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Jul
2015
15

$1.4M Wage Theft Settlement Exposes Practice of Temp Worker ‘Shell’ Companies in Philly

ICS PHILLY WAGE THEFT

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Following an investigation by the Department of Labor Wage and Hour division, Philadelphia-based direct mail and printing company ICS Corp. has agreed to a $1.45 million settlement for failing to abide by the Fair Labor Standards Act.  ICS Corp., New Century Integrity Corp. and its owner Hokkito Teddy were all joint employers according to the DOL, overseeing 166 Filipino and Indonesian temporary workers.  Investigators found that a second staffing agency used by ICS, Richy Services Inc, failed to produce time and payroll records.  

Wage and Hour Division Administrator Dr. David Weil said of the case (and others like it):

“Temporary staffing agencies are valuable contributors to our economy.  These agencies should not be used by employers to attempt to avoid their obligations under the law. Those who do will be held accountable, as today’s action shows.”

Between 2012 and 2014, workers were often paid cash at straight time rates for all hours despite working more than 40 hours a week.  Workers provided by New Century were paid by check for their first 40 hours at ICS.  For all overtime hours they were paid $11 an hour in cash, an amount lower than their actual wage of $13 an hour.  The 166 workers will receive $725,583 in overtime back wages.  

According to Philly.com, most of the employees will recieve evenly split payouts of more than $5,000.  A small handful of former employees will receive more than $40,000 a piece.  

ICS and New Century Corp. admitted no wrongdoing as part of the settlement. Matthew Hank, attorney for the staffing agency and its owner, Teddy Hokkito, said: “There was a dispute. We settled it.”

Okay then.

The judgement prevents ICS from doing business with Richy Hang, owner of Hang Services, Inc.  However, given the nature of the business it is likely that Hang will reappear on the scene under a different name. Hokkito Teddy, also named in the judgement, has a long history of opening temporary staffing companies only to see them collapse after their violations are discovered.  Hokkito then changes the name of his company and repeats the process again.  According to Philly.com he has had three companies with three different names over the last three years.

This scheme is an important part of the process called fissuring, in which companies get away with labor violations by contracting jobs out to temporary staffing companies.  These companies often use immigrants on temporary visas or workers whose immigration status is questionable in order to easily exploit them and lower labor costs.  Ivette Vigano, Assistant Director of the Philadelphia district office for the Labor Department, explained:

“These are nontraditional temporary agencies,” she said. “After we begin to investigate, they will close shop. They can change names and employees within a couple of days.”

In addition to the fines and penalties, the consent judgement will force ICS to hire a compliance officer to ensure its records are properly keps and its temporary are properly paid. Oscar Hampton, the DOL’s Regional Solicitor in Philadelphia said:

Companies that use temporary agencies have a responsibility and duty to pay legally required wages.  ICS violated the law when it failed to pay its workers the wages they earned. The company cheated its employees and sought an unfair business advantage over competitors that abide by the law.”

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