L.A. SPORTSWEAR FIRM CITED BY LABOR DEPT.

Byline: Joanna Ramey

WASHINGTON--Labor Department wage investigators have hit a Los Angeles private-label sportswear manufacturer again for not insuring that its contractors pay federal minimum and overtime wages, in a case that agency officials say puts more teeth into their apparel industry crackdown.
In the face of Labor's continued enforcement, the manufacturer, Sungdo International, which will monitor its local contractors, plans to move a good part of its Los Angeles production to Mexico in conjunction with a new joint venture there.
"We're moving out; we're going to Mexico," said David Plummer, president of Sungdo's Los Angeles operation, which last year produced $15 million in women's sportswear, $10 million of which he said will be made in Mexico starting in March. The company is part of the manufacturing division of South Korea's largest retail chain carrying the same name.
"I am in the garment business. I am not in the Labor enforcement business," he said.
Because of the latest order against Sungdo, filed last Wednesday in U.S. District Court, Los Angeles, Labor officials say they will have more firepower next time they move to force another company to police contractors for wage compliance.
The consent order requires Sungdo to pay $15,000 in back wages owed workers at one of its fashion T-shirt contractors. In addition, the company, which in May paid $223,000 in a case involving another contractor, agreed to establish a detailed wage-monitoring program at all of its contractors.
For almost three years, Labor investigators have been targeting apparel manufacturers to put pressure on contractors to comply with wage laws. The agency has based its enforcement effort on the "hot goods" clause in the federal Fair Labor Standard Act. The clause makes it illegal to enter goods into commerce that were made in violation of the act, which subjects time-sensitive fashions to potential seizure.
Labor officials contend manufacturers should be pressured to monitor their contractors since sewing shops act as agents of apparel makers. This strategy also insures that apparel makers won't accept extremely low bids from contractors who may avoid paying workers the minimum wage and overtime in order to get business, officials argue.
The court order in the Sungdo case gives Labor's point of view its first court test.
Contained in the order are a judge's conclusions that manufacturers in such cases cannot invoke a "good-faith defense" by saying they were unaware their contractors weren't paying workers properly. The agreement establishes another legal precedent by requiring manufacturers to pay contractors' back-wage bills and to establish a monitoring program.
"This gives us good case law," said Rolene Otero, Los Angeles district director for Labor's Wage and Hour Division. "Some of the manufacturers have tried to argue they have the good-faith defense available because on the back of their contractor order forms it says, 'You will abide by all aspects of the [Fair Labor Standards Act]."'
In his order, Judge Manuel L. Real wrote that the good-faith defense doesn't apply because the manufacturer owns the materials sent to their contractors and otherwise has a proprietary interest in the sewing shop.
Likewise, since this defense can't be invoked, Real wrote that it's "incumbent" upon manufacturers to "implement a compliance program or to guard against violations" of wage laws.
The majority of manufacturers faced with the threat of apparel being seized have paid contractors' back wages and voluntarily agreed to monitor contractors. Should investigators find manufacturers continuing to have contractors in violation, apparel companies are then pressed to sign an agreement with the agency detailing a specific monitoring program they will follow. Chorus Line, Z. Cavaricci and Guess are among the manufacturers who have signed such agreements.
Plummer said he is frustrated by Labor's targeting apparel manufacturers for violations he views as solely the responsibility of contractors. And while he said the company plans to follow the agency's latest demands for a monitoring program, he said regardless of the oversight, many sewing shops will still circumvent the law.
"The contractors 'yes' us to death. Then they go behind our backs and do it again. What are we going to do? I know we are going to be busted again," Plummer said, labeling the agency's threat of delaying shipment of apparel until contractor back wages are paid a form of extortion.
Plummer also questioned the federal wage laws, which require that overtime wages be based on the average hourly wage earned calculated according to piece work during a workers' first 40 hours on the job. He said many contract workers already make well beyond the $4.25 an hour federal minimum doing piece work and that figuring overtime on the piece work basis can be extremely costly.
--Fairchild News Service

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