As of Thursday, February 25, 2016
YN Apparel, a Los Angeles–area manufacturer that supplies garments for Ross Stores, has been ordered to pay $212,000 in back wages for employees of its subcontractors after the U.S. Department of Labor found YN’s subcontractors did not pay minimum wage and overtime.
The fine is a consent judgment handed down by a U.S. District Court judge in Los Angeles, which requires that 270 employees of the subcontractors be paid for wages owed.
Department of Labor Wage and Hour Administrator David Weil was in Los Angeles on Feb. 24 to make an announcement about the case and worker abuse in Los Angeles’ apparel industry.
Weil could not say whether Ross Stores knew about the violations, but he noted that Ross had been using YN Apparel for years and also worked with the company when it operated under a different name and had previous labor violations. YN Apparel’s principal owner is David Um. The company is located in Vernon, Calif.
“We find the kinds of prices that contractors are being paid, like YN Apparel, are insufficient to pay basic wages,” Weil said at a press conference. “You start with contractors that are being paid a price too low and it works up the chain.”
Weil said his department has not gotten a response from Ross about the labor violations. “I came to Southern California with the hopes of meeting with people from Ross and talking to them about what the agency has done to document the problem and find solutions,” he said, adding that he ended up not meeting with Ross.
In a statement, Ross Stores, headquartered in Pleasanton, Calif., said it takes labor issues very seriously and that the retail chain requires its suppliers to uphold its ethical standards. “We also work very closely with the Department of Labor to make sure our vendors understand and comply with all applicable federal, state, local and international laws related to products we purchase and sell, and this is an ongoing and continuous effort,” a corporate spokesperson said in an email.
Labor department investigators looked at the prices YN paid its contractors and found that YN would have had to pay up to three times more for the goods in order to pay the workers legally and would have had to charge Ross Stores twice the amount it paid for the goods. The consent judgment requires YN to do the same analysis for all its domestic contractors in the future. “Low prices are driving this problem and creating this pressure at the bottom, where the worker is, and that tends to drive down wages,” Weil said.
Investigators estimate that most of the subcontractors’ workers were making anywhere between $5 and $6 an hour because they were paid on a per-piece basis. Currently in California the minimum wage is $10 an hour.
Many of the garment laborers working at these subcontractors are no longer employed at these factories, but they can still collect back wages by going to a government website and checking a database to see who has back wages waiting for them. The website is www.dol.gov/whd.
There were 13 subcontractors involved in the investigations of minimum-wage and overtime violations while sewing clothes for YN Apparel. Of those, only the workers at six of the subcontractors will receive back-wage payments from YN Apparel. They are Shaina Fashion Inc. at 757 S. Los Angeles St. in Los Angeles; Izzi Style Inc. at 1711 E. 58th Place in Los Angeles; Gomez Fashion at 427 S. Bonnie Brea in Los Angeles; G&R Fashion at 112 E. Adams Blvd. in Los Angeles; D APS Inc. at 1431 E. Vernon Ave. in Los Angeles; and Sam Fashion Inc., which also does business as Han’s Fashion and Tic Tok, at 1247 E. 58th Place.
California does have a law, AB1855, that requires companies to make sure that the garment contractors and other entities they hire have enough money to comply with all labor, state and federal laws, but the federal government does not enforce state laws.
Over the last five years, the Department of Labor’s Wage and Hour division in Southern California has concluded more than 1,000 investigations resulting in the discovery of more than $11.7 million owed in back wages, the department said. But the problem continues to persist. “We are tired of fighting this problem,” Weil said. “It is simply unacceptable that this problem has persisted.”
The Federal Fair Labor Standards Act requires employers pay nonexempt workers at least the federal minimum wage of $7.25 per hour plus time and a half for hours worked beyond 40 in one week. Companies must also keep accurate time and payroll records under the FLSA.
In addition to requiring YN Apparel to pay back wages, the judgment requires YN to ensure its subcontractors have valid garment registration. YN Apparel is also ordered to hire a third-party monitor to make sure its contractors comply with the overtime, minimum wage and recordkeeping provisions of the FLSA. YN is prohibited from contracting with companies that do not comply with the FLSA.
According to court documents, YN Apparel does not sew specific garments but supplies fabric that is precut for the number of pieces in the order and then subcontracts with other companies to sew the garments.