April 9, 2015

Winning in court just the first step for Bellingham wage theft victims

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When workers get cheated out of wages, it’s often not enough just to win a court order for back pay. Often the court ruling is a hollow victory because the employer has gone out of business or claims to have little or no money to pay the judgment.

That’s the challenge likely facing 101 workers who a jury last month awarded $1.3 million in back pay and damages from the co-owners of a restaurant and a spa in Bellingham, Wash. A lawyer for the employers said there is no way they will be able to pay.

The case, detailed in a FairWarning story InvestigateWest published last year, was brought by the U.S. Department of Labor against Huang “Jackie” Jie and Zhao “Jenny” Zeng Hong and their businesses. The government’s civil suit highlighted the issue of low-skill immigrant workers who are victims of wage theft but resist complaining to authorities because they fear retaliation by their employers.

Federal officials alleged an array of workplace abuses by Huang and Zeng, who once were married but divorced in 2013. Also named as defendants were their businesses, which operated under the names J&J Mongolian Grill and Spa Therapy in a Bellingham mall. Both closed in recent months.

The defendants were accused of using employees – mostly Chinese immigrants who spoke little or no English — an average of 70 hours a week but not paying them the legally required time-and-one-half overtime premium. In some cases, the government said, workers weren’t even paid the federal minimum wage of $7.25 an hour. The defendants also were accused of falsifying payroll records and misclassifying employees as independent contractors to cover up wage violations affecting cooks, kitchen helpers, cashiers and masseurs.

The Seattle jury that heard the case, along with awarding back wages to the 101 workers, also gave compensatory damages to four employees found to have suffered retaliation for cooperating with labor investigators. During the three-day trial, workers testified that one employee was fired after refusing instructions from the employers to lie to state officials about working conditions.

In a declaration filed in the case, a Labor Department Wage and Hour investigator said some workers also disclosed that one of the owners, Huang, “told them that if his interest was harmed, he would call the police and falsely tell the police that the employee was caught stealing.” In addition, the investigator said some employees told him that Huang threatened to turn them in to immigration authorities if they cooperated with labor investigators.

Labor department officials said workers were also threatened with “physical harm” although none of the affected workers agreed to testify during the trial.

Janet Herold, who oversaw the government’s case as the Western region solicitor for the Labor Department, said the jury’s unanimous verdict was a complete vindication of the agency’s position.

“The perfect trifecta of exploitation is stealing [the] wages of a vulnerable population, misclassifying them to convince the workers they don’t have any rights and then retaliating against any worker who tries to call the cops,” Herold said. “That’s what happened here.”

She said the government’s case demonstrated “the increasing frequency of retaliation as a business practice.”

Yet Herold conceded that she is worried about collecting the jury award. At the government’s request, the case is set to go in two weeks to a court proceeding known as a “debtor’s examination.” The aim is to assess whether the defendants can pay an award as well as to determine how the money can be collected.

Herold said federal officials asked for the examination, “which is what we always do in situations in which we’re concerned about collection.”

“Given the pattern here, given the interference, the retaliation, the divorce moving assets into the wife’s hands, are we worried about collection? Sure. We’re taking every step we can to go after collection,” Herold added.

Glyn Lewis, a lawyer for the defendants, countered that federal authorities “are never going to collect that amount. That’s impossible.” His clients, Lewis said, don’t have “that kind of money.”

Lewis also called the government’s case against his clients “very unfair” because it didn’t take into account the value of the “free rent” defendants provided to house the workers in apartments.

He said no decision has been made on whether to appeal the jury’s decision.

 

FairWarning is a Los Angeles-based nonprofit investigative news organization focused on public health and safety issues.

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