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News » US » Contractor pays $1.5m to settle allegations in wages case » published 9 May 2018

Contractor pays $1.5m to settle allegations in wages case

A construction company based in Southampton, New Jersey, is to pay US$1.5m to resolve allegations that it committed multiple violations of False Claims Act.

It is alleged that Ranco Construction secured contracts for public construction jobs despite paying its workers a lower hourly wage than required under state and federal law.

US attorney Craig Carpenito and New Jersey attorney general Gurbir S Grewal announced the settlement, which resolves a joint state and federal investigation of Ranco Construction’s labor practices. The investigation began after a former Ranco employee filed a federal qui tam, or ‘whistle-blower’, lawsuit against the company.

In that lawsuit, claim was that Ranco routinely entered into construction contracts with various state and federal entities and certified to the government that its employees were paid hourly wage rates set under federal and New Jersey prevailing wage laws.

The person making the claim alleged, however, that Ranco systematically underpaid several of its workers and then falsified company payroll records to disguise the conduct. The allegation was made by someone who worked for Ranco for a total of nine years – first as a laborer and then as an electrician – and left the company in 2016. He alleged in his lawsuit that Ranco forced him out for objecting to the company’s allegedly unlawful practices.

“Companies that contract with the federal government undertake an obligation to pay their employees a fair wage,” said Carpenito. “When contractors pay substandard wages and then falsely certify their compliance to the government, they not only cheat their employees, they also gain an unfair advantage in the contract bidding process, all at taxpayer expense.”

Grewal added: “The rules are simple: if a construction company wants to do business with the State of New Jersey, it has to pay its workers a fair wage. Ranco took the State’s money but then failed to keep up its end of the bargain. As part of today’s settlement, we are recovering nearly half-a-million dollars for New Jersey taxpayers. Just as importantly, we are sending an important message – vendors who do business with public entities in New Jersey must act with integrity and honesty, and will be held accountable if they don’t.”

The relator in the underlying qui tam will receive more than $150,000 as his statutory share of the recovery and to resolve his employment-based claims in accordance with the False Claims Act.

The civil lawsuit was filed in the District of New Jersey and is captioned United States ex rel. Robert Kleinow and the State of New Jersey ex rel. Robert Kleinow and Robert Kleinow individually v. Ranco Construction, Civ. Action No. 15-7278. The civil settlement is not an admission of liability or improper conduct by Ranco.


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This article was published on 9 May 2018 (last updated on 9 May 2018).

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