The Department of Labor has found a former restaurant owner liable to pay damages to two of its then employees for breach of contract by closing the business without advance notice to the workers.
Labor administrative hearing officer Jerry Cody ordered K.Y.S. Enterprises Inc. to pay Alice B. Figueroa and Cesar L. Abobo $976.80 each for damages.
K.Y.S. was also found owing the two complainants repatriation tickets in the event that they notify Labor of their intent to depart the CNMI within the initial contract period.
The hearing officer did not find KSA Corp., the company that bought the restaurant, liable to the workers’ claims.
According to Labor records, Figueroa and Abobo began working for K.Y.S. Enterprises, which owns Hot Curry Bar & Restaurant, in 2009 as a waitress and cook, respectively. Yun Dong managed the business. The two employees worked at Hot Curry until August 2013.
Prior to 2013, K.Y.S. had obtained CW status for the two employees, then renewed that status in 2013.
In June 2013, Dong informed the employees that she was planning to sell the restaurant and return to China. In early 2013, Dong told employees that Linlin Chen had decided to buy the restaurant. Dong assured the employees that the new owner would “take care of them.”
On Aug. 25, 2013, in the presence of Chen, Dong told the employees that Chen had bought the restaurant and she would be leaving the CNMI in less than a week. Dong then paid the employees the wages that they had earned up to that date.
Chen told the employees the she planned to close the restaurant briefly for cleaning and minor renovations, then open under a new name, Serene Bar & Grill. Chen asked the employees to assist in the cleanup, but made no statement about long-term employment.
On Sept. 7, 2013, Figueroa received a text message from Chen, telling her to pick up her salary tomorrow “and find yourself a new job.”
Abobo worked on the cleanup, then as a cook at the new restaurant from Sept. 1 to 7, 2013. He was also told on Sept. 7 that it was his last day of work.
On Sept. 8, 2013, Chen reviewed the hours the complainants had worked and paid each of them in cash for those hours ($280 to Figueroa and $416 to Abobo).
Chen didn’t tell them why she no longer wanted them to work.
Both employees believed that they were legally entitled to continued employment with the new owner because of statements made to them by their former manager.
On Sept. 11, 2013, Figueroa and Abobo went to the Labor Hearing Office and filed complaints against K.Y.S. and KSA Corp. for breach of contract, wrongful termination, and unfair treatment. They each sought compensation for at least six months’ wages.
In an administrative order released last week, Cody said he finds credible the testimony of KSA Corp. president Il Hwan Kim and manager Linlin Chen, who both testified regarding KSA Corp.’s takeover of the leased premises of Hot Curry.
The only other negotiating party to that sale, K.Y.S. general manager Dong, had already left the CNMI and did not testify.
Chen stated categorically that the sale concerned only the restaurant and bar equipment—not all assets and liabilities of K.Y.S.
Cody ruled that each employee’s termination was not done for an unlawful purpose, therefore they have no valid labor claims against K.S.A. Corp., including any claims for breach of contract, wrongful termination, or unpaid wages.
Cody noted that K.S.A.’s conduct does not seem particularly humane to the workers but such conduct was not illegal or in breach of any contract.
He said that KSA was not bound by that contract and that KSA employed the complainants on an “at-will” basis; therefore, they could be terminated without cause.
K.Y.S., on the other hand, failed to appear at the mediation hearing despite being served with notice and was therefore found in default.
Cody said the general manager closed K.Y.S.’s business with no advance written notice to employees, and left no advance salary or repatriation tickets for the two employees.
Cody said the fact that the new employment with KSA was “possible” did not relieve K.Y.S. of its obligation to provide a minimum of 30 days’ advance written notice—in essence 30 days’ salary—to all employees whose contract was being terminated as a result of the business closure.