Employer and worker sanctioned over illegal sponsorship scheme

An employer was barred from hiring nonresident workers in the CNMI after the alien he had agreed to “sponsor” turned against him and filed a labor complaint for alleged non-payment of wages.

The Department of Labor has permanently disqualified James G. Untalan from employing nonresidents in the Commonwealth and ordered him to pay a $300 fine for engaging in an illegal sponsorship scheme with worker Xu Ming Yang.

Xu was ordered to depart the CNMI, and permanently barred from obtaining nonresident employment in the CNMI.

The Labor administrative order stemmed from a labor complaint filed by Xu against Untalan shortly after their contract expired in August 2002. Xu accused the employer of non-payment of wages for the duration of the contract and demanded reimbursement of processing and handling fees.

At the hearing, however, it was found that the parties’ relationship had been a mere “sponsorship” rather than legitimate employment.

Records showed that in about August 2001, Untalan entered into an agreement where his name would be used to enable Xu to obtain a work permit, but he would not actually employ Xu.

Pursuant to the agreement, Untalan signed the necessary transfer documents and filed an employment contract and permit transfer application, representing that he intended to employ Xu as a farmer on Untalan’s farm in Tinian.

At about the time the application was submitted, Xu’s friend paid $300 to Untalan to compensate him for acting as the employer of record for Xu.

Labor found that Xu and Untalan only met each other once—on the day the contract was signed. On the same day the permit was issued, Xu left for Saipan in search of work. He never asked Untalan to provide him with work at the Tinian firm. Instead, Xu said he earned money on Saipan by recycling aluminum cans.

At the hearing, Untalan claimed he worried about Xu for months because Untalan did not know where Xu was living or working. He added that he considered telling the department about the sponsorship, but was concerned about the possible consequences against him in admitting the sponsorship.

For his part, Xu claimed he considered filing a labor complaint against Untalan on Tinian, but feared the employer would retaliate against him if he did so.

“Both parties engaged in a fraud on the department, which detrimentally relied on the parties’ misrepresentations by issuing a permit to Xu Ming Yang,” noted Labor hearing officer Jerry Cody.

For this reason, he said judgment should be rendered against Xu on his labor complaint.

Cody, however, ordered Untalan to pay a fine of $300, the amount he received from Chen, as a means of ensuring that he does not benefit financially from the unlawful scheme.