Local
Thursday, December 17, 2009

Labor completes work on worker unpaid wage claims

In this file photo, alien workers line up at the Department of Labor during the issuance of umbrella permits. The department now says it has completed its processing of unpaid wage claims from 2008 and all prior years. (Haidee V. Eugenio) The Labor Department has completed its processing of unpaid wage claims from 2008 and all prior years, Deputy Secretary Cinta M. Kaipat announced Wednesday.

“The department published notices over a six-month period to register unpaid wage or other claims. That period ended on Oct. 30, 2009,” Kaipat said. “We have finished processing the claims of all the foreign workers who registered. We have held hearings as necessary, and we have completed the hearings in all the cases. Nearly all of the orders have been issued, and the orders in the few remaining cases will be issued shortly.”

Total claims under $450,000

The total amount of these outstanding unpaid wage claims was under $450,000, Kaipat estimated. “We don't have an exact number because some of the claims came in without any amount stated,” she said.

However, there never was a total of $6.1 million in unpaid wage claims as was publicized many, many times over in the press, Kaipat emphasized. That total was never correct, she said. “In fact, now that we have more data, we know that the Commonwealth has a far lower rate of unpaid wage claims among alien workers than any U.S., European, Australian or New Zealand jurisdiction that publishes data in these regards,” Kaipat said.

First, it is important to distinguish between claims that are and are not covered by labor bonds. Unpaid wage, medical expense, and repatriation claims are covered by employer bonds. “However, claims such as unpaid wages for illegal work, liquidated damages, workers compensation, cosmetic surgery and other non-essential medical treatment, common law spouse claims, and other similar matters are not covered by employer bonds,” Kaipat said. Once the claims that were never intended to be covered by the Labor Department's bonding system are taken out of the calculation, the number and amount of claims decreases dramatically.

Second, it is also important to understand that-just like any other insurance policy-bonds have limits on what they are required to pay. “We distinguish between claims that are within the standard limitations of bond coverage and those that are not,” Kaipat said. Employer bonds typically cover three months of wages, $3,000 in medical expenses, and full fare for repatriation tickets. This means that the bonding system assumes that workers will bring their claims promptly.

However, under the old labor system, workers often waited until the very end of their work permit period to bring their claims. This meant that all of the unpaid wages beyond the three-month limitation were not covered by bonds.

“P.L. 15-108 fixed this problem by limiting the period within which workers could bring claims,” Kaipat said. “A worker must seek to resolve disputes promptly. This is a better system than waiting months and months to bring a stale claim after the employers and witnesses may be long gone.” When the claims that are beyond bond coverage are eliminated, the number and amount of claims falls even further.

Claims being paid

The department expects that a substantial number of workers either have been or in the near future will be paid by the bonding companies. “Some bonding companies have paid voluntarily once the claims were put on the Hearing Office docket,” Kaipat said. But other bonding companies have appealed to the Secretary and to the courts. The Attorney General's Office is handling the appeals that have been filed in federal and Commonwealth courts by the bonding companies.

Access to courts

“The department still believes strongly that the proper venue for expeditious resolution of worker claims against employers and bonding companies is in the courts,” Kaipat said.

The department advertised for unpaid wage and other claims and set up the special hearings on bond claims in response to two court opinions requiring workers to press their claims first at the Labor Department before going to court.

Of the approximately $450,000 in claims, only about $54,000 has been paid as a result of the bond claims hearings. Other claims have been appealed.

“It is ironic,” Kaipat noted, “that when we told workers to go to small claims court, the bonding companies objected that they should be in Labor Department hearings. When we brought them before the Administrative Hearing Office for hearings on whether they should pay, they argued that they should be in court.”

Ultimately, Kaipat expects that the department will prevail in the courts, and that the bonding companies will be ordered to pay.

Further action in the courts

“We have not ignored claims that are not covered by bonds at all or that are beyond the standard coverage provided by labor bonds,” Kaipat said. “All of those claims have been referred to the Attorney General for action in the courts as appropriate.”

Orders from the Administrative Hearing Office have been issued stating the name of the claimant and the case in which the claim arose. Those orders are published on the department's Web site.

“We expect that the Attorney General's Office will determine which claims might be collected through the court system and which claims are simply uncollectible at this point. Claims may be totally uncollectible because either the employer or the bonding company or both are no longer in business and there is no person or entity that a court could order to pay,” said Kaipat.

The Labor Department wanted to use experienced collection lawyers to pursue all unpaid worker claims in the courts, Kaipat disclosed. “We thought this would get the fastest action and the best results.” However, the Attorney General's office decided that it would pursue these claims for workers in the courts.

Extra time to earn

If a claim is uncollectible, then the worker who has made the claim cannot use that claim as a basis for remaining in the Commonwealth. However, Kaipat explained that the umbrella permit system essentially allows these workers-whose claims can never be collected-to have an extra chance to work in the Commonwealth to recoup their losses.

“Under the normal system, these workers with uncollectible claims would be repatriated,” Kaipat said. “However, their umbrella permit gives them repayment of a kind, in that they are allowed to remain in the Commonwealth, which is what they would like to do, and to continue to seek work for an extra period of time. This is a way of meeting, in some part, any inequity in the system in the past.”

The Labor Department discussed this aspect of the umbrella permit system with representatives of foreign worker groups, and it was agreed that if the claims were totally uncollectible, an opportunity to “earn it back” would be the next best thing that could be offered to affected workers.

Future unpaid claims

The court opinions ordering the Labor Department to hold bond claim hearings cover only the Nonresident Workers Act, not the current labor law, Kaipat said. However, the department will continue the bond claims process for 2009 cases.

The notice for registration of any unpaid wage claims from administrative orders issued in 2009 was published two weeks ago, the registration period will end on Dec. 30, 2009, for orders issued in the first three quarters of 2009. Kaipat announced that the Labor Department expects to finish all the 2009 claims by March 30, 2010. (PR/Department of Labor)