NEWPORT, Del. — A Delaware construction firm has been fined after a state investigation uncovered improper wage practices on public works projects.

The Delaware Department of Justice and Department of Labor reached a settlement with Diamond Materials, a heavy-highway contractor and materials supplier based in Newport, following allegations that the company made false statements and unlawful payroll deductions while working on taxpayer-funded projects governed by the Delaware Prevailing Wage Law.

“When contractors bid on government contracts, they have a legal and a moral obligation to do right by workers and the public,” said Attorney General Kathy Jennings. “Unfortunately, some contractors try to underbid their competitors by cutting corners on funds owed to their workers. That’s illegal. My office is cracking down on businesses that violate workers’ rights.”

The investigation revealed that Diamond Materials deducted thousands of dollars from workers’ paychecks, stating in certified payroll reports that the funds were for “training benefits.” However, the money was actually used to pay for the company’s membership in a contractor association, according to state officials.

As part of the settlement, the company will cease the practice immediately and pay $100,000 to the state. The Delaware Department of Labor also secured $3,733.54 in restitution for affected workers and additional penalties paid to state agencies.

The case is part of a broader effort by the DOJ's White Collar Crime Unit to enforce accountability on public works projects and uphold wage protections.

The unit continues to investigate false payroll filings and potential criminal charges for wage theft, especially in the context of certified weekly payroll reports required for public contracts. These reports are intended to ensure compliance with state labor laws and prevent exploitation of workers on taxpayer-funded construction.

The investigation underscores the importance of transparency in public contracting and the need for strong oversight mechanisms to detect and prevent labor violations.

Workers or contractors who suspect wage theft or other labor law violations are encouraged to contact the Delaware Department of Labor at (302) 761-8200.

“This case is a reminder that cutting corners to win a bid comes at a cost—and that cost is accountability,” said Jennings.

Originally reported by Delaware Business Now.