Hauler accused of pay shortages

Another Minnesota trucking company has come under federal and state investigation for allegedly shorting its drivers' payroll checks and submitting fraudulent payroll records to the government.

Authorities have searched the St. Cloud offices of Watab Hauling and the home of its owner, Gary Bauerly, 60, Rice, Minn., seeking evidence of mail fraud and false statements in connection with several highway projects, according to federal court records unsealed Friday in Minneapolis.

According to a sworn statement by Chris R. Smith, a special agent with the U.S. Department of Transportation's inspector general's office in Chicago, Watab Hauling has worked on at least a dozen federally funded road projects for the Minnesota Department of Transportation (MnDOT) since 2005. Contractors paid with federal dollars must pay their workers what's called prevailing wages. Time-and-a-half pay is required for those who work more than 40 hours a week.

Smith said that Watab employees have reported to him and to investigators with the Minnesota Department of Transportation that they were not paid prevailing wages.

One employee reported that Bauerly called about 50 drivers to a meeting last year and put the prevailing wage checks from a recent project on the table. About 30 of the drivers worked on the project, and Bauerly allegedly told them to sign their checks back over to him, Smith said in his affidavit.

"In another meeting last year, Bauerly told the drivers they needed to sign a form stating they forfeit the prevailing wage," he said. "Bauerly told them if they did not sign over their prevailing wage checks, he would not call the drivers that did not sign the form as often to work."

Bauerly could not be reached for comment Monday. An employee at Watab Hauling took a message but said Bauerly would not be returning the call.

Smith declined to comment Monday. His affidavit said investigators have analyzed Watab Hauling's records and found falsifications of certified payrolls, including underreported hours, underpayment of wages and nonpayment of overtime.

The company has failed to submit certified payroll documentation on at least half of the 12 projects it worked on in the past two years, he said.

Assorted discrepancies

According to Smith, Watab Hauling's office manager, Patricia Baumann, signed payroll records related to work on Hwy. 212 indicating that one employee was paid $21.80 an hour straight time and $24.83 an hour overtime in 2006. But the employee's pay stub showed that he was paid just $12 an hour straight time and $18 an hour overtime.

On an Interstate 35 project last year, a Watab Hauling employee was paid the same rate, but payroll records signed by Baumann indicated payments of $34.80 an hour straight time and $46.65 an hour overtime, Smith said. A company receptionist said Monday that Baumann no longer works for Watab Hauling.

A message left at her home was not returned.

Similar disparities were found in pay records for a Watab Hauling employee last year who worked on Riverside Avenue in Stearns County, he said.

The Star Tribune reported in July that Smith and MnDOT were conducting a similar investigation of three other Minnesota trucking companies suspected of falsifying payroll records. Those companies are Willis Trucking Inc. of Farmington and Koehnen Landscaping and Trucking Inc. and K&M Trucking of IGH Inc., both of South St. Paul.

Gary Bauerly LLC is a holding company that owns and operates Watab Hauling LLC, according to a 2003 civil suit brought against them by the U.S. Department of Labor. That complaint alleged that Watab Hauling was stiffing drivers for the time they spent for pre-haul activities such as picking up, preparing and inspecting trucks. An audit found that 64 drivers were shorted $84,880.55 in wages between May 2001 and October 2002, and that Watab Hauling failed to pay four employees even minimum wage for the hours they worked.

U.S. District Judge Paul Magnuson ruled in 2005 that the companies were exempt from having to automatically pay overtime under the Fair Labor Standards Act, but found them liable for minimum wage violations and left open the question of record-keeping violations.

The case was settled with Bauerly and Watab Hauling promising to comply with minimum wage laws and to keep proper payroll records. They also had to pay four employees $3,486.36 in back wages and liquidated damages.

Dan Browning • 612-673-4493