Monitor: IPI employees paid properly, no wrong deductions

An auditor appointed by the federal court to monitor Imperial Pacific International (CNMI) LLC found that most IPI employees they interviewed stated that their regular and overtime work are properly compensated.

The independent monitor, Burger Comer Magliari (BCM), informed the U.S. District Court for the NMI Friday in its report that most of the IPI employees they interviewed also report no improper deductions on their pay.

For those occasions where there was some type of error, they were corrected in the subsequent pay period, said BCM managing partner David J. Burger.

BCM began monitoring IPI in mid-May 2019. Its report covers that period until last Thursday, Aug. 15.

Interviews with employees were done almost exclusively in BCM’s conference room in Puerto Rico, Saipan, and a set of questions was asked every employee, Burger said. The questions were translated to Chinese, Tagalog, Korean, and Thai. Burger said their firm has English, Tagalog, Korean, and Chinese language capabilities. He said they do have contacts who can provide translation for Thai or Mongolian.

Recently, he said, some of the interviews were conducted with newly arrived Italian construction workers and that IPI provided a translator for those workers.

With respect to potential issues identified from the interview process, Burger said IPI has what they call a “dual rate” system in place, which was recently implemented.

As IPI consolidates departments of functions, it is possible that an employee will perform the duties of the job they were hired to do, and may also perform the duties of a different position, Burger said. The different position may carry a different hourly rate.

Burger said the employee is sometimes paid using the rate for the alternate position for the hours worked in the alternate position. At other times, the employee is paid solely the rate for their original job classification.

Burger said they searched the Fair Labor Standards Act and its regulations and did not find any guidance that prohibits paying an employee just one rate, regardless of whether the employee performs the duties of more than one position.

“Our research indicates that the employee and employer can agree on how the employee will be compensated,” he said.

Burger said they did find guidance on how to calculate overtime pay for employees who work in more than one position.

“In cases where a non-exempt employee is paid at different rates for different duties performed, the overtime rate to be paid is based on the weighted average hourly rate for regular work performed,” he said.

Burger said the Commonwealth Casino Commission has apparently authorized the use of dual rates for some IPI employees.

He said there is a specific stamp on CCC identification tags for employees authorized to receive dual rates.

Burger said they are still resolving certain issues relating to the rate of pay that was actually paid to certain employees.

In all cases, IPI paid the employees at a rate higher than what BCM calculated, he said.

He disclosed that there were 21 employees in the sample of 280 where the rate of pay seemed to differ from the amount indicated on the personnel action form or the offer letter. Burger said in almost all cases, the difference was caused by tips paid to the employee.

He said the hourly rates for the employees were proper.

Upon their request for a list of contractors working on IPI projects, IPI provided them with a list showing names of nine companies, contact information, and type of work being performed, Burger said.

He said he personally visited the offices of six of the nine companies. Of the three that Burger did not visit, one is in Guam, one shows contact information with a Seattle area code, and one does not currently have any employees on Saipan.

Burger said that, for each of the six companies he visited, he explained to them their role in independently monitoring IPI’s compliance with the FLSA.

Burger said he found that IPI had not requested for the payroll records of any of the six companies.

He said that almost unanimously, the six companies stated that they were not currently working on any projects for IPI. Instead, they told him that they were waiting to be paid by IPI.

The six companies, he said, asserted that they are paying their employees the proper wages and for overtime pay.

IPI has been placed on independent monitoring in connection with U.S. Labor Secretary R. Alexander Acosta’s lawsuit in federal court against IPI and its subsidiary, Imperial Pacific International (CNMI) LLC, for alleged violations of FLSA over the construction of its casino/resort project in Garapan.

USDOL investigated the casino construction project covering the period from Jan. 22, 2016, to Dec. 19, 2017. The investigation revealed violations of the FLSA caused by the IPI contractors’ failure to pay overtime and minimum wages, as well as maintain records required by the FLSA.

To resolve the lawsuit, IPI and Acosta agreed to an entry of a consent judgment. IPI agreed to pay a total amount of $3,360,000, which is comprised of $1,580,00 in back wages, another $1,580,000 in liquidated damages, and $200,000 in civil monetary penalties.
The parties signed the consent judgment last April.