Investigators from the US Department of Labor’s Wage and Hour Division found the four sewing contractors deliberately failed to pay overtime wages for hours exceeding 40 in a workweek, despite employees consistently working an average of 52 hours per week.
The sewing contractors in violation of the rules were named as Good Cash LLC and its associated entities, Good Cash Inc., Premium Quality Apparel LLC, and Premium Quality Apparel Inc., owned by Ramon Tecum, Marisela Romero (aka Diana Tecum), and Joseph Delao,
The investigators added that California Deputy Labor Commissioner Conrado Gomez played a significant role in these businesses.
The investigators also claimed the contractors not only engaged in illegal wage practices but also falsified payroll records and issued fake checks in an attempt to conceal their illegal pay practices.
During a court-authorised investigative inspection warrant by the US Department of Labor's Wage and Hour division, Tecum, Romero, and Gomez are said to have attempted to obstruct the process by posing as workers, shutting off power to the facility, and instructing employees to leave the worksite.
Upon learning of its contractors' violations, Beyond Yoga, the apparel brand associated with the scandal, took responsibility and agreed to rectify the situation after the department enforced a ”hot goods” hold on the apparel produced by the employees.
The company has committed to paying $582,317 in back wages and an equal amount in damages. In a bid to enhance compliance in its product supply chain, Beyond Yoga entered into a compliance agreement with the Department’s Wage and Hour Division.
The agreement includes an update to Beyond Yoga’s code of conduct for garment contractors and includes full compliance with the Fair Labour Standards Act.
It has also established a monitoring programme and has directed all contractors to display information for workers on how to report potential labour violations confidentially, including through Beyond Yoga’s worker hotline.
Commenting on the case, Wage and Hour administrator Jessica Looman said: “The garment industry employment model involves multiple layers of contractors and sub-contractors and leaves workers vulnerable to wage theft and exploitation.
“This case demonstrates that the Wage and Hour Division will hold to account employers across the supply chain to ensure that workers receive the pay they have earned and the rights they are afforded by the law.”
The Office of the Solicitor secured a consent judgment in the US District Court for the Central District of California against Good Cash and Premium Apparel entities and their owners. The judgment mandates that Good Cash and Premium Quality Apparel pay $200,000 in civil money penalties for their "wilful Fair Labor Standards Act violations".
The US Department of Labor noted this is not the first time Good Cash has faced such charges. In 2021 the division cited them for similar violations and recovered $29,413 in back wages for nine workers and assessed $3,921 in penalties in a separate investigation.
Solicitor of Labor Seema Nanda warned: “Employers who steal hard-earned wages from workers who produce their goods may incur penalties that disrupt the operations of their distributors and cause production to fall short of customers’ expectations, as the enforcement of the hot goods provision in this case shows.
“To avoid potential liability, businesses must monitor their supply chains closely to make sure the goods they purchase are made legally.”
