California Apparel News

The state of California has filed suit against San Francisco-based Wins of California, bringing the company’s employees one step closer to receiving nearly $2 million in unpaid wages.

On March 7, State Labor Commissioner Arthur Lujan sued the manufacturer on behalf of 240 Wins employees, citing more than three months of unpaid wages from late April to July of 2001. A separate motion attached to the lawsuit freezes the assets of the company’s owners, Anna Wong, Jimmy Quan and Jenny Wong, including a total of eight family homes in the San Francisco Bay area.

According to a press statement released by the Department of Industrial Relations, the $2.1 million lawsuit intends to “preserve assets that may be needed to pay $840,000 in back wages.” The lawsuit also cites administration costs and penalties resulting from the issuance of bad checks to workers, said department spokeswoman Susan Gard.

All four Wins factories were shut down last year. Affiliated company Win Industries of America, a San Francisco-based cutting service, was shut down by the state last July 12 for failing to carry workers’ compensation insurance and failing to be registered as a garment contractor. (The company’s registration had expired the month prior, according to the Department of Industrial Relations.)

Wins of California, which produced clothing for JCPenney, Sears, TJ Maxx and U.S. Army/Air Force Exchange, shuttered last August after state investigators charged that it was operating without a license and had failed to pay workers about $840,000 in back wages.

Quan and Anna Wong filed for bankruptcy protection for Wins of California and a second company, Wins Fashion. The family-owned Utah-based manufacturer Tomi Inc., which produced apparel for Wins of California, shuttered late last year.

The state is still determining the companies’ total revenue combined for last year. However, Gardsaid that during early summer Wins of California had revenues of $1.2 million. “We don’t know what happened to the money, but we do know it wasn’t used to pay the employees,” she said.

Wins’ owners were unavailable for comment at press time.Case Complicated by Bankruptcy

Last December, Lynn Schoenmann, the state-appointed trustee in charge of seizing the Wins of California assets, sold approximately $140,000 worth of corporate property, “mostly sewing machines and dresses made before the violations,” she noted. Schoenmann said the money would pay for legal fees and then be distributed to creditors, and, she added, it would not be handed over to the state’s “lock box,” a savings account set up by the government for funds that will be distributed to the employees.

The U.S. Department of Labor(DOL) declined to say what the current amount in the lock box is but said the employees will get their back pay once the full amount is available to all of them. Nikki Bass, director of Sweatshop Watch, an Oakland, Calif.-based grass-roots organization, said she was told by the DOL that the amount was close to $400,000.

Meanwhile, North Carolina-based General Electric Capital Corp., which served as a factor for Wins of California, has filed a $750,000 lawsuit against Quan and Anna Wong. That lawsuit has its roots in yet another dispute, according to Tim Lyons, a spokesman for Plano, Texas-based J.C. Penney. Lyons said his company handed over a large order of private-label children’s apparel to GE Capital after the DOL identified the order as “hot goods,” a provision of the Fair Labor Standards Act that prevents the shipment and allows for the seizure of goods made in violation of federal labor laws.

Now GE Capital wants to be able to sell the goods.

“The best thing that can happen for the employees is for the Department of Labor to allow us to sell the goods,” said Laura Worsinger, an attorney for GE Capital, who added that the corporation has volunteered to donate a portion of the invoice to help pay for employees’ back wages. Worsinger said about $400,000 worth of apparel is being stored in a warehouse in Orange County, Calif., and is depreciating with each day it sits in storage.

In addition, Worsinger said that after GE Capital made an inventory of the goods that were returned it discovered that the apparel’s style tags did not match the date of the goods that were supposedly shipped to it during the time of the violations.

“To my knowledge no one has ever proved that goods shipped to J.C. Penney were goods that were made during the time the employees went unpaid,” Worsinger said, adding that, if allowed to sell the goods, a donation from her company could help employees come one step closer to receiving their wages.

Although all sides seem to agree that 240 Wins of California employees went unpaid for three months, there’s no certainty they’ll see paychecks anytime soon. “Sometimes these kinds of cases can last 40 days and sometimes they can last up to two years,” said Rae Glass, a federal labor official in Washington, D.C.

“Restoring back wages—which Wins’ employees have earned—is the Department of Labor’s foremost priority in this case,” said Tino Serrano, a department spokesman. Serrano confirmed that his department has obtained a court order requiring that any profits recorded by Wins of California be deposited in a “lock box” until the company pays its workers, and he added, “We are actively and aggressively doing everything we can to secure the employees’ back wages.”