Articles

INMATES WIN MORE PAY FROM GARMENT MAKER

Decision Applies State Law on Prevailing Wage to Businesses Employing Prisoners
By Jeffrey Anderson, Daily Journal Staff Writer
Wednesday, March 13, 2002

Robert Robinson was halfway through an eight-year prison term when the prospect of earning money caught his eye.

This wasn't black-market commerce. This was a straight job.

Through a joint venture with the state, CMT Blues, a garment manufacturer, was hiring inmates to sew and assemble T-shirts and sweatshirts at the Richard j. Donovan Correctional Facility in Otay Mesa, where Robinson was doing his third robbery stint.

The state Department of Corrections had hailed the prison-based labor program as being "good for inmates, the institution and the people of California."

The arrangement certainly looked like a bargain for everyone, but on Monday, a San Diego Superior Court judge ruled that CMT Blues violated California's wage and hour requirements, and the judge ordered the small manufacturing firm to pay $841,000 in back pay to Robinson and 166 of his co-workers.

Attorneys for CMT Blues denied wrongdoing, contending the company, which was created to function as a joint venture with the state, complied with its contract with the Department of Corrections.

The company intends to seek an arbitrator's decision to force the Corrections Department to pay the judgment, a CMT Blues lawyer said. The court dismissed a related taxpayer action brought by the plaintiffs against the department in May.

Monday's class-action ruling is the first time a state court has interpreted California wage provisions to apply directly to private businesses that employ inmates as workers, attorneys in the case said. Ervin v. Ratelle, GIC 740832 (San Diego Super. Ct. March 12, 2002).

The effect of the ruling, according to plaintiffs' attorney Robert Berke, a sole practitioner in Santa Monica, is that companies will be unable to exploit prison labor and unable to drive down wages in the private sector among companies that hire noninmate workers.

"This is why the California Constitution prohibits slave labor," Berke said. "The court has now said that [employers] cannot gain an advantage by hiring convicts and not paying them."

Berke's co-counsel, Janet Herold of Pasadena's Bahan & Herold, said it is unclear whether the ruling would affect other prison-based companies.

Convicted of armed robbery in 1993, Robinson, 51, a former maintenance technician from Rialto, was "ecstatic" when CMT hired him as a threader's assistant in 1997.

With three children and a wife, he was troubled by his periodic absence from family life, he said.

"When I went away I never thought I'd be working and getting paid," he said after he was released recently. "I could send money home, and I'd be giving instead of taking."

The job arose from the Joint Venture Prison Labor Initiative, which originated in 1990 with voter approval of Proposition 139. As a result of the initiative, employer could hire inmates to work at manufacturing centers located in the prisons.

Manufacturers would submit proposals to the Corrections Department with the express purpose of forming companies to operate within correctional facilities, state officials said. In some instances, the department would hold trade shows and send out cold-call mailings to existing manufacturers to solicit their partnership with the state.

"The motivating idea [behind Proposition 139] was to bring jobs back to California and provide inmates with job training," Herold said, "not to keep funneling labor into the prison system at the expense of the private sector."

Designed to benefit taxpayers, inmate-workers and their families, the program consists of 12 companies and 306 employees statewide. In addition to CMT, it includes an electronics manufacturer, a steel producer, a beer and wine vat manufacturer and a plant nursery.

The joint venture specifies that 20 percent of inmates' wages goes to their families to reduce the state's welfare rolls and 20 percent goes to a victims' relief fund. If inmates don't want money to go to their family or if they have no family, that portion of their wages goes into their savings account to be held by the state until their release.

The Corrections Department keeps 20 percent to defray prison costs, and the government takes 20 percent in taxes.

Inmates keep the remaining 20 percent.

In August 1996, CMT posted a job notice at the Donovan Correctional Facility offering minimum wage to experienced sewing machine mechanics, operators and fabric cutters who were free of disciplinary action and who were not on INS hold or detention status.

Robinson had no clothes-making expertise but applied, anyway.

"Word of mouth was that [CMT] was hiring, so I thought I'd get in on the ground floor," he said. "I made it known that I had no sewing experience, but they said, 'OK.'"

After passing the interview and job screening, in September 1997, Robinson was told that he must complete a 240-hour, unpaid training period.

"I knew ahead of time that I wouldn't get paid for the first 30 days," he said. "After that, I was supposed to get paid every two weeks."

He knew right away that something was amiss. Despite working the first month for free and putting in eight to 12 hours a day, five days a week, he often received his paychecks late.

