DIR Prevails: Judge Gives Preliminary Tentative Decision on DIR v. Wins.

SAN FRANCISCO -- Three years after the Department of Industrial Relations (DIR) filed a lawsuit against garment contractor Wins of California, Win Industries of America and Win Fashions (Wins), in one of the most egregious cases for failure to pay wages in Northern California history, DIR has prevailed in the suit. On Thursday a San Francisco Superior Court judge gave a preliminary indication for further proceeding whereby the decision is subject to change, ordering the defendants to pay $956,112 in back wages and $284,900 in waiting time penalties. Additionally, in the midst of their business failure, business owners Ana Wong and Toha Quan transferred ownership of an estimated $5 - $8 million in personal property to relatives. The judge deemed the transfers to be fraudulent a move to hide assets from the defendant's creditors.

"This has been a long fight; the agency has put a lot of resources into getting justice for the workers," said Donna M. Dell, State Labor Commissioner.

David Balter, attorney for the Division of Labor Standards Enforcement (DLSE), stated, "The court's tentative decision gives light at the end of the tunnel that not only will justice be served for the employees, but will also be collectable from the extensive property holdings of the defendants."

The Wins case is complicated by the issue of liability which is currently being addressed in a similar case before the California Supreme Court. In that case, Reynolds v. Bement, the question regards a closely held corporation, and if the corporation is bankrupt, will the corporate owners be held personally liable. The Wins corporations were held by Wong and her husband Quan, who declared bankruptcy in the summer of 2001. In this preliminary indication, liability on the defendants as individually and personally responsible, was granted on the basis of a combination of state and federal law. The judge determined that if the Supreme Court decision did not hold corporate shareholders personably liable, the defendants in the Wins case would not be held personally liable, leaving the state with the monetary judgment, the assets to collect, but no ability to go after Wong and Quan personally, only their now defunct corporation.

In March of 2001, Wins of California's garment registration expired and was not renewed. July of 2001 DLSE was called by the US Department of Labor to participate in a joint investigation. Working against shut down orders, the company continued to work their employees, mostly older female monolingual Cantonese speakers. In September of that year, DLSE investigators raided Wong's illegal operation and confiscated 23 bags of garments, and on December 3, Wins Fashions' license was revoked. Wins employees received their payment from the state garment fund in October of 2002, penalties collected will go to replenish the fund in addition to paying attorney fees.

DIR filed the lawsuit Feb. 26, 2002, against Wins principals for failure to pay over $800,000 in back wages. The fund was established in the 1980s as a "payment of last resort." When wages owed by irresponsible contractors and manufacturers are not forthcoming, the fund pays the employees that have suffered the damages. The funding comes from the registration fee California garment contractors and manufactures must pay annually.

"It is of utmost importance to this agency that we fight hard to defend and protect immigrant workers from employers that try to exploit them in the underground economy," said the Commissioner. She added, "In California every employee has protections under wage and hour law, regardless of their residency status."

In 2004 DLSE collected nearly $70 million for workers in unpaid or improperly paid wages. Employees who have not been paid justly may file a claim for their unpaid wages with the District office having jurisdiction over the location in which the work was performed. To determine the correct office to file the claim, and directions on how to file a wage claim, visit our Web site at www.dir.ca.gov.