Kentucky Pressures Coal Companies to Protect Miners' Wages
September 11, 2019 - The Kentucky Labor Cabinet has sent dozens of letters in the last several weeks to coal and construction companies that might be in violation of a state law requiring them to post a bond to protect employee wages, according to records shared with the Lexington Herald-Leader.
Records show the cabinet launched an effort to enforce the law by issuing letters to 89 companies that have failed to post the bond, along with issuing fines to at least two out-of-compliance coal companies.
The letters could move dozens of companies to post bonds totaling millions of dollars, and may lead to steep financial penalties if the companies fail to respond.
The state’s failure to enforce the performance bond requirement made headlines following the July bankruptcy of Kentucky coal producer Blackjewel LLC., which failed to pay the bond and left hundreds of Kentucky miners unpaid for weeks of work.
Reporting from the Herald-Leader last week showed that not a single coal company has paid the bond over the past five years. An audit from Attorney General Andy Beshear’s office confirmed the reporting, and identified 30 coal companies that may be out of compliance.
Beshear, the Democrat challenging Republican Gov. Matt Bevin in November, has accused the Labor Cabinet of moving slowly since the Blackjewel bankruptcy to bring other coal companies into compliance.
Last month, Labor Secretary David A. Dickerson said the law contained no mechanism to notify the cabinet when a company that is required to post the bond incorporates in Kentucky. On Tuesday, Dickerson sent a scathing letter to Beshear claiming the cabinet has “no way to compel a company to post a performance bond,” but did not mention the cabinet’s ongoing effort to notify companies of their non-compliance.
Beshear said the letters released Wednesday prove the Labor Cabinet could have enforced the bond law all along.
“It is now clear that Matt Bevin and the Labor Cabinet have been refusing to enforce a law that they unsuccessfully tried to repeal, and the Blackjewel miners are suffering because of it,” Beshear said. “These new letters were sent after the Bevin administration’s failures were exposed and they show not only is there no loophole, but that the Labor Cabinet could have protected miners by simply sending a letter. Their failure is inexcusable.”
Records shared with the Herald-Leader Wednesday show the cabinet sent notices of violation to several coal companies, including: JRL Coal, Inc.; UC Mining, LLC.; Black Diamond Coal, LLC.; and The Muhlenberg County Coal Company, LLC.
Each letter gives companies 15 days to respond or pay the bond. Companies that feel they should be exempt can contest the bond requirement within those 15 days. The cabinet warns that failure to respond within 15 days may lead to further legal action and financial penalties for each day of non-compliance.
On August 16, the cabinet issued a $125,800 penalty to GCIE, Inc., a coal company that has failed to post the bond, according to a statement from a cabinet spokesperson. The penalty marked the second fine issued by the cabinet in recent weeks. Following Blackjewel’s bankruptcy, the cabinet issued a fine of $366,500 to Blackjewel and its former CEO Jeff Hoops for failing to post the performance bond.
According to state law KRS 337.200, “every employer engaged in construction work, or the severance, preparation, or transportation of minerals” that has continuously operated in Kentucky for less than five years must post a performance bond with the Labor Cabinet to cover its payroll for four weeks.
The law aims to protect wages for employees of new companies that might be financially unstable.
Though the cabinet has moved to enforce the law, it appears to support a repeal of the bond requirement.
“The performance bond statute puts Kentucky at an economic disadvantage by imposing start-up costs on new construction and minerals businesses,” cabinet spokeswoman Mary Robertson said in a statement to the newspaper. “The Labor Cabinet does not have data indicating the instances in which a bond has been used to satisfy an employer’s obligation to pay wages. Repealing KRS 337.200 could remove a statutory burden that puts Kentucky businesses at an economic disadvantage relative to neighboring states.”
Last year, cabinet officials urged state lawmakers to pass a bill that would have repealed the bond requirement. The bill failed before it received a vote in the House of Representatives.
Tyler White, President of the Kentucky Coal Association, told the Herald-Leader last week that he also believes the bond could have a negative impact on the ability of coal companies to set up shop in Kentucky. He said Blackjewel’s failure to pay its employees was an anomaly within the coal industry.
Some state legislators have publicly supported the bond and proposed legislation that could assist the cabinet in enforcing the bond. Those bills will be formally discussed during the next legislative session, which starts in January.