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July 8, 2008

Excavation company to pay $356,000 in back wages and premiums

TUMWATER – The owners of a Vancouver excavation business have agreed to pay $356,000 in a case involving unpaid overtime wages and workers’ compensation premiums.

In a settlement approved today in Clark County Superior Court, Jerry and James Schram, brothers and business partners in Schram's Excavating, also pleaded guilty to misdemeanor charges for the unpaid wages. Jerry Schram pleaded guilty to a gross misdemeanor and will serve 30 days in jail. Both were given two years’ probation and 240 hours of community service.

As part of the settlement, the Schrams pledged personal assets to guarantee repayment of the debts. The settlement includes a payment, made today, of $75,000 to employees owed overtime pay for working more than 40 hours a week.

“This settlement levels the playing field for other excavating companies,” said Carl Hammersburg, manager of the Fraud Prevention and Compliance Program at the Department of Labor & Industries (L&I). “Most contractors in Washington are honest. It’s unfair when they can be underbid by companies that aren’t paying their employees properly or are avoiding the insurance costs for caring for injured workers.”

Also today, the company, through Jerry Schram, pleaded guilty to a felony for hiding information used to set their workers’ comp insurance premiums, allowing the company to avoid paying its fair share. As a result, L&I dropped 31 other felony charges to avoid the costs of a lengthy trial and expedite payment of unpaid wages and debts.

The case against the Schrams is part of L&I’s stepped-up efforts to find unregistered contractors and registered construction companies that purposefully underpay their insurance premiums. A report to the Underground Economy Task Force estimates conservatively that taxes owed by those in the underground construction economy in 2006 totaled $126 million.

The Schram Excavating case was investigated jointly by the Clark County Sheriff’s Office and L&I, with criminal charges filed by the Washington State Attorney General's Office on behalf of the Clark County Prosecutor's Office.

Susan DanPullo and Jason McGill, of the Attorney General’s Office, negotiated the settlement. L&I hired DanPullo in 2006 to help increase criminal fraud prosecutions. The Legislature increased funding to combat the underground economy and another attorney will be hired.

To report suspected fraud, fill out an online form at www.Fraud.Lni.wa.gov or call the fraud hotline at 1-888-811-5974.

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 For media information: Barbara A. Davis, 360-902-4216

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