Sako ordered to pay 486 workers $243K

The Division of Labor has recommended that Sako Corporation be ordered to pay $243,000 in total contractual damages to its 486 workers for alleged wrongful termination, plus a fine of $500 for each worker affected by the now defunct garment company’s workforce reduction earlier this year.

Labor director Dean Tenorio also asked the Department of Labor Hearing Office to permanently bar Sako from employing nonresident garment workers in the CNMI.

In a determination and notice of violation, Tenorio said Sako violated sections of the Nonresident Workers Act, the Alien Labor Rules and Regulations, the Minimum Wage and Hour Act, and the company’s approved employment contracts with its workers.

Specifically, Tenorio related that on Jan. 27-28, 2005, Sako president Kyun Hee Kun announced to its employees a force reduction plan that would take effect February 2005. In the notice, Kyun said 80 percent of Sako’s 486 employees would be either transferred to another garment factory and/or be repatriated due to lack of orders from buyers.

The notice was placed at the office bulletin board and all main entrances for employees to see and read. The Labor Department was not informed of the notice until an on-site visit by the garment task force on Feb. 4, 2005.

On Feb. 1, 2005, Sako vice president Min Hyung Ki issued non-renewal notification letters to employees whose contracts were set to expire on various dates within February. Min told the employees that the company had no intention to renew their employment, but the workers were advised to continue working until the expiration of their contracts.

However, the company never informed the Labor Department of its plans and intent until March 3, 2005. In a letter, Sako told the department that it had been reducing its workforce since December 2004 and that it would sell its production line equipment to a Korean company to raise funds for payments owed employees for wages and for their repatriation costs.

A week after sending the letter, Sako abruptly ceased its business operations due to eviction. Accordingly, Sako breached its contracts with employees due to Sako’s failure to continue providing work as required by the approved contracts.

Since Sako’s March 10 closure, none of the company’s officers have made any attempt to contact Labor about the status of the company and to address the repatriation of its employees.

The Office of the Attorney General has been paying for the repatriation of Sako’s

The Labor Division also found that Sako still owed wages to four employees whose paychecks had been lost or stolen. A stop order had been placed on those checks and Sako had yet to make a substitute payment.

Two other employees, who failed to appear during the March payroll distribution, are still waiting for their wages, totaling $73.96.

In yet another violation of labor laws, Sako was found to have engaged in unauthorized employment by having an employee to work as an assistant to Sako’s general manager when the worker’s permit authorized him to work for Mariana Fashions as a cutter.

“Based on the above findings, the Director of Labor alleges that Sako and its officers are financially incapable in rectifying its contract obligations with its employees and therefore creating chaos by abandoning its employees,” Tenorio said.

He said Sako should have notified Labor about the force reduction so that the employees could be transferred properly to other employers. For this, Sako must pay a fine of $500 per employee for its failure to properly notify the department of the force reduction, Tenorio said.

He also asked the Hearing Office to assess Sako contractual damages of $500 for each of its 486 employees for wrongful termination.

Furthermore, Sako should be ordered to reissue checks to the four employees with lost or stolen paychecks, and to settle the unpaid wages of the two other workers. A $2,000 fine must also be collected from the company for the unauthorized employment of worker Jun Young Ham, said Tenorio.

He also called for Sako to be disqualified from employing alien workers in the CNMI.

As for the workers, Tenorio said those with valid permits should be allowed 45 days to transfer to other garment factories.