DOL Fines Southern Border Broker for Wage Violations; Broker Denies Wrongdoing
A San Diego broker-forwarder will pay $1 million in back wages and a $26,215 penalty for “egregious” violations of the Fair Labor Standards Act under a settlement reached with the Department of Labor to resolve allegations that it was illegally paying workers directly in Mexican pesos, DOL said in a March 20 news release.
DOL said Freig Carrillo Forwarding paid employees that “handle and transport goods,” according to a settlement agreement that was otherwise silent on the nature of the violations, at “as little as” $3.24 per hour and, between December 2019 and December 2021, “typically paid workers in Mexican Pesos for workweeks that averaged nearly 45 hours at a flat rate of $180-$200 per week.”
The settlement comes amid an ongoing effort “to combat labor abuses of foreign workers in Southern California’s logistics and warehousing industries,” DOL said. “The department’s ongoing work in this industry along the Southern border puts other U.S. employers on notice that we will not tolerate these kinds of exploitive labor practices,” Solicitor of Labor Seema Nanda said in the news release. “An employee’s citizenship has no bearing on whether the Fair Labor Standards Act’s protections apply to them. We will continue to combat wage theft aggressively on behalf of all workers covered by the statute.”
Freig Carrillo denied any wrongdoing in a statement issued through its lawyer, Annie Ellis.
“Freig Carrillo employs close to 50 U.S. workers and complies with all applicable U.S. laws regarding its U.S. employees,” said the company, which is the U.S. subsidiary of a Mexican brokerage headquartered in Nogales, Mexico. The DOL investigation “targeted a different group of employees: Mexican customs inspectors, who are Mexican citizens employed by a Mexico-based company, some of whom cross the border to comply with Mexican customs law by inspecting goods located at the U.S. warehouse,” Freig Carrillo said.
“Freig Carrillo is not the only customs broker that has been investigated by the DOL,” the company said, adding that DOL has been “targeting the customs broker industry” since 2019. “The industry requires workers with specific knowledge and expertise in Mexican international commerce laws to physically inspect the goods that are moved between both countries. These Mexican citizens have been traditionally paid pursuant to Mexican employment laws, which has been an industry practice for over 40 years,” Freig Carrillo said.
The broker said it paid its employees “appropriately under applicable laws,” and that citizens of Mexico employed by a Mexican entity that cross the border are not necessarily covered by U.S. wage laws. “We are not aware of any court that has ruled that U.S. laws apply to these Mexican citizens in these circumstances and would encourage the DOL and the court system to work on this clarification for the benefit of the entire customs broker industry.”
The company doesn't "agree with the DOL’s tactics in this case but decided that it was in the best interest of its stakeholders, employees, and clients to cooperate in full with the DOL’s investigation and voluntarily resolve this matter without litigation through the terms set forth in the Consent Judgment,” it said. “Freig Carrillo is paying a substantial sum of money that will impact operations but assures its stakeholders, especially our U.S. employees, that we will continue to work hard to maintain the company as operational.”
In its news release, DOL also announced that ACV Logistics, a San Diego-based forwarder, will pay over $80,000 to resolve similar allegations. ACV Logistics did not immediately respond to a request for comment.