La Mode workers to get back wages

Former workers of La Mode, Inc. will soon get a significant portion of back wages owed them by the defunct garment firm, with Attorney General Pamela Brown disclosing that the federal Labor Department has already collected some $329,000 from the company’s retailers.

The U.S. Department of Labor stands to collect some $380,000 from the garment retailers. Brown said the Labor Department’s Wage and Hour Division had convinced concerned retailers to provide the money for the workers’ unpaid wages, citing the “hot goods” provision of the Fair Labor Standards Act.

Brown said the federal Labor Department and her office would work together to locate affected workers and distribute a significant portion of their back wages, notwithstanding the bankruptcy petition filed by the company before the U.S. Bankruptcy Court in the Central District of California in Los Angeles.

“This is great news for these workers, now that La Mode has filed for bankruptcy. It means that even though actions to collect directly from La Mode are stopped by the bankruptcy proceedings, workers will be fairly compensated for their work,” Brown said in a statement.

“It is another example of the cooperation between Commonwealth and federal agencies using our existing laws to make certain that justice is done. It also means that the CNMI will be reimbursed for money paid out to compensate and repatriate workers under our statutes,” she added.

La Mode ceased its Saipan operations on April 25. It has an affiliate company in California, Golf Apparel Brands Inc. Sometime last July, some 121 workers sued La Mode before Saipan’s federal court for alleged illegal termination of employment, unpaid wages and overtime, and illegal wage deductions or kickbacks.

The workers are seeking a multi-million-dollar judgment against La Mode and its owners, Edward and Barry Kahn. The suit impleaded Golf Apparel Brands Inc. as co-defendant, saying that both companies operated as a single employer.

Later that month, however, La Mode filed a bankruptcy petition that automatically stopped temporarily all other court proceedings involving claims against the company. La Mode filed the petition under Chapter 7 of the Bankruptcy Code, which seeks liquidation of assets to pay off creditors to the extent possible and to free itself as debtor so it can start anew. The company declared the value of its assets at no more than $50,000 and the range of the number of creditors at 200 to 999.

Brown expressed optimism that her office could locate all affected workers, citing “a very detailed and highly accurate accounting” of garment workers that has been done since 2003.

“When the funds are ready for distribution, we will publish notice and begin the notification process for workers who returned to their home countries,” the attorney general said.