Jury orders East Penn Manufacturing to pay $22M for overtime violations

East Penn Manufacturing of Lyons Station will have to pay more than $22 million to the Department of Labor (DOL) for overtime wages it failed to pay more than 7,500 of its employees. 

The DOL said a 12-member federal jury ordered what it called the largest recorded verdict under the Fair Labor Standards Act. The jury also intends to ask the U.S. District Court for the Eastern District of Pennsylvania to award an equal amount in liquidated damages for the affected workers. The department will also seek an injunction requiring future FLSA compliance by the manufacturer. 

In an earlier summary judgment ruling, the court found that East Penn violated the FLSA’s overtime requirement by failing to pay uniformed workers for all actual working time. 

Typically, East Penn paid workers only for their 8-hour scheduled shift. The employer did not pay for additional time employees needed to put on and remove protective equipment and to shower to avoid the dangers of lead exposure and other hazards. Federal law requires employers to include all hours employees worked and to pay an overtime premium for hours over 40 in a workweek. 

East Penn issued a statement on the verdict. 

“East Penn had made every effort to comply with the laws as it understood them. As a company, it stands behind the time paid to employees to put on and take off uniforms and to shower. The company believes it provided proper compensation for these activities and was fair in determining the reasonable time required to perform them,” it said. 

The company also noted that the jury found thatv East Penn did not act in a knowing or reckless disregard of the law. 

The DOL said the jury award follows a 2016 investigation by the department’s Wage and Hour Division and subsequent litigation by its Office of the Solicitor. 

“This verdict of more than $22 million is a long-overdue victory for more than 7,500 workers at East Penn Manufacturing,” said Principal Deputy Wage and Hour Administrator Jessica Looman. “Federal law requires employers to pay workers for the hours they work, including time these workers needed to protect themselves from dangerous workplace hazards.” 

 The verdict ends a trial in response to the department’s March 2018 complaint against East Penn Manufacturing in federal district court. During the trial 39 employees testified that they and other co-workers performed unpaid work. There was also a witness who had performed a time study and provided testimony on the estimated time employees spent on this work. 

“Decades of settled law states that employers must pay employees for all hours worked, and this includes the time employees spend changing into and out of uniforms and showering where such activities, as here, were necessary and indispensable to their work. Contrary to the law, East Penn allowed employees to work off-the-clock for years,” said Solicitor of Labor Seema Nanda. “The jury’s verdict will go a long way towards making the employees whole and serves as a stark reminder for employers like East Penn to think twice before instituting policies designed to skirt the law.” 

The division’s Wilkes-Barre District Office conducted the investigation. Regional Solicitor Oscar Hampton and trial attorneys Elizabeth Kuschel and Alexander Gosfield in the department’s Regional Solicitor’s Office in Philadelphia litigated and tried the case. 

Noting that before the trial started, the DOL claimed that the company owed employees over $214 million in back wages versus the $22 million that was awarded, East Penn said the amount of the ultimate judgement is subject to further argument to the trial judge and adjustment. In addition, either the DOL or East Penn may file an appeal.