Transair, a Honolulu-based cargo airline shut down by the Federal Aviation Administration for poor safety practices following the 2021 crash at sea of one of its freighters, has returned more than $450,000 in back pay to employees as part of a settlement with the U.S. Department of Labor.
The federal agency alleged this week that Transair had shortchanged 250 employees of their full pay and benefits while fulfilling a $113 million U.S. Postal Service contract to move mail among the Hawaiian islands.
The wage reductions associated with the Postal Service contract occurred between October 2019 and October 2021, said Labor Department spokesman Jose Carnevali. Back pay for general overtime worked covered a three-year period going back to 2018.
The Labor Department concluded its investigation in December, but it took awhile to collect the wages that were due and distribute them to the workers, he said in an email response.
Transair ceased operations in July 2021 when the FAA suspended Rhoades Aviation Inc.’s operating authority, days after one of its Boeing 737-200 converted freighters crash-landed in the Pacific Ocean. Rhoades Aviation did business as Transair. The pilots ditched the plane in the water when one of the engines lost power. The National Transportation Safety Board determined that the pilots were confused over which engine lost power and shut down the working engine, which caused the crash.
The FAA in January 2023 revoked Transair’s air carrier certificate after determining the company was no longer qualified to legally operate because of deficient maintenance and safety practices.
Rhoades Aviation, founded in 1982 by Iran-born businessman Teimour Riahi, is a division of Trans Executive Airlines of Hawaii and does business as Transair Express. Rhoades Aviation provided scheduled cargo service with five 737-200 cargo jets when it closed down. Trans Executive Airlines holds a separate authority for charter operations and operates as Transair Hawaii with four Short 360 twin turboprop aircraft that are more than 35 years old, according to public aircraft databases.
The Department of Labor alleged that Rhoades Aviation “recklessly disregarded” requirements in the Postal Service contract that sets prevailing wages and fringe benefits that employers under federal contract must pay. Investigators found that Rhoades Aviation had paid lower prevailing wage rates and didn’t disburse correct health and welfare benefits or holiday and vacation pay to 208 workers. It also failed to pay correct overtime wages to 55 workers.
“Transair failed to comply with federal service contract regulations regarding worker compensation,” said Terence Trotter, a district director in the Wage and Hour Division. “The U.S. Postal Service’s federal contract obligated Transair to not only comply with standards for mail delivery but also for standards that deliver the lawful payment and benefits to workers performing those labor-intensive services.”
The Labor Department said Transair unlawfully made 30-minute deductions for lunch breaks not taken, causing the employer to underreport and underpay overtime hours, in violation of the Fair Labor Standards Act.
Transair did not respond to requests for comment.
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