Six Los Angeles based garment makers have been fined US$574,000 for labour law violations involving a scheme where the six contractors illegally operated under one license to avoid compliance.

According to a statement from the Department of Industrial Relations, four of the contractors did not have valid workers’ compensation coverage for their employees.

The probe by the Labor Commissioner’s Office began in July when investigators visited a worksite operating under the name Pure Cotton Inc, whose owner, Kyung Ho Choi, told the investigators he collected rent but was not involved in the garment making.

His brother-in-law, Kuong Chan Kim, said all of the workers were employed by his company – Union Supply Inc – which is registered as a garment manufacturer

The investigation revealed a further four contractors were operating in the building without garment licenses or workers’ compensation insurance. Kim charged each contractor a fee for the use of his license and insurance coverage which concealed the actual number of workers.

“Shared use of a garment manufacturing registration is illegal, and it gave these contractors an unjust economic advantage over law-abiding garment businesses,” says labour commissioner Julie A Su. “Sweatshop operators attempting to game the system at the expense of their competitors often do so on the backs of their own workers.”

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The investigation discovered that most of the 57 employees at the contractors’ building downtown on South Broadway worked up to 65 hours a week for less than minimum wage. Two workers, ages 15 and 16, were operating industrial sewing machines in violation of California’s child labour laws. 

Union Supply Inc was fined US$240,300.

Stop Work Orders were issued to the four contractors operating illegally under the Union Supply Inc license and their inventory was confiscated. They were cited for violating wage statement and garment registration provisions, and failure to cover employees with workers’ compensation insurance.

Cindy Soon Yun, with 20 employees, was cited $118,600. She was also cited for violating child labour laws. Sun Park, with 10 employees, was cited $158,855. Pil Chang, with 8 employees, was cited $37,450. Francisco Tecum Son, with 4 employees, was cited $18,000. The factory owner – Pure Cotton Inc – was also fined US$500.

The Labor Commissioner’s Office is currently pursuing wage theft investigations of the contractors.

Union Supply Inc did not respond to just-style’s request for comment.