Auditor: IPI underpaid some workers

An independent auditor that’s been hired to check if Imperial Pacific International (CNMI) LLC is complying with labor laws is not seeing eye to eye with IPI in how to interpret the law governing prevailing wages.

That conflict has prompted accounting firm Burger Comer Magliari to report to the U.S. District Court for the NMI last Thursday that it now believes that IPI’s foreign workers and some U.S. workers were underpaid from Oct. 1, 2019, until their pay rates were increased.

Burger Comer Magliari said that its interpretation of the Code of Federal Regulations is that the foreign workers, referred to as CW-1 visa holders, should be paid at the prevailing wage rate that became effective Oct. 1, 2019, regardless of when their CW-1 status was approved.

BCM managing partner David J. Burger said that their interpretation of the CFR is that it requires the employer to pay U.S. workers at the prevailing wage rate from Oct. 1, 2019 forward.

Burger said IPI took the position that any changes in the prevailing wage as a result of the prevailing wage survey should not take effect until the CW-1 visas were actually approved.

Burger said this could have been several months after the Oct. 1 application period starting date.

The pay rates are among the many issues or findings that BCM discussed in its third report filed in court.

As of press time yesterday, Saipan Tribune was still waiting comments from IPI.

Burger’s accounting firm was appointed by the District Court to monitor IPI if it is complying with labor and payroll rules. BCM’s monitoring activities began in this case in mid-May 2019. Thursday’s report, which is BCM’s third, covers the three-month period from Nov. 16, 2019, to Feb. 15, 2020.

BMC’s activities in this time period consisted of interviewing IPI employees and conducting payroll compliance testing.

In BCM’s third report, Burger said that IPI has many workers that are working in the CNMI under a CW-1 visa status. He said these CW-1 workers must be paid the prevailing wage as indicated in the prevailing wage survey, as long as that wage is greater than the CNMI or federal minimum wage. Burger said such as a survey was conducted, and became effective Oct. 1, 2019.

Burger said many of the contracts for the CW-1 workers were not approved until sometime after Oct. 1, 2019. He said the application period for all CW-1 contracts covers the period from Oct. 1, 2019, to Sept. 30, 2020.
Burger said the CW-1 workers did perform work during the period from Oct. 1, 2029, to the date of their CW-1 visas were approved by U.S. Citizenship and Immigration Services.

Burger said they have provided the relevant Code of Federal Regulations sections to IPI human resources staff and legal counsel.

“We are waiting for their analysis and response as of the date of this report,” Burger said.

On holiday pay, he said one of the 104 employees they interviewed stated that he was not paid for a valid company holiday (Veterans Day). Burger said the employee spoke to management about this, but has not been paid for this holiday as of the date of this report. Burger said they have provided this information to IPI human resources staff for follow-up. He said they are waiting for their response as of the date of this report.

IPI was placed on independent monitoring in connection with U.S. Labor Sectary R. Alexander Acosta’s lawsuit in federal court against IPI for alleged violations of the Fair Labor Standards Act over the construction of its casino/resort project in Garapan.

To resolve the lawsuit, IPI and Acosta agreed to an entry of a consent judgment. IPI agreed to pay a total amount of $3.36 million, which is composed of $1.58 million in back wages, another $1.58 million in liquidated damages, and $200,000 in civil monetary penalties.