Blackjewel has agreed to pay $793,847 in back wages on Tuesday after the U.S. Department of Labor filed a lawsuit against the bankrupt coal company in federal court.
The federal agency filed a lawsuit in U.S. District Court over unpaid wages on Monday, veering outside of bankruptcy court in an attempt to secure money the company owes its Wyoming miners. The company subsequently agreed to pay the back wages within 90 days of closing of the sale of the Eagle Butte and Belle Ayr mines, according to court documents.
The lawsuit claimed that Blackjewel and affiliated companies violated federal labor laws by failing to pay workers wages and overtime pay. The lawsuit named around 500 Wyoming miners as affected, and leaves the door open for more to be added to the list.
The filing came as former Blackjewel workers are being asked back to work by Eagle Specialty Materials, the new operator of the Eagle Butte and Belle Ayr mines.
The lawsuit also came two weeks after bankruptcy filings revealed the federal government was investigating Blackjewel for potential violations of the False Claims Act, which deals with defrauding the federal government. In Monday’s lawsuit, the government accused Blackjewel of violating a different law, the Federal Labor Standards Act.
The lawsuit asked for a judge’s injunction that would prevent the companies from escaping their payment obligations to the workers, even as a bankruptcy court in West Virginia continues to hear the case. Instead, U.S. District Court of Wyoming Judge Alan Johnson signed a settlement between the company and the government the following day.
The lawsuit focused on a seven-day period just before the company filed for bankruptcy on July 1. During that period, the lawsuit said, “defendants failed to pay employees any wages for hours worked.” The Department of Labor claimed the Blackjewel workers were owed both regular and overtime pay.
The suit was an effort to protect workers from losing wages to the bankruptcy proceedings, where well-secured lenders get first priority in divvying up a company’s assets, said Joshua Macey, a visiting assistant professor of law at Cornell University who studies bankruptcy law.
“It mean[t] it’s not just going to go away even if the bankruptcy is resolved,” Macey said of unpaid wages. WyoFile spoke with Macey before learning of the lawsuit’s settlement.
“It’s good that the Department of Labor is taking this seriously,” Macey said. “The federal government has a lot more tools at its disposal than state governments.”
Two employees of the U.S. Department of Labor, Wage and Hour Division referred WyoFile’s inquiries to the agency’s public affairs arm, which did not respond to questions by press time.
An attorney for Blackjewel did not respond to a voicemail seeking comment by press time.
Last month, the U.S. Department of Labor, Wage and Hour Division sent investigators to former Blackjewel offices in Gillette to review payroll data, according to Kelly Roseberry, an administrator with the Labor Standards Division of the Wyoming Department of Workforce Services. Roseberry’s agency has been pursuing its own effort to get miners paid, but is only able to seek unpaid wages and benefits for workers who have made claims — 33 thus far, she told WyoFile.
The filing of the lawsuit in a federal court indicated investigators believe Blackjewel was not paying its workers for reasons unrelated to those that led to bankruptcy, Macey said. A lawsuit could have implicated executives like former Blackjewel CEO Jeffrey Hoops.
“If the [U.S.] Department of Labor [could] show in a court proceeding that Blackjewel willfully didn’t pay its employees, it can go after a lot of people,” Macey said, “and possibly even Hoops directly.”
Another bankruptcy scholar suggested the federal government might have stepped outside bankruptcy court to secure a judgement that the company had violated the Federal Labor Standards Act. “Every instance of violation of the law you want a record of it because you get down the line and it becomes evidence for a future case,” said Michael Duff, a University of Wyoming law professor.
In Gillette, Blackjewel under Hoops had a reputation for failing to pay bills to local contractors and vendors even before details began to emerge in a bankruptcy filing that the company had shorted its workers on 401(k) retirement deposits and, ultimately, wages. Local businesses have subsequently filed claims in the bankruptcy court for tens of thousands of dollars.
Last week, Roseberry told Wyoming lawmakers on the new Select Committee on Coal/Mineral Bankruptcies that the U.S. Department of Labor had found Blackjewel owed 506 Wyoming miners an estimated $816,000 in lost wages. Roseberry at the time said she believed that number may be low, as her initial investigation of just 27 workers turned up $140,000 owed.
That accrued through overtime wages, unpaid overtime and deductions for 401k retirement accounts and health savings accounts that were taken from workers paychecks and never deposited. Extrapolated to more than 500 workers, the total sum would be much greater than $816,000.
The U.S. Department of Labor, however, focused in the lawsuit only on unpaid wages, not benefits.
The deal for Eagle Specialty Materials to buy the mines included $1.8 million the company agreed to put aside for workers who went unpaid or lost out on wages and benefits. The $1.8 million will also go toward health expenses idle employees incurred in the months since the bankruptcy filing that Blackjewel has not covered. The company cancelled health insurance for idle employees at the end of August, with court approval.
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