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Tuesday, May 21, 2024
Logistics

Logistics companies ordered to pay warehouse workers $1M in back pay

In an effort to combat wage theft affecting foreign workers, the Department of Labor has recovered $1.1 million in back wages from two separate companies operating in the San Diego area.

The wages were recovered from Freig Carrillo Forwarding Inc. and ACV Logistics Inc. for 50 Mexican nationals, some paid as little as $2.43 an hour, according to a news release.

Federal investigators reported the two logistics companies used affiliates to compensate the workers in Mexican pesos by direct deposit each week.

On March 9, the U.S. District Court for the Southern District of California entered a consent judgment and order for Freig Carrillo Forwarding and its owner, Javier Martin Freig Carrillo, to pay $1 million in back wages and damages to 35 workers, $400,000 of which must be paid within 15 days with monthly payments of $16,928 for three years.

Freig Carrillo Forwarding must also pay $26,215 in civil money penalties for its violations of the Fair Labor Standards Act.

The court’s decision follows an investigation of Freig Carrillo Forwarding’s pay practices from December 2019 through December 2021, which found the employer denied minimum wage and overtime wages to Mexican nationals working at its San Diego warehouses, the DOL said.

Investigators determined Freig Carrillo Forwarding paid workers as little as $3.24 per hour and typically compensated workers in Mexican pesos for workweeks that averaged nearly 45 hours at a flat rate of $180 to $200 per week.

“The department’s ongoing work in this industry along the southern border puts other U.S. employers on notice that we will not tolerate these kinds of exploitative labor practices,” Seema Nanda, the DOL’s solicitor of labor, said in a statement. “An employee’s citizenship has no bearing on whether the Fair Labor Standards Act’s protections apply to them.”

Officials for Nogales, Arizona-based Freig Carrillo Forwarding denied any wrongdoing. The company is a logistics and transportation brokerage that services goods moving between the U.S. and Mexico.

The company said it complies with all U.S. labor laws for its American employees, and the workers who were allegedly underpaid were Mexican citizens employed by a Mexico-based company and hired to inspect goods to comply with that country’s customs laws.

“The industry requires workers with specific knowledge and expertise in Mexican international commerce laws to physically inspect the goods that are moved between both countries,” the company told the San Diego Union-Tribune. “These Mexican citizens have been traditionally paid pursuant to Mexican employment laws, which has been an industry practice for over 40 years.”

The company also said it disagrees with the DOL’s findings.

“Freig Carrillo does not concede that citizens of Mexico who are employed by a Mexican entity and cross the border are automatically and necessarily covered by U.S. wage and hour laws,” the company said. “We are not aware of any court that has ruled that U.S. laws apply to these Mexican citizens in these circumstances and would encourage the DOL and the court system to work on this clarification for the benefit of the entire customs broker industry.”

The DOL also agreed to a settlement with San Diego-based ACV Logistics Inc. and its owner, Armando Carrillo. The company provides transportation and import-export services for cross-border shippers.

Carrillo agreed to pay more than $70,000 in back wages to 15 Mexican employees, some of whom were paid as little as $2.43 per hour for work they performed at the company’s San Diego warehouse, according to the DOL.

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