Facebook Pinterest Search Icon SourcingJournal_horiz Tumbler Twitter Shape photo-camera graph-trend Shape latest-news icon / user
You will be redirected back to your article in seconds

California Factories Owe Garment Workers $1.6 Million in Back Wages for Violating Labor Standards

The Rivet 50 is calling for nominations for leaders in the denim industry in 5 categories: design, influencer, leadership, sustainability and supply chain. Nominations close on May 23.

Investigations in Southern California by the U.S. Department of Labor (DOL) have found $1.6 million in back wages and liquidated damages due to 1,377 garment industry employees since January.

Those amounts resulted from violations of the Fair Labor Standards Act (FLSA) found in 94 percent of 129 Wage & Hour Division investigations of garment facilities in the region during that period. DOL also assessed an additional $36,000 in civil money penalties associated with those investigations.

Many of the investigations found that employees were paid well below the federal minimum wage of $7.25 per hour, with some receiving as little as $4.27 per hour. Investigators also found employers often failed to pay employees overtime at time-and-one-half of their regular rates of pay when they worked more than 40 hours in a week, as required by the FLSA.

The Labor Department said officials continue to meet with retailers to encourage them to avoid non-compliant manufacturers and to buy only from suppliers that comply with federal labor laws.

“In addition to our outreach efforts in this industry, we continue our investigations in Southern California to ensure local garment employees receive their rightfully earned pay,” said Ruben Rosalez, Wage & Hour Division regional administrator in San Francisco. “Unfortunately, we continue to find wage violations at nine out of every 10 facilities we investigate. Manufacturers that fail to pay their employees minimum wage and overtime have a negative impact on the garment industry by unfairly undercutting their competition.”

As a result of the inquiries, CAL TM Inc. will pay $41,742 to 46 employees after an investigation found that employees were not paid overtime and in many cases earned less than the federal minimum wage. Records were falsified to make it appear that employees were paid hourly.

ANC Fashion Inc. will pay $64,906 to 269 employees after investigators found that employees worked over 40 hours per week without receiving overtime pay.

HJ Fashion will pay $21,023 to 21 employees after an investigation disclosed the employer failed to pay employees the federal minimum wage and overtime. Investigators also found the employer kept no time records and paid employees in cash only.

In a separate investigation revealed last week,= in a case stemming from an investigation into Los Angeles Fashion District businesses using “Black Market Peso Exchange” schemes to launder narcotics proceeds for international drug cartels, an import-export textile business and two executives pleaded guilty to federal money laundering and tax charges.

The investigation into Pacific Eurotex was conducted by U.S. Immigration & Customs Enforcement’s (ICE) Homeland Security Investigations division and the Internal Revenue Service’s Criminal Investigation unit.

Pacific Eurotex Corp. and its owners–Morad “Ben” Neman and Hersel Neman–pleaded guilty to federal charges in an indictment that accused them of using the business to receive bulk cash they knew or believed to be the proceeds of narcotics trafficking.

[Read more about supply chain fraud: Companies Are Using Analytics to Mitigate Supply Chain Fraud]

The defendants admitted in court documents that they failed to report to federal authorities the receipt of this bulk cash, and that they “structured” frequent deposits of the cash, in amounts less than $10,000, to avoid a bank reporting requirement that would have drawn the scrutiny of law enforcement, ICE said.

The Nemans also pleaded guilty to conspiring to defraud the U.S. by maintaining two sets of business records in order to conceal income for tax purposes.

A Black Market Peso Exchange scheme is designed to assist drug traffickers who have U.S. currency that they want to send to a foreign country, such as Mexico, and convert into pesos. As part of the scheme, a broker finds business owners in the foreign country who buy goods from U.S. companies and who need dollars to pay for those goods. The broker arranges for the illegally obtained dollars to be delivered to the U.S.-based vendors, such as Pacific Eurotex, and these illegally obtained dollars are used to pay for the goods purchased by the foreign customers. Once the goods are shipped to the foreign country and sold by the foreign business, the pesos are turned over to the broker, who then pays the drug trafficker in the local currency of the foreign country, thus completing the laundering of the illegally obtained dollars.

Pacific Eurotex received, laundered and structured approximately $370,000 in bulk cash delivered on four separate occasions in 2013 by an undercover agent posing as a money courier, according to court documents.

Neman faces a maximum sentence of 21 years in federal prison and Neman faces a sentence of up to 28 years. Pacific Eurotex faces a statutory maximum sentence of up to 10 years’ probation and almost $2 million in fines.

Related Articles

More from our brands

Access exclusive content Become a Member Today!