UPDATE: A bankruptcy judge approved an order authorizing the debtors to pay employees wages and withheld benefits on Wednesday afternoon. — Ed.

Bankrupt coal mine operator Blackjewel LLC has withheld $1.2 million from employees’ paychecks without depositing the funds in the workers’ retirement accounts.

The company, which suddenly shuttered two Powder River Basin mines on Monday, laying off nearly 600 workers, appears to be out of financing options that would enable continued operations. A bankruptcy judge this afternoon approved a $5 million loan deal to cover security and fire suppression. That deal is contingent upon the resignation of CEO Jeffrey Hoops.

As Hoops exits the company, worker accounts and bankruptcy filings suggest he left workers behind millions of dollars in promised retirement benefits.

Three Blackjewel employees told WyoFile that for months deductions have come out of their paychecks to go into 401(k) retirement accounts, but the money hasn’t been deposited for weeks afterwards. Other employees have made similar allegations both to Wyoming newspapers and to Gov. Mark Gordon and his staff during a Campbell County Commissioners meeting on Monday.

Bankruptcy filings indicate Blackjewel is behind on the 401(k) payments. The filings indicate the company has not deposited $1.2 million withheld from employees’ paychecks. The company is also $900,000 behind on its obligation to match employees’ retirement contributions.

The irregularities raise further questions about the management of Blackjewel CEO Jeffrey Hoops and the dire financial straits of his company. As of Wednesday morning Hoops had yet to speak with Wyoming regulators or the governor after suddenly shuttering the Belle Ayr and Eagle Butte mines on Monday.

A 401(k) plan typically involves pre-tax payroll withdrawals authorized by the employee, who also determines the amount they’d like set aside from each paycheck. The company is then responsible for depositing those funds in the employee’s 401(k) retirement account, where the employee also determines how it will be invested for retirement savings. Employers often agree to match some of the employee’s retirement savings, depositing the matching funds in the same accounts as a part of the employees compensation. Blackjewel offered up to a 3% percent match, according to bankruptcy filings.

When employee contributions are withheld but not promptly deposited, the worker simultaneously loses the cash from the paycheck and the chance to earn investment income on that money.

Delayed deposits by Blackjewel have been happening as far back as January, said one employee, who asked to speak anonymously in case he went back to work at the company.

Worse, none of the three Blackjewel employees WyoFile interviewed said they had seen deposits made into their 401(k)s in two to four paychecks.

Now, with the mines suddenly shuttered and the miners facing unemployment, it’s unclear when, or if, they’ll get the money they’re owed — the amounts of which can be significant.

Coworkers told Jarik Dudley, a dispatcher and production tech at the Eagle Butte mine, that they could be out more than $4,000, Dudley said. Dudley saw money go into his 401(k) at the end of June, he said. But, at one point the company was behind on deposits “almost four paychecks, pretty much two months.”

A similar delay was happening with health savings accounts, Dudley said.

Another miner said she’d also seen a four-paycheck lag on deposits.

“I remember a lady telling me her and her husband are owed over $3,000 to date,” said Lynne Huskinson, an equipment operator.

All three of the employees said some Blackjewel workers had quit the 401(k) program all together, rather than see chunks of their paychecks disappear and not enter retirement accounts in a timely manner.

In an affidavit filed with the bankruptcy court, Blackjewel said it was behind on its health care plan as well, and even on depositing the tax and social security payments it takes out of paychecks.

The company owed $675,000 in obligations on its employee health plans — the filing did not specifically mention the health savings accounts mentioned by Dudley and others. The company also had collected $8.3 million from paychecks for obligations like social security and taxes that it had yet to hand over to the proper authorities, the filing said.

Internal Revenue Service regulations governing retirement plans say deposits should be made as early as they “reasonably” can.

For miners, that’s money out of their pockets. “You’re messing with people’s payroll,” said Huskinson. “Four paychecks is not a reasonable time to get your 401(k) deposits.”

Some employees at the County Commission Tuesday suggested Hoops should be investigated as to whether he’d broken the law.

Dudley, the Eagle Butte miner, said he did not suspect Hoops was using the money illegally but just that he’d kept putting off making the payments, right up until the bottom fell out from under the company.

“You get too much on your table, you’re just signing away on stuff and then all of a sudden ‘oh I have no money,’” Dudley said. “But his responsibility should have been to the employee. He doesn’t have any shareholders.”

Recourse for employees remains unclear. Blackjewel’s employees are not in a labor union that might represent them in bankruptcy court.

Workers could make complaints with the Labor Standards Office of the Wyoming Department of Workforce Services, said Ty Stockton, a spokesperson with that agency.

“If they’re deducting it out of their paycheck to provide a service and they don’t provide that service then that would fall under labor standards,” Stockton said.

CORRECTION: This story has been updated to reflect that it is Internal Revenue Service guidelines that states deposits into retirement accounts should be made as early as they “reasonably” can, not Wyoming statute. — Ed.