An Anaheim company that does inventory control work for Trader Joe’s and Grocery Outlet faces payments of back wages and fines totaling more than $1.6 million, the California Labor Commissioners Office said Tuesday.
Inventory Professionals has been ordered to reimburse 64 workers the company failed to pay minimum wage, overtime and other compensation, according to the state.
Under state law, companies that hire subcontractors also can be liable for workplace violations, meaning Trader Joe’s and Grocery Outlet would be on the hook to pay the fines if their contractor did not, a spokesperson for the state Department of Industrial Relations said.
“Entities who contract with the lowest bidder should be aware that they will be held liable if that vendor cuts corners by committing wage theft,” Lilia Garcia-Brewer, the state labor commissioner, said in the statement.
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The state citations hold Monrovia-based Trader Joe’s and Grocery Outlet in Emeryville each liable for $825,813 as client employers.
The ruling from the state covers 64 workers who went aisle to aisle counting merchandise at Trader Joe’s and Grocery Outlet stores statewide over a three-year period ending August 2018.
All three companies have said they will appeal the decision, according to the statement. Inventory Professionals owner Arun Gandhi, when reached by phone, said the state’s claims were false.
“We are going to fight this tooth and nail,” Gandhi said. “These charges are not true.”
Trader Joe’s and Grocery Outlet did not respond to emailed requests for comment.
Along with the wage violations, the companies were also cited for violating child labor laws. Two minors, one 14 years old and one who was 17, performed these tasks as late as 2 a.m.
According to the statement, workers performed inventory tasks for as much as 65 hours a week and were not paid overtime; they also were paid less than the state’s mandated minimum wage. They will also be compensated for interest lost during the period they were not paid, the state said.
Additionally, some workers were not given their final paychecks immediately after severing their employment, resulting in additional penalties.
Wage theft is an ongoing issue that denies millions of low-wage employees billions of dollars in lost pay. A report in 2018 by GoodJobsFirst.org said more than 500 large U.S. companies have paid out $8.8 billion in wage-theft claims since 2000 and more than half were from California.
The longstanding practice of denying workers fair wages is “pervasive” and “goes far beyond sweatshops, fast-food outlets and retailers,” according to Philip Mattera, lead author of the report.