California warehouse on Mexican border cited for wage violations

A warehouse near the U.S.-Mexico border in California has been hit with a fine by the U.S. Department of Labor over its wage practices, and more such actions are likely.

The Wage and Hour division of the Department of Labor announced last week that it had reached a settlement for a relatively small sum with G-Global, which it described as a border warehousing company in Otay Mesa, California. That city sits right on the border between the U.S. and Mexico.

Under the terms of the $124,465 settlement, 61 Mexican workers who would cross the border to work at G-Global were paid a flat sum for their work. The payment was in pesos. The Wage and Hour division concluded that the payments worked out to a number less than minimum wage. The flat payment was not tied to hours worked.

“When those salaries fail to cover minimum wage for the hours worked, or when employees work more than 40 hours and the employer fails to pay overtime, violations result,” the Department of Labor said in its statement. “Investigators also cited record-keeping violations when the employer failed to provide pay or time records for the 61 employees working at the facility.”  .

A spokesman for the Department of Labor said the G-Global case was not the first case of this kind, but is part of a “first wave of cases” targeting the practice of paying Mexican nationals in the warehouses a flat fee. 

He said he was unsure when other actions might be announced, but there might be more this year. California will be a key target, “but Arizona, Texas and New Mexico have logistics warehouses along the U.S.-Mexico border with similar issues,” he added in an email to FreightWaves. The warehouses are located where they are to service active U.S.-Mexico cross-border activity.

G-Global was selected randomly for enforcement from the “universe of employers,” the spokesman said, describing the company as “cooperative” with the process.

In its announcement of the action, the Department of Labor described the practice of paying Mexican workers a flat fee as “widespread.” The spokesman said they came to that conclusion “based on discussions with industry leaders and chambers of commerce.” 

The department has a program called PAID. In its release, Ruben Rosalez of the Department of Labor said it was encouraging warehouse employers to “come forward and to participate…and get themselves into compliance, while avoiding the expenses that could arise through litigation.” 

Rosalez also said warehouse workers should use an online tool called Workers Owed Wages, operated by the Department of Labor, to see if there is money that the Wage and Hour division is holding for them as a result of prior investigations of employers. 

The action will create a one-time windfall for 59 workers at G-Global The Department of Labor said they would each receive an additional $10,456 in back pay.

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