Two Philadelphia companies that did not pay temporary workers the minimum wage agreed to pay $763,000 in back wages and damages to be distributed among 797 workers.
Temporary workers who packaged jewelry at Stanley Creations Inc. in Melrose Park were paid $6 an hour in cash and were not paid overtime when they worked more than 40 hours, the U.S. Labor Department said Monday.
Minimum wage in Pennsylvania is $7.25 an hour.
Asendia USA in Folcroft, part of a multinational Swiss and French direct mail and distribution company, paid overtime, but based the overtime on a base pay rate of $6.69 per hour, below minimum wage. Workers, hired by Northeast Staffing L.L.C., were paid in cash, the Labor Department said.
"The entire time we were paying our temp agency well above the minimum wage, and overtime," said Michael J. Hastings, chief executive of Asendia USA. "The fact is that the temp agency did not use the funds in the correct way. At no time did we benefit from this. We were trying to do the right thing."
The settlements, announced Monday, are part of the Labor Department's push to protect temporary workers that firms hire through temporary help agencies.
Under the federal Fair Labor Standards Act, the temp agencies and the firms that use them are considered joint employees; both are responsible for paying proper wages.
"However, the staffing agencies often have limited resources, so the focus is on the companies that used the labor," a spokeswoman from the Labor Department said.
At Stanley Creations, the workers were primarily Indonesian, Vietnamese, and Chinese, she said.
The company, which distributes jewelry to retailers such as Kohl's, Macy's, JCPenney, and Boscov's, hired temporary workers through International Labor Inc. from March 2012 to March 2015.
The company will pay $180,786 in back wages to 163 workers and the same amount in damages, and agreed not to intimidate workers into repaying part of the settlement.
The agreement was signed in January by Stanley Creations' chief executive, Randy Needles.
"Stanley did not control International Labor's pay practices and was entirely unaware that its workers were receiving less than the federal minimum wage or appropriate overtime payments," Needles said. "Stanley stopped using International Labor for its staffing needs, and International Labor ceased operations. Stanley denies that it acted improperly in any way."
In its agreement, signed in February by Hastings, Asendia agreed to pay workers electronically and also to hire a human resources manager to monitor its arrangements with staffing agencies.
The company will pay $200,795 in back wages to 634 workers and an equal amount in damages, covering the period between the week ending Feb. 10, 2013, through the week ending Feb. 7, 2015. Asendia's workers were Caucasian, African American, Hispanic, and Asian, the spokeswoman said.
The Labor Department said neither company kept proper payroll records.