Powell Steel owes employees $400,000
Pequea company has filed for bankruptcy Powell Steel owes employees $400,000 BY TIM MEKEEL, Business Editor
Powell Steel owes its current and former employees nearly $400,000, new court filings show.
The shortfall consists of back pay, payroll deductions for 401(k) accounts and partial 401(k) matches by Powell Steel.
The debts to 49 current and former employees were itemized by the Pequea Township firm in bankruptcy court filings this week.
News of the impact on employees comes as Powell Steel is proposing to cut the annual salary of top executive Steve Powell by 19 percent.
Powell Steel filed for bankruptcy reorganization in February.
The Baumgardner Road company reported total liabilities of $6.6 million and total assets of $2.9 million.
As was previously reported, lenders, suppliers, various taxing bodies and Powell Steel's landlord are the company's biggest creditors.
But the new court filings show that employees, as a group, are a significant creditor as well.
Thirty-two employees are owed a combined $342,000 in back pay, a court filing shows, including one who's owed $91,000.
Eleven others are owed between $10,000 and $20,000.
The filing does not explain why only these employees are owed back pay and not the entire 75-employee work force.
Company attorneys and executives did not immediately return calls for comment.
However, sources familiar with the issue said the money is extra pay, above regular wages, that's due to employees who worked on prevailing-wage jobs.
Prevailing-wage jobs, such as public school or government construction projects, pay better than Powell Steel's regular wages.
In another type of debt, Powell Steel owes 21 employees a combined $33,000 in payroll deductions to employee benefit plans.
Again, the filing does not specify the type of plans.
However, the sources said the payroll deductions were supposed to go into the employees' 401(k) accounts.
But the amounts listed in the filing were never deposited in the employees' accounts.
Powell is among the employees who had deductions taken from his paycheck that were never deposited in his 401(k). Powell is owed $5,400.
The same 21 employees are owed a combined $6,100 in partial company matches for their 401(k) retirement plans.
Again, Powell is among the employees affected. He's owed $1,400 in partial company matches, according to the filing.
Four employees are owed money in all three categories -- back pay, payroll deductions and partial company matches.
The disclosure of the debts to employees follows a Powell Steel motion last month to set the pay of Powell, president and chief executive officer.
Powell Steel wants to pay Powell $160,000 annually.
In the three months before entering bankruptcy, Powell Steel paid him at an annual rate of $196,900, the filing shows.
The company also would pay Powell $151 a month for health insurance premiums and provide him with a company phone.
The motion also proposes a salary for Michael Jackson, Powell Steel's vice president and general counsel.
Jackson would be paid $90,000 annually, the same as his annual rate in the three months before Powell Steel entered bankruptcy.
These pay rates are subject to the approval of the bankruptcy court.