Facing two class-action lawsuits, Glenn O. Hawbaker Inc. loses insurance coverage battle
A major construction contractor that is one of the largest employers in Centre County was handed another legal defeat Tuesday, the latest in a string of mounting legal woes.
Glenn O. Hawbaker Inc.’s insurance company does not have to provide coverage, including any defense, for the business as it fights two class-action lawsuits, Chief U.S. Middle District Judge Matthew Brann ruled for a second time.
Hawbaker asked the federal judge to reconsider his August ruling, which found Twin City Fire Insurance had no obligation to provide coverage for any claims that arise from allegations of unpaid wages or benefits.
Messages left with attorneys for Hawbaker and the insurance company were not immediately returned Wednesday.
Each of the ongoing class-actions lawsuits against the company allege Hawbaker failed to pay wages in a timely fashion, misappropriated retirement funds and violated state and federal wage payment and collection laws.
At least one suit covers more than 1,250 current or former hourly wage employees who worked on prevailing wage projects from Sept. 1, 2015 through Dec. 31, 2018.
The business pleaded no contest in 2021 to illegally diverting millions of dollars and other benefits from its workers to pad its profits, undercut competitors and pay for internal projects and company bonuses.
Hawbaker agreed to repay more than $20 million to workers and hired a corporate monitor to provide oversight. In exchange, state prosecutors agreed to not bring criminal charges against executives, shareholders or employees.
In short order, the company and its executives found themselves on the wrong side of the lawsuits. Hawbaker claimed it was covered under its insurance policy, but was turned away by both the insurance company and Brann.
“A finding of no coverage in this case is consistent with the purpose of wage and hour exclusions, which is to avoid the ‘moral hazard’ created by an incentive to violate wage and hour laws and offload the cost to the insurer,” Brann wrote in August. “It is of little significance that GOH has made a restitutionary payment to the Class Action Plaintiffs. The temptation to violate wage and hour laws would still exist if the only consequence was to pay restitution and employers could externalize any subsequent liabilities.”
It’s the second legal loss for Hawbaker in less than a month.
Pennsylvania’s highest court in November ruled the state Transportation Department has the authority to pursue a potential suspension that’d prevent the company from doing state work for up to three years.
Hawbaker has been pre-qualified to bid on PennDOT projects for decades. The business booked $1.7 billion in state transportation construction contracts between 2003 and 2018.
