O. Hawbaker Inc., which was forced to repay more than $20 million in wages stolen from its employees, lost its bid to halt the state’s process to disqualify the company from bidding on road work projects.
The state Supreme Court rejected arguments by the Centre County-based company that PennDOT lacked jurisdiction to prosecute violations of the Prevailing Wage Act, which requires contractors to pay workers a minimum wage established by the state.
In its decision overturning a lower court’s ruling, the Supreme Court also rejected Hawbaker’s argument that it did not need to go through PennDOT’s disqualification process before challenging it in court.
The Commonwealth Court last year granted Hawbaker a preliminary injunction halting the PennDOT proceeding to debar or disqualify the company as a pre-approved bidder on state funded and supervised road projects.
Hawbaker was the subject of a three-year investigation by the Pennsylvania Attorney General’s Office into its practice of using money intended for employees’ retirement funds to contribute to retirement accounts for all Hawbaker employees, including the owners and executives.
These practices allowed the contractor to underbid projects, offset other costs, and deny other companies from working throughout the state, prosecutors said.
“The men and women doing the back-breaking 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,” then-Attorney General Josh Shapiro said when he announced a plea agreement with Hawbaker in August 2021.
In the plea agreement, Hawbaker pleaded no contest to charges of theft and was required to pay nearly $20.7 million to 1,267 Pennsylvania workers and $240,562 to the attorney general’s office for costs of prosecution.
At the time, the company said in a statement that the plea agreement avoided protracted litigation that could have put the livelihoods of its employees at risk. It maintained that it did nothing wrong with regard to workers’ fringe benefits and that the practices the attorney general’s office identified as improper were based on the advice of former attorneys.
Lawyers representing Hawbaker before the Supreme Court did not return calls Monday.
In a unanimous opinion for the Supreme Court, Justice Kevin Brobson found the Commonwealth Court improperly granted the injunction and rejected Hawbaker’s argument that PennDOT lacked jurisdiction because the state Department of Labor & Industry has exclusive jurisdiction to enforce the Prevailing Wage Act.
The court found that PennDOT has the authority to disqualify contractors found guilty of crimes under the State Highway Act. It also rejected Hawbaker’s argument that it doesn’t need to exhaust its administrative remedies because PennDOT’s process does not provide constitutionally-required due process protections.
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