$356,042 in Back Wages and OSHA Penalties Against Companies Who Hired Student Workers

Thursday, November 15, 2012

The U.S. Department of Labor has recovered more than $213,000 in back wages for 1,028 foreign students employed in summer jobs in Palmyra where they repackaged candies for promotional displays. The settlement with The SHS Group, LP, the Council for Educational Travel-USA, and Exel Inc. resolves federal minimum wage and overtime violations, and also resolves $143,000 in fines for safety and health violations found at an Exel-operated facility in Palmyra. The settlement also includes commitments by Exel to implement pro-active procedures to help ensure future FLSA and OSHA compliance at each of their over 300 facilities across the country.

The department's Wage and Hour Division investigation found violations of the minimum wage and overtime provisions of the Fair Labor Standards Act as a result of excessive housing costs charged to the foreign students employed at the Palmyra facility, which reduced their hourly wages below the amount they were required to be paid under the FLSA. Under the settlement agreement, the three companies have agreed to pay $213,042 in back wages to the foreign students who were participating in the State Department's Summer Work Travel program, which is designed to promote educational and cultural exchange. The SHS Group, LP, under a contract with Exel, hired and placed the students at the Palmyra work site. The Council for Educational Travel-USA acted as the students' sponsor in the program. The State Department has since terminated the Council for Education Travel-USA's designation as a program sponsor. In addition to recovering back wages for the foreign students, an additional civil money penalty was assessed against SHS for repeat violations of the FLSA.

As part of the FLSA settlement, Exel has agreed to implement a voluntary compliance program that provides enterprisewide relief at all its U.S. facilities to ensure compliance with the FLSA. The terms of the settlement require Exel to review each of its facilities' compliance with minimum wage, overtime and record-keeping provisions; train workplace managers and supervisors regarding minimum wage and overtime requirements; maintain a hotline for workers in the event they believe their FLSA rights have been violated; remedy any violations it finds or that are brought to its attention; require its third-party labor service providers to remedy violations it finds among those service providers; amend its standard labor service provider contracts to include FLSA compliance commitments; and maintain a log of all FLSA problems it finds or are brought to its attention for the next three years.

The FLSA requires that covered employees be paid at least the federal minimum wage of $7.25 per hour as well as time and one-half their regular rates for every hour they work beyond 40 per week. The law also requires employers to maintain accurate records of employees' wages, hours and other conditions of employment, and prohibits employers from retaliating against employees who exercise their rights under the law. 

The Labor Department and Exel have also entered into a settlement agreement that resolves citations issued by the department's Occupational Safety and Health Administration for violations of OSHA's occupational noise exposure standard and record-keeping regulations. Exel has agreed to pay $143,000 in penalties. Exel will implement a site-specific record-keeping policy, a noise abatement plan and a hearing conservation program at the Palmyra facility. Exel will also implement revised polices that address noise exposure at all Exel production facilities and record-keeping policies at all facilities nationwide.

Additionally, Exel will revise its U.S. Corporate Wide Incentive Program to eliminate incentive payments based on the number of reported or recorded injuries and illnesses at a facility. This action is consistent with OSHA's current efforts to eliminate "bonus" plans that potentially incentivize nonreporting of injuries or illnesses.

Exel has agreed to address occupational noise at all its production facilities nationwide. Exel will hire a qualified safety consultant who within 90 days will conduct an audit of the noise exposure levels in all production facilities and will submit to OSHA a noise abatement plan and a hearing conservation program that will be implemented at each production facility.

Exel has agreed to revise its record-keeping policy and for each facility will designate a permanent job position with ultimate authority for overseeing and reviewing record-keeping practices, and will provide record-keeping training to all employees with record-keeping responsibilities within 120 days.

Under the Occupational Safety and Health Act of 1970, employers are responsible for providing safe and healthful workplaces for their employees. OSHA's role is to ensure these conditions for America's working men and women by setting enforcing standards, and providing training, education and assistance. 

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