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BetterBone Inc., a dog chew manufacturer, leased part of the old Homestead Woolen Mill complex in West Swanzey.

SWANZEY — A report from the state’s labor department says a business owes more than $28,000 in back wages, though the company’s owner disputes there have ever been any employees at the Swanzey facility.

The N.H. Department of Labor began its inspection of BetterBone Inc. on Oct. 30 and finalized its report Tuesday, finding 25 violations.

BetterBone, a manufacturer of edible dog chews, began moving into the old Homestead Woolen Mill complex on South Winchester Street in Swanzey last summer.

The inspection report says Peter Halfkenny, BetterBone’s vice president, “stated they had no employees,” but the labor department interviewed three employees and determined at least seven people worked at the company last year.

According to the report, BetterBone owes a $28,653.89 in wages to three employees: Lora George for three pay periods, Holly Morin for eight pay periods and Christy Whitcomb for five pay periods.

“These violations are cited based on claims made by the three employees and in conjunction with numerous letters, texts, apparent company documents, newspaper articles, and interviews conducted by the department,” the report says.

The inspector, Rob Campbell, states in the report that records were available to calculate back wages for only three of the seven employees. Anyone who believes they are owed wages can file an individual claim through the labor department within 36 months from the date the paycheck was due, according to the document.

The report also asserts that BetterBone didn’t have proper documentation showing identity, work eligibility or proof of written notification of pay rate for the seven employees, as required by state law. The report says three employees submitted copies of their hiring notices to the inspector, two of which were incomplete.

One violation noted that time sheets and payroll records “were either not available at the time of this inspection or non-existent.”

Angelo Nastovski, owner of BetterBone, wrote in an email to The Sentinel Wednesday evening that the business disputes the claims in the inspection report. In a hearing with the labor department, “our attorneys are confident we will prevail,” Nastovski wrote.

“No wages are owed because no employees were hired. Simple as that,” he continued. “Some people listed in this report only came in for 2 job interviews. Trying to prove these people were not employed by us is quite simple.”

Nastovski said the inspection seems to have been initiated by “one or two disgruntled individuals” who named other people as employees, but he said they only visited the BetterBone facility for job interviews or for general information.

“We have many witnesses that can validate our claims…,” Nastovski wrote. “I am very disappointed in the caliber of some individuals from (New Hampshire).”

Rudolph W. Ogden, the labor department’s deputy commissioner, said Wednesday the department hadn’t yet issued its initially assessed penalties. Because the report alleges failure to pay employees, he said, he expects some sort of fines to be imposed. The department will likely send a letter to BetterBone detailing the proposed fines within a week or so, Ogden said.

Once a business receives the letter from the department, Ogden said it has 30 days to respond. It can pay the penalties and the back wages, meet with the department to settle the matter informally or take it to court for an administrative law hearing.

Most businesses first try to resolve the issue informally, Ogden said. While he said he couldn’t comment specifically on BetterBone’s case, he said sometimes businesses have no assets for the department to collect on employees’ behalf.

“In a general sense you have to realize, if an employer’s not paying their people, it’s because they don’t have the money to pay them,” Ogden said.

Nastovski has promised to hire more than 224 people in the mill complex, initially saying he expected those employees by December. The business hasn’t obtained its certificate of occupancy from the Swanzey Fire Department, meaning it can’t use the mill building for manufacturing.

Nastovski has said he moved his business to Swanzey from New York. As previously reported by The Sentinel, publicly available documents and interviews with economic-development professionals cast doubts on his projections for the company’s future and show inconsistencies in his claims about its past.

Posts on the BetterBone Facebook page in December show photos of a machine operating “in auto mode” and pictures of hundreds of dog chews lying on plywood in rows. Achille Agway in Keene confirmed that it carries BetterBone’s products.

Nastovski told The Sentinel last month that the company isn’t technically producing anything in Swanzey since it has no labor force.

“We can test all the equipment we want,” he said. “… We had a lot of inventory in as we came in here; it doesn’t mean it was manufactured here. Nothing that was manufactured here in Swanzey is being sold in stores.”

He said the dog chews in the Facebook photos were all thrown away, not sold in stores.

But Whitcomb, a Swanzey resident who said she was hired as BetterBone’s human resources manager, pointed to the posts on social media as more reason to be skeptical of the company’s activity.

“I just think it’s amazing that they’re continuing to pretend that they’re this wonderful operation when they’re refusing to cooperate with the state, they’re refusing to pay what they owe us,” she said.

Whitcomb and George, her daughter, told The Sentinel in October they both left full-time jobs to work for BetterBone after being promised $85,000 a year. Whitcomb said she expected a one- or two-week delay in her first paycheck because it was a new job. She met a representative from a payroll company, she said, and that gave her hope.

Both women said that, by the time they realized there would be no paychecks, it was too late to turn back. They had already quit their jobs and made new commitments.

George, who also lives in Swanzey, said she was brought on board as BetterBone’s marketing director. She said she had a hiring letter signed by Nastovski, so she didn’t have a reason to doubt the job’s validity.

George accepted the position around the same time she and her husband decided to sell their home. When George didn’t receive a paycheck from BetterBone, she said, her family was caught between selling their old house and not being able to secure the loan to buy a new one.

Now, she said she lives in her grandmother’s basement with her husband, daughter and two dogs.

Often told she’s overqualified for entry-level positions, George said she’s still on the job hunt. For now, her fingers are crossed for the back wages the labor department says BetterBone owes her.

“It’ll be nice once I get that, hopefully,” she said. “… That’ll be an extra almost $5,000 towards a new house, once I get a new job.”

Whitcomb is less optimistic.

“I think in the end they will be ordered to pay us and they never will,” she said. “… I don’t have really any hope of getting any of the money that (Nastovski) owes me.”

Whitcomb said she has been unable to secure a full-time position and works part time in Brattleboro. She noted that, while it may seem obvious to some people now that she and others shouldn’t have stayed at BetterBone for so long without pay, the situation wasn’t as clear at the time.

Some people are still trying to get jobs at the company, she added.

“I don’t think people really understand how bad it hurt the people who were closely involved,” Whitcomb said.

Sierra Hubbard can be reached at 355-8546 or at shubbard@keenesentinel.com.