Pennsylvania Company Faces Class Action Lawsuit For Failing to Make Required Employee Benefit Contributions

A major highway contractor in Pennsylvania that has been accused by three former employees of illegally retaining welfare and pension benefits from hourly employees working on prevailing wage projects.

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In the civil case brought by three former employees regarding these allegations, the presiding judge ruled in favor of the employees earlier this month and granted their status as a class capable of bringing a class action suit. 

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These three former employees - Lester Packer Sr., Lester Packer Jr., and Shawn Dyroff - will now represent almost 1,500 people who are current or former employees of Glenn O. Hawbaker, Inc. that worked on similarly arranged prevailing wage projects for the company between September 1, 2012 and the end of 2018.

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The lawsuit was initially filed in the fall of 2021 and claimed that the defendant company violated the Employee Retirement Income Security Act and breached their fiduciary duties by neglecting to make the stipulated contributions to the employees’ benefits and retirement savings plans in accordance with the law. In fact, the allegations in this civil lawsuit are directly tied to a criminal case stemming from the same actions to which the company pleaded no-contest on multiple counts of theft and was required to pay out more than $20 million in restitution and expenses.

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Despite not contesting the charges of theft and agreeing to the massive pay-out, however, the company did not specifically admit to the underlying crimes being addressed in the current class action suit. 

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In support of finding that the class met the necessary legal requirements in size and commonality for a class action suit to proceed, the plaintiff employees pointed to the plea agreement in the original criminal case in which the company agreed to pay restitution to more than 1,200 affected current and former employees, which does not encompass the entire class of employees affected, according to the lawsuit.

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In addition to the current class action civil suit that Hawbaker, Inc. must defend itself in federal court against, the company is now also facing a related legal action filed by their insurance company, Twin City Fire Insurance of Hartford, Connecticut. In the insurance company’s view, the policy in question does not provide protection for losses stemming from the kinds of civil and criminal behavior that are alleged in these legal proceedings. Hawbaker of course comes at this issue from the opposite standpoint in this dispute, of course, and claims that their policy with Twin City Fire does cover circumstances like the ones presented in this case and requires the insurance company to disperse the funds accordingly. 

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In sum, these proceedings have serious ramifications for companies found in violation of federal law protecting employee benefit and retirement plans, and the newly verified class status of the defendants has significantly raised the stakes in terms of how much additional restitution Hawbaker may yet be on the hook for. 

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You can read more about this lawsuit and the potential implications it may have beyond the scope of this particular case here.