The State of California Department of Industrial Relations explains it is the first criminal prosecution of a garment manufacturing business owner under California Penal Code Section 487m (Grand Theft of Wages), which came into effect 1 January 2022.

The prosecution also follows California’s implementation of the Garment Worker Protection Act in 2022.

Before this law it was common for garment workers to be paid based on the “piece rate”, i.e., workers were paid based on the number of units produced, rather than the time spent on the job, which could lead to a far lower wage.

The department states that Lawrence Lee, the co-owner of clothing manufacturing company Parbe Inc., and Soon Ae Park, a sewing contractor, which it claims had a history of wage theft, had been arraigned on felony charges of grand theft of wages and perjury by declaration.

Labor commissioner Lilia García-Brower explains: “This marks the first instance where both a garment manufacturer and garment contractor have faced arrest for wage theft.”

She continues: “These employers not only abused their workers by paying them as little as $6.00 per hour but they also defrauded the system.”

Under the Garment Worker Protection Act contractors, manufacturers and brand guarantors are joint liable for the full amount of unpaid minimum, regular, overtime and premium wages as well as reimbursement for expenses and any other compensation, including interest, due to all employees who perform manufacturing operations under this law.

At the time of the Garment Worker Protection Act’s introduction US governor Gavin Newsom said: “California is holding corporations accountable and recognising the dignity and humanity of our workers, who have helped build the fifth-largest economy in the world. These measures protect marginalised low-wage workers, many of whom are women of colour and immigrants, ensuring they are paid what they are due and improving workplace conditions. We are committed to having their backs as we work to build a stronger, more inclusive economy.” 

An investigation by the labor commissioner’s office’s Bureau of Field Enforcement (BOFE) in January 2021 determined that there was “probable cause to believe Soon Ae Park and Lawrence Lee committed grand theft of labour and perjury”.

This resulted in Lee and Park being arrested on 6 September 2023 and arraigned thereafter.

The investigation suggests Park failed to pay her workers minimum wage or overtime; paid her workers in cash averaging $350 for more than 50 hours of work per week; and failed to provide pay stubs to the workers.

The investigation also states Park neglected to provide workers with workers’ compensation insurance coverage or information about paid sick leave.

Parbe Inc., identified as a wage guarantor for Park, continued to engage Park’s services even after the Labour Commissioner’s Office had informed them of alleged wage violations committed by Park.

Both Parbe Inc. and Park were operating without the required garment manufacturing registrations. Lee, who allegedly had a history of wage theft is also alleged to have omitted material information on his garment manufacturing registration application under penalty of perjury.

California wage theft charges

For Soon Ae Park – garment contractor

Fines totalling more than $70,000 for violations of:

• paid sick leave requirements
• record-keeping requirements
• violating the garment registration provision.

For Lawrence Lee – co-owner of Parbe Inc.

• $4,000 for failing to provide workers with written notice of paid sick leave.
• $4,000 for violation of record-keeping provisions
• $200 for violation of the garment registration provision.

In addition to the criminal charges, BOFE issued notices of joint liability to Park and Parbe Inc., amounting to more than $81,000 for their failure to provide workers’ compensation coverage for their employees.

Enforcement investigations involve a three-year payroll audit to identify labour law violations, calculate payments, and calculate penalties, including liquidated damages and interest for underpaid workers.

The Department of Industrial Relations Division of Labour Standards Enforcement (California Labour Commissioner’s Office) says it aims to combat wage theft and unfair competition by investigating allegations of illegal and unfair business practices.

To this García-Brower added: “My office will continue to work with the Los Angeles District Attorney’s office to prosecute bad-actor employers who commit wage theft and gain an unfair advantage over law-abiding employers.”