Businesswoman charged in prevailing wage case; employees lost $240,000
A Loretto business owner has been charged with five counts of theft by swindle for failing to pay 22 employees the prevailing wage on state and local road projects, short-changing the workers $242,000, Hennepin County Attorney Mike Freeman announced Thursday.
Laura Lee Plzak, 53, was charged last week following an extensive investigation by the FBI and the Minnesota Department of Transportation. Her first appearance has not yet been set.
“On the eve of International Workers’ Day, it is appropriate to point out that a few employers still want to cheat their workers out of the wages to which they are entitled,” Freeman said. “We are more than willing to charge those cases when federal or state investigators bring them to our office. In this case, electricians who have to work under difficult weather and safety conditions were short-changed while trying to keep our roads safe.”
Plzak is the president and chief executive officer of Honda Electric, a company she runs with her husband, Jeffrey, out of their Loretto home. Jeffrey Plzak is an electrician and worked at the job sites while Laura Plzak handled the office work.
In 2010, Honda was the electrical subcontractor on a Minnesota Department of Transportation project at Interstate 35W and Interstate 694. In October 2010, the transportation department started investigating Honda and two months later a former Honda employee, M.J., told investigators he was paid $17 an hour, rather than the $58.50 an hour he was supposed to get under the prevailing wage law, according to the criminal complaint.
When M.J. talked to investigators, he provided them with both timesheets and paystubs from some of the pay periods of Aug. 24, 2010 to Oct. 6, 2010. The paystubs showed a lower number of hours worked than what M.J. had reported on his timesheets and therefore a higher rate of pay, the complaint states.
By October 2012, the transportation department was demanding that Laura Plzak provide investigators with company pay records, including timesheets, for the Honda employees who worked on the project and 25 other projects. After more than a month of stalling and turning over only some of the records, Plzak turned over a complete set of timesheets in December 2012, according to the complaint. However, these documents were false.
The timesheets, in particular, did not match the hours M.J. had put down on the timesheet he provided investigators, according to the complaint. In addition, the handwriting on all of the employees’ timesheets was the same, even though each timesheet should have been filled out by the individual employee, according to the complaint.
Later, investigators received a similar complaint from D.M. about what Honda had paid her on another project. On Jan. 10, 2013, D.M. called Plzak and recorded the conversation. She asked Plzak why her paystub showed $42. Plzak told D.M. she was paid the $10 to $12 hours the company had promised her and added, “Don’t you think that’s fair?” D.M. responded she did not think it was fair if she was entitled to $42 an hour. Plzak said she hoped D.M. would not cause trouble for her and her husband, the complaint states.
Investigators from the FBI and the transportation department obtained a search warrant and seized records from Honda Electric.
“The FBI is committed to fundamental fairness between employers and employees,” said Richard Thornton, special-agent-in-charge of the Minneapolis office. “This investigation reaffirms both the FBI’s ability and willingness to hold responsible those who would defraud others. Fraud upon innocent parties will not be tolerated where it is discovered.”
The seized records showed that the employees worked a higher number of hours than the company reported to the transportation department. Further, many of the timesheets contained handwritten notes indicating calculations to determine the number of hours each employee would have to work to receive the same gross pay if the employee had received the prevailing wage, according to the complaint.
Those records also allowed investigators to determine that Honda Electric illegally withheld $241,920.69 from workers over a nearly three-year period. Jeffrey Plzak, in pleading guilty to similar charges in federal court, agreed with that figure.
Jeffrey Plzak was sentenced to 22 months in prison earlier this month.
Criminal Complaint (PDF)