Finance News & Insights

Tab for ignoring minimum wage laws: $763k

Two Pennsylvania business are finding that trying to save money by denying workers overtime pay can turn out to be very expensive.  

A custom jewelry distributor and an international shipping and direct mail company – each of which failed to pay a combined 797 temporary workers minimum wage and overtime — will be ponying up $763,000 in back wages and damages following a DOL investigation.

U.S. Department of Labor’s Wage and Hour Division investigators found Stanley Creations Inc. in Melrose Park and Asendia USA in Folcroft violated the Fair Labor Standards Act when they did not pay legally required minimum wages and overtime to the workers for more than two years. Investigators also cited both for failing to maintain records the law requires. In separate agreements with the division, the two employers will pay a total of $381,580 in back wages and an equal amount in liquidated damages.

Investigators found that Stanley employed a core crew of temporary workers supplied by staffing company, International Labor Inc., and paid the workers each week in cash at a rate of $6 per hour. The company did not pay overtime when the workers’ hours exceeded 40 in a workweek. The company distributes its custom jewelry to major retailers, including Macy’s, Kohl’s, JCPenney and Boscov’s.

OT rate calculated incorrectly

In the second investigation, the division found Asendia, a global provider of business-to-consumer shipping and mailing services, paid temporary workers supplied by Northeast Staffing LLC, an average of $6.69 per hour, in cash. Although the company paid workers overtime when they worked more than 40 hours in a workweek, the rates upon which they based their time-and-one-half calculation were below the legally-required federal minimum wage of $7.25 per hour.

In addition to paying back wages and damages, Asendia agreed to take the following steps to ensure future compliance with the law:

  • Hire a human resources manager as a liaison between the staffing agency and company management.
  • Interview staffing agencies and request references.
  • Require the staffing agency have a supervisor on site and pay temporary workers electronically.
  • Maintain records of all temporary workers at the site.
  • Periodically check the staffing agency’s payroll records.
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