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News Release

Archived News Release — Caution: Information may be out of date.


Employment Standards Administration

ESA Press Release: U.S. Department of Labor Crack Down on Labor Law Violations in Saipan Results in More Court Actions [03/27/1998]

For more information call: 202-219-8211

The U. S. Department of Labor announced today that three more companies in the Commonwealth of the Northern Mariana Islands (CNMI) were charged in the last month with violating U.S. labor law: the overtime provisions of the Fair Labor Standards Act (FLSA), failing to pay for all hours worked and making illegal deductions from wages.

Today, the Labor Department filed suit against two garment factories. These cases follow a suit filed last week against several commonly-owned nightclubs. Last December, the Labor Department filed suit against a CNMI construction company. All of these cases were filed in U.S. District Court for the District of the Northern Mariana Islands.

The Labor Department's Occupational Safety and Health Administration has also issued citations in February and March to three garment manufacturers, a construction company and a cardboard box manufacturer in the CNMI. Proposed penalties totaled $244,350, for numerous alleged violations of federal safety and health standards.

"The U.S. Department of Labor will not tolerate the exploitation of workers and will not hesitate to seek legal action to compel compliance", said Secretary of Labor Alexis Herman. "As Secretary of Labor, one of my goals is to guarantee every worker a fair workplace."

The case against Hyunjin Saipan, Inc., which took over the former S.R. Saipan Corporation garment plant in late 1997, seeks to recover back wages in excess of $250,000 for 300 garment workers who were not paid for all hours worked and an additional amount, which could be as high as $1 million or more, for barracks confinement. Hyunjin has cooperated with the Department in its investigation and has already paid employees over $160,000 for missed payrolls and bounced checks prior to its assumption of ownership. The Department of Labor's Wage and Hour Division found that since January 1997, in addition to missed payrolls, the former employer required employees to work hours for which they were not compensated and to live in employer-leased and managed housing, which they were prohibited, except under very limited circumstances, from leaving outside of work hours. The employer failed to include barracks confinement time as work time. Also named in the suit are Byung Yong Moon, Sang Chul Lee, and Jin Sik Lee.

In the second garment factory case, Micronesian Garment Manufacturing, Inc. (MGM) and Diorva Saipan Limited were charged with failing to pay for hours worked and making illegal deductions for food and lodging. The Labor Department is seeking back wages for 500 garment workers. The full nature and extent of the violations are still under review by the Department. Also named in the suit are Diorva principal Bshiu Fai Yim, and MGM president Ignacia Villaluz.

The case against Moods & Music, Rhythm and Blues\42nd Street and 8th Avenue nightclubs, and their common owner, Elizabeth P. Castaneda, seeks to recover back wages of more than $75,000 for nearly 60 employees who were not paid for all hours worked and had illegal deductions made from their wages for recruitment fees. The investigation determined that employees were required to drink alcoholic beverages with customers, solicit customers over the phone to come to the clubs, serve customers during "happy hours" when the clubs were officially closed, and clean the clubs and barracks, and were not compensated for the time. In addition, the investigation determined that the employees were unlawfully required to pay the expenses incurred by the clubs in recruiting them from the Philippines. Castaneda has also been indicted by the U.S. Attorney in Saipan for violations of the Mann Act which prohibits transporting women across state lines for immoral purposes.

In December 1997, a case was filed against a construction company, Marianas Star Corp., and Byung Soo Jun to recover $200,000 in back wages for 11 workers recruited from the Philippines. The investigation found that employees were not compensated for time worked at the firm's compound in the morning and afternoon before being transported to construction sites, time cleaning the firm's barracks on Sunday, and time employees were restricted to barracks. In addition, the Labor Department found that illegal deductions were made from employees' wages for tools and medical fees.

All of the court actions also seek a permanent injunction to restrain the firms and their principals from future violations of the FLSA.

"I hope that these latest court actions send a clear signal that the department will continue to pursue all available means to obtain compliance with the labor laws that we can enforce in the Commonwealth," continued Secretary Herman. "The department will continue to concentrate its enforcement efforts on the lowest paid, most vulnerable populations and target egregious violators of the law."

On May 30, 1997, President Clinton wrote to then Governor Froilan C. Tenorio to express his concern about labor practices in the CNMI and his intention to work with Congress to extend the minimum wage and immigration laws to CNMI. Although the child labor, overtime, and recordkeeping requirements of the FLSA apply in the CNMI, the minimum wage is set by CNMI law pursuant to the Covenant signed in 1986 between the CNMI and the U.S. The Federal Labor Department cannot enforce the CNMI's local minimum wage, set at only $3.05 per hour.

The U.S. Labor Department has stepped up its enforcement in recent years to curb flagrant abuses of workers in the CNMI most of whom are Asian guestworkers. Last year, Wage and Hour was able to recover more than $734,000 in back wages for nearly 1,100 workers in 19 firms found to be violating the FLSA.

Archived News Release — Caution: Information may be out of date.

Employment Standards Administration
March 27, 1998
Contact: David Roberts
Phone Number