CA Contractors to Pay $4 Million to Settle False Claims Act Allegations & Wage Disputes

In a recent False Claims Act settlement, California contractors Arbon and its subsidiary Rite-Hite have agreed to pay $4 million to settle claims of unlawful wage practices involving its employees. Under the False Claims Act, it is considered a violation for a contractor to breach the terms of its agreement with the government and thereafter submit claims for reimbursement. If this occurs, anyone with original knowledge of the scheme can commence a whistleblower lawsuit, which not only exposes the fraud but can result in a sizable reward for the whistleblower relator.

In today’s case, one whistleblower did just that and exposed a fraud scheme involving the consistent and repeated underpayment of workers assigned to tasks pursuant to a services contract between Arbon, Rite-Hite, and the federal and California governments. For his efforts, the whistleblower will receive a reward totaling $1,164,000.

Details of the case against Arbon and Rite-Hite

Arbon and Rite-Hite are two companies involved in the installation and maintenance of loading dock equipment and facilities. The companies were awarded a lucrative contract to install and maintain such equipment in several federal and California state government buildings. Under the terms of the contracts with the companies, both agreed to adhere to state and federal prevailing wage requirements, which mandate that companies pay all employees a pre-determined rate for their labor. This rate is often higher than minimum wage and allows workers the opportunity to earn more per job than they would have in completing a private project.

According to the allegations, the companies had agreed to these prevailing wage requirements, but nonetheless paid their workers no higher than minimum wage. In addition to the $4 million settlement paid by the companies to avoid liability in the matter, each has agreed to revamp its compliance measures to help avoid similar issues in the future. Moreover, the company has agreed to pay $1,500 to all current and former employees who were underpaid during their time working on government contract projects. The Department of Labor will also retain $600,000 of the settlement in trust for any employees who can prove they worked on Arbon’s projects and were underpaid as a result of the fraud scheme.

Counsel for the whistleblower said in a statement, “This hard-fought lawsuit shows the power of the False Claims Act to encourage whistleblowers, and to incentivize companies to comply with the law….In addition, this lawsuit demonstrates that qui tam actions under the False Claims Act can be an important tool for enforcing the Davis-Bacon Act and other prevailing wage laws.”

The whistleblower in the case similarly said, “It feels good to have helped my fellow employees.”

Contact Berger Montague today

If you are aware of similar underpayment of employees by your employer and would like to discuss whether the False Claims Act applies to your situation, please contact our office as soon as possible to discuss your case.