LA Apparel Contractor Ships ‘Hot Goods’ to Charlotte Russe Prompting Restraining Order

RK Apparel Inc., an apparel contractor that illegally shipped clothing to Charlotte Russe from a subcontractor allegedly not paying minimum wage or overtime, was slapped with a “hot goods” temporary restraining order by the U.S. Labor Department.

The temporary restraining order, announced on April 13, was issued by the U.S. District Court in Los Angeles.

Investigators from the U.S. Department of Labor found that RK Apparel’s subcontractor, HDK Ave. Inc., did not pay its employees the federal minimum wage of $7.25 per hour, which is significantly lower than the California minimum wage of $11 an hour and the Los Angeles County minimum wage of $12 an hour. Despite being warned by the Labor Department about HDK’s labor status, RK went ahead and shipped nearly 80 boxes of garments in February and March to Charlotte Russe, court documents said.

Some of HDK’s employees received only $4 per hour, said Janet Herold, the U.S. Department of Labor’s regional solicitor in Los Angeles. The government determined that the workers were owed $168,000 in back wages and overtime. As part of a consent judgment, RK Apparel and HDK agreed to deposit $40,000 as the first payment for the back wages owed.

Under the provisions of the order, HDK and RK Apparel, owned by Jessie Lee, cannot ship its goods until the unpaid back wages have been made to the sewing factory’s employees.

The defendants will also be required to hire an independent third-party monitor, acceptable to the Labor Department, to monitor all of its domestic-garment contractors to enforce the contractors’ compliance.

“Whenever goods are produced in violation of the FLSA’s [Fair Labor Standards Act] minimum wage, overtime, or child labor provisions, the U.S. Department of Labor can restrain those goods from being shipped in interstate commerce. This action is commonly referred to as invoking the ‘hot goods’ provision,” Herold said. “Today’s action demonstrates that we will use all of the tools provided by law to ensure that employees receive the pay they have legally earned and that law-abiding employers are not undercut by unfair competition.”

The employees were not paid overtime, as required by federal law, when they worked more than 40 hours a week. Labor department investigators found that HDK required their employees to work up to 58 hours per week, but only paid them at a piece rate, or a flat amount per garment produced.