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Companies Settle FCA Case for $4 Million for Failure to Pay Workers Prevailing Wage

Arbon Equipment Corporation and its holding company, Rite-Hite Holding Company, agreed to pay $4 million to settle a suit alleging they violated the federal and California False Claims Act by failing to pay employees prevailing wages on certain government-funded projects. A former employee, Mark Brooks, filed the qui tam suit in the U.S. District Court for the Southern District of California. Brooks and other employees installed and serviced loading dock equipment at facilities owned by the federal or California state government. Arbon and Rite-Hite, as part of the settlement, also agreed to change their compensation practices and policies.

The Service Contract Act and the Davis-Bacon Act require contractors and subcontractors working on certain government-funded projects to pay employees specified hourly wages that are higher than minimum wage and often higher than wages paid for similar work on private projects. Courts recognize that false certifications regarding the mandated payments can form the basis for qui tam actions.

Because of Brooks’ decision to blow the whistle, he will receive an award of $1,164,000. Additionally, Arbon and Rite-Hite Holding have agreed to pay approximately $1,500 to each current and former employee who was not paid the required wages.

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