U.S. Department of Labor levies $1.45 million in damages against Philly firms for not paying overtime

"There was a dispute. We settled it," said Matthew Hank, attorney for the staffing agency and its owner, Teddy Hokkito, a South Philadelphia businessman and serial owner of temporary staffing companies.

ICS Corp. president Matthew Bastian, of Media, did not return several calls for comment.

To Brian Johnson, director of enforcement for the Labor Department's Wage and Hour division in the Philadelphia area, the case is emblematic of a growing and disturbing employment trend.

He calls it "fissuring," defined as the increasing tendency of employers like ICS to separate themselves from their workers by contracting out jobs to temporary agencies.

"Workplace relationships become more tenuous, and the workers become vulnerable to violations of laws that afford the most basic protections," Johnson said.

Temp employees tend to be more vulnerable to violations, he said, because they are often younger, less-educated, foreign, minorities, or women.

Workers at the printing plant were issued ICS paychecks for their first 40 hours of work in a week, said Ivette Vigano, assistant director of the Philadelphia district office for the Labor Department.

After that, they were paid by New Century, the staffing agency.

However, New Century didn't pay workers time and a half for overtime when their work weeks stretched beyond 40 hours.

Instead, Vigano said, workers actually earned less an hour - $11 an hour instead of $13, for example, receiving envelopes stuffed with their wages paid in cash.

The incidents took place between April 2012 and April 2014. The department issued a complaint against the two companies on June 17 and a settlement was signed by a federal judge on June 24.

How did investigators know how much each worker was owed if workers were paid in cash? Vigano said New Century kept records so it could bill ICS for workers' wages and its fee.

The U.S. Labor Department said that even though the workers were hired by the temporary agencies, they were jointly employed by both the agencies and ICS.

Although both ICS and New Century, along with its owners, are liable to pay workers, ICS is the company that is required to write the checks.

That should send a message to employers, Johnson said, that hiring a temp agency doesn't absolve them of the responsibility to see that employees are paid properly.

Most of the ICS temp workers were recruited by New Century, but a handful came through Richy Services Inc., owned by Richy Hang. His company went out of business, Vigano said.

"These are nontraditional temporary agencies," she said. "After we begin to investigate, they will close shop. They can change names and employees within a couple of days."

For example, she said, Hokkito's company changed names three times in three years.

Many of the 166 workers will receive more than $5,000 in payouts, evenly split between back wages and damages, as required by federal law. A handful will receive more than $40,000.

In addition to paying back wages and damages, ICS agreed not to do business with Richy Hang. The company must also appoint a compliance officer to monitor records and to ensure that the temporary agencies it hires pays workers properly.