SGMA slams U.S. labor enforcement • Association chair says federal W&H officers threaten to use ‘hot goods’ provision of FLSA

SAIPAN- Officials of the Saipan Garment Manufacturers Association (SGMA) have expressed their displeasure with ongoing federal enforcement activity at their members companies as a result of U.S. Labor’s interpretation of the Fair Labor Standard Act’s provisions for independent contracts.

SGMA acting chair Richard A. Pierce, after preliminary contact with local federal Labor officials, and U.S. Labor administrative offices in Guam, Hawaii and San Francisco, issued a statement to the federal offices, “I am having a hard time with U.S, Labor’s attempt to influence our members into assuming someone else’s responsibilities as employers, and using our members’ most important relationship as a means to their ends.”

Mr. Pierce was referring to enforcement activity at some SGMA member companies, where federal Wage & Hour officers have been threatening to invoke the “hot goods” provision of the Fair Labor Standards Act, (where manufactured goods can be seized if goods are not produced in compliance with wage laws ), when garment firms have hired security service companies that end up not paying their workers properly, and the federal officers insist that if the security guards aren’t paid, the factories will have their apparel products seized.

“The garment companies hire the security firm, the garment companies pay the security firm for their contracted security work, the security firm doesn’t pay their workers properly, and now the U.S. Labor Dept. use our members as leverage to collect wages for the poor workers that happen to have an unscrupulous employer,” Mr. Pierce continued.

“It’s not our fault that the workers don’t get paid. We paid our bill to the firm. Does this mean that every time we buy a cucumber from a local farmer, we better make sure that their employer pays its people? What about the garbage disposal service, or the cleaning service companies, or the insurance companies, or the bakeries, or the fishermen?” Mr. Pierce raised.

SGMA held Its 4th Code of Conduct Training Conference this past May, where both OSHA and the U.S. Labor-Wage & Hour Division conducted educational outreach. Wage & Hour requested SGMA to invite all their subcontractors engaged in embroidery work, laundering, printing and trimming services. U.S. Labor talked with the association membership on their assumed liability and responsibility for independent contracting and the possibility of the invocation of the “hot goods” provision of the Fair Labor Standards Act, should employees of the subcontractors not be paid properly.

Mr. Pierce said, “We had no idea that the law could be meant to read as far as security services. We concluded that this liability extended to the direct manufacturing process only. We issued statements on May 10 after our conference noting that federal Wage & Hour had spent little time discussing with our membership all we needed to know.”

“Naturally, we are concerned with this enforcement activity because we do not feel it is appropriate or fair. We are also concerned with how this would affect our business relationships with our local vendors, the relationship with our buyers, the litigation theorists and the politicians. We want to continue to work with the enforcement offices that oversee our operations, but we need more education and contact outside enforcement activity,” he explained.