Other inmates complained of grim working conditions and pressure to produce.

Rumors spread that, although CMT was paying minimum wage, garment workers on the outside made more money.

"You gotta understand, a lot of guys [in prison] never worked a straight job," he said. "To them, it was like a sweatshop."

But Robinson had worked in the private sector doing maintenance work for convenience stores. He understood the realities of blue-collar work.

"I didn't see any point in griping about the situation," he said. "I was working for the man, and I knew the seas were rough when I stepped into the water."

Robinson worked for seven months until his name no longer appeared on the duty roster, he said.

In August 1999, he joined 166 other inmates and the Union of Needletrades, Industrial & Textile Employees, AFL-CIO - the nation's largest garment workers' union - to form a plaintiff class. In its lawsuit, the class charged that CMT, with encouragement from the Corrections Department, took thousands of hours of free labor from the inmates.

Plaintiffs sought $1.7 million in remedies for 100 percent of the inmates' unpaid overtime and late pay as well as back wages for their 30-day unpaid training period. The class also sued CMT for failure to pay a prevailing wage consistent with garment manufacturers in the community who didn't rely on prison labor.

San Diego Superior Court Judge William Page on Monday awarded the class $841,000 in damages and issued an injunction against CMT Blues, ordering the company to cease its practice of paying inmates less than a prevailing wage. Pate also ordered CMT to pay inmate workers timely and to ensure payment to victims' groups and families of inmates.

CMT has two years to pay the judgment.

In his order, Pate said, "[CMT's] failure to pay prevailing wages supports this court's finding that [CMT] engaged in unlawful and unfair business practices. Proposition 139 clearly provided that in order to prevent employers, such as [CMT], from obtaining a competitive advantage, such employers would be subject to the same wage and hour requirements as a private business employing non-inmate labor."

Regarding the 30-day unpaid training period, Pate ruled that CMT did not violate its contract with the Corrections Department, but he ruled nonetheless that it violated California labor laws, which require employers to pay a minimum hourly wage for all hours worked.

Corrections officials contend that all joint venture programs discontinued the unpaid training period in late 1997.

Berke said that CMT simply got greedy. As an incentive to participate in the joint venture program, CMT was receiving tax breaks and a 25 percent discount on its workers' compensation premium, he said, not to mention paying just 2 cents per square foot in rent, including utilities.

"This was free labor for a company that was doing pretty well," he said.

Pierre Sleiman, a successful garment manufacturer, owns CMT Blues. CMT, the Corrections Department's biggest joint venture, grossed $5 million in 2001, $483,425 of which went to workers, after taxes.

"Allowing businesses to operate with no labor costs and virtually no rent or utility costs and paying inmates no wages undercuts wages for all California workers," Janet Herold, the plaintiffs' co-counsel, said. "No business paying a living wage could lawfully compete with this."

Jack Lee, the operations manager at Joint Venture Electronics, with manufacturing operations at Central California Women's Facilities and Valley State Prison for Women, in Chowchilla, said that his company pays its prison workers a prevailing wage - $6.75 per hour.

Although the Department of Corrections was named as a defendant in a related taxpayer action, the court dismissed the case, which is on appeal.

Carlsbad lawyer Robert Shipley, attorney for CMT, said his client intends to seek indemnification from the state through binding arbitration. Shipley claimed the contract between CMT and the Corrections Department specified that CMT was not required to pay workers for a training period as long as they did not produce any garments for sale during that period.

As for the Labor Code's prevailing wage requirement, Shipley said, "The state thought one set of rules applied, and it turns out another one did. Now it's a business issue between the [Corrections Department] and CMT."

Noreen Blonien, assistant director of the Department of Corrections' joint ventures program, said in her deposition that she thought federal law relieved the program from complying with state wage laws.

The state Employment Development Department sets an acceptable pay range for all joint ventures, Blonien said, and it was CMT that chose the workers' actual wages.

Nevertheless, Blonien said she was happy with CMT's performance and considers the company a good joint venture partner.

"It's up to [Sleiman, CMT's owner,] whether to stay with the program," she said.

Robinson, the only member of the plaintiff class who has been released from prison, said he holds no grudge against CMT for shorting him on his wages.

He said he's not expecting a big payday from the class action judgment but that every little bit helps. Now a plumber - a skill he learned in prison - he said it feels "real good" to be free again and spending time with his children and his wife of 15 years.

"I disagreed with some things about the job, but I was willing to put up," he said. "If they had hired me back, I would've gone back."