Wage and Hour Division (WHD) Director John DuMont said, “Payroll before profit is one of the key principles in the Fair Labor Standards Act.” A West Virginia mining company that laid off 44 workers before filing Chapter 11 bankruptcy found out the hard way that the Department of Labor’s WHD will go to great measures to make sure that employers don’t illegally profit on the backs of workers. It should be a lesson to all employers who think they can get away without paying all wages due.
Workers denied last paycheck
Ben’s Creek Operations WV LLC not only laid off their workers before filing bankruptcy, they also didn’t pay workers their final paycheck. Workers had 2 weeks of work on the books, from March 31 to April 13, 2024. Their final paycheck was due on April 19, but the company failed to issue paychecks, most likely due to their bankruptcy filing a few days prior. During the WHD’s investigation, it was determined that the company had produced 40,000 tons of metallurgic coal, which was worth over $3 million. At the first of May, the Department of Labor obtained a court order preventing the mining company from selling the coal that was mined during its final two weeks of operations until the back wages were paid.
What to learn from this case
The WHD division recovered over $175K for those employees. Fortunately for the miners, the employer did cooperate with the WHD and pay the back wages. DuMont also said,
“A bankruptcy filing does not excuse an employer’s obligation to pay workers for all the hours they worked or allow them to violate federal law.”
With small business bankruptcies on the rise, all employers should be aware that the Department of Labor will stand up for workers who are denied wages, for whatever reason. In this case, they could prevent interstate shipment of goods for violating minimum wage or overtime regulations.