Hershey Chocolate Sweatshop Case’s Bittersweet Ending, Back Wages Paid

The workforce at a warehouse run by Hershey’s chocolate contractors melted down in sweatshop conditions in August 2011, exposing a summer employment scam that took advantage students from around the world.

The U.S. Department of Labor (DOL) has recovered more than $213,000 in back wages for 1,028 foreign students who worked in summer jobs in Palmyra, Pa., where they repackaged Hershey candies for promotional displays.

The 14 November 2012 settlement with The SHS Group, LP, the Council for Educational Travel-USA, and Exel Inc. resolves federal minimum wage and overtime violations. The settlement also resolves $143,000 in fines for safety and health violations found at an Exel-operated Hershey facility in Palmyra.

Foreign students protest at Hershey plant August 2011.
Foreign students protest at Hershey plant, August 2011.

The Hershey Co., which owns the warehouse and distribution center, was not cited for labor law violations because it contracts out the operation to, Exel Inc., Hershey spokesman Jeff Beckman told the Associated Press.

About 400 student guestworkers recruited from several nations went on strike in August 2011 at the plant to expose alleged abusive working conditions, sub-minimum wage pay, threats and retaliation by supervisors and labor recruiters.

Under a contract with Exel, SHS Staffing Solutions hired the students to work at Hershey’s Palmyra site repackaging Hershey candies for promotional displays.

Headquartered in Westerville, Ohio, Exel is a contract logistics provider with more than 40,000 employees at more than 500 North American sites.

“The decision of these companies to play by the rules is a positive step that will ensure that workers are treated fairly, as is legally required,” said Nancy J. Leppink, deputy administrator of the department’s Wage and Hour Division.

The DOL and Exel also resolved Occupational Safety and Health Administration violations of for occupational noise exposure standard and record-keeping regulations.

The students paid (USD)$3,000 to $6,000 each to come to America for what they were told was a cultural exchange program that included a summer job, according to The New York Times. Instead, the students found themselves packing chocolates at a Hershey’s plant in deeply abusive conditions.

OSHA inspected Hershey’s Palmayra plant after a worker advocacy group, the National Guestworker Alliance, filed a complaint on behalf of the foreign students who were working under the U.S. Department of State’s J-1 visa program.

Their visas were sponsored by a nonprofit organization, the Council for Educational Travel-USA (CETUSA).

The DOL’s Wage and Hour Division investigation found violations of the minimum wage and overtime provisions of the Fair Labor Standards Act (FSLA) due to excessive housing costs charged to students employed at the Palmyra facility. The charges reduced the students’ hourly wages below the amount required by the FLSA.

The settlement includes commitments by Exel to implement procedures to ensure FLSA and OSHA compliance at its more than 300 facilities nationwide.

Hershey Contractors Agree To DOL Settlement

The three Hershey contractors agreed to pay $213,042 in back wages to the foreign students participating in the State Department’s Summer Work Travel program, which is designed to promote educational and cultural exchange.

Contingent staffing firm, The SHS Group, LP, under contract to Exel, hired and placed the students at the Palmyra plant. 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.

Exel no longer hires people with J-1 Summer Work Travel visas issued by the U.S. Department of State, according to the AP report.

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 enterprise-wide 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
• 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 hours 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.

Exel 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 implement revised polices addressing noise exposure at all Exel production facilities and record-keeping policies at all facilities nationwide. Exel will also revise its incentive program, eliminating 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 non-reporting 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.

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