Labor sanctions Koresco owner for abandoning three workers

The Department of Labor has sanctioned the owner of Saipan Koresco Hotel and its managing officer and banned them from hiring alien workers in the CNMI for abandoning three employees.

Labor hearing officer Jerry Cody ordered Saipan Koresco Corp. and its managing officer Chang Wook Park to pay a $900 fine for their conduct, including failure to pay wages and failure to appear for investigation.

Cody found the corporation liable to pay its workers Conrado F. France and Melanie C. Obula $536.80 and $390.40 respectively for wages and liquidated damages.

The hearing officer determined that no wages are owed the third worker, Anicia V. Caguiat, as she was unable to work during the notice period.

Cody said it is assumed that the corporation is unable to pay the judgment, given that the hotel is closed and Park has departed the Commonwealth.

If Koresco fails to pay the wage awards within 10 days, the insurance companies shall be obligated to pay the judgment pursuant to the surety bonds that cover the workers’ employment with the corporation, said Cody in his order issued Friday.

The corporation and Park are each disqualified for three years from employing nonresident workers in the CNMI.

Cody also prohibited Park for three years from serving as officer or director of any CNMI corporation that employs alien workers.

France, Obula, and Caguiat were found not at fault in the case and allowed to seek another employer within 45 days.

Cody said Park was not a party to the employment contracts entered into by Saipan Koresco; therefore, he is not personally liable for the corporation’s breach of contract.

“On the other hand, Park played a decisive role in the closure of the company and the events that led to wages not being paid,” he noted.

“Although corporate officers may be shielded from personal liability for contractual damages, they are not protected from the imposition of sanctions for their intentional and willful decisions that violate provisions of the Nonresident Workers Act,” the hearing officer said.

In this case, he said, Park’s conduct was negligent in that he failed to pay remaining wages owed the workers.

Furthermore, Cody said, despite the fact that he made numerous trips to the CNMI in 2005 after closing the business, Park failed to appear for an investigative interview during the course of the investigation.

Therefore, he should be sanctioned along with the corporation, Cody said.

Labor records show that the case arose from the sudden closure of Saipan Koresco’s hotel business in Koblerville in June 2005.

Park managed the hotel, but represented himself to the Labor director as the “president” of the company.

Koresco employed nonresident workers France, Obula, and Caguiat, to assist in hotel operations.

France worked as a “mason” under a nonresident work permit that was scheduled to expire on March 16, 2006.

Obula worked as a housekeeping cleaner under a nonresident work permit that was scheduled to expire on July 8, 2005.

Caguiat worked as a housekeeping cleaner under a nonresident work permit scheduled to expire on Jan. 29, 2006.

On June 27, 2005, Park wrote a letter to the Labor director informing him that Koresco had closed its hotel business as of that date. In the letter, Park requested that their three employees be granted transfer relief.

Park delivered the letter about the closure to France and Obula on June 28th and the workers stopped working that same day.

Caguiat was in the Philippines on medical leave and returned to the CNMI on Aug. 23, 2005.

Park departed from the CNMI on July 1, 2005. The business never re-opened.

Cody said the closure of a business may constitute valid grounds to terminate workers’ employment contracts. However, he said, the employer must follow proper procedures.

“In this case, the closure of Koresco’s business constituted proper grounds for termination for cause under the provision of the employment contracts,” he said.

The employer, Cody said, began the proper procedure when it gave notice of the business closure to the director and requested a transfer for company employees.

However, he cited, respondents served the workers with notice of the closure and closed the business on the same day.

“Thus, Koresco failed to give the required 15 days of advance written notice to its employees [or the Director] and never paid the workers’ wages for that period, in breach of the terms of the employment contracts,” he said.

Cody said three days after submitting the letter to the director, on July 1, 2005, Park boarded an airplane and departed the CNMI.

Park’s sudden departure left complainants without their “advance” wages and with the problem of having to seek immediate authorization from the department for temporary work, transfer or repatriation.

Cody said the evidence establishes that the termination was for cause, but that the workers may be entitled to wage awards for the “advance notice” period for which they were not paid.

He said respondents’ failure to appear and produce required records constitutes hindrance of an investigation and delay of the director’s designee’s performance of his duties in violation of law.

“Such conduct justified the imposition of sanctions against respondents. The evidence in this case establishes that respondents breached complainants’ employment contracts by failing to pay wages to these employees for the advance notice period required in the contracts,” he said.