Labor: Migrants Exploited, Locals Ignored

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Special to CorpWatch

In the immediate aftermath of Hurricane Katrina, flamboyant Louisiana developer F. Patrick Quinn III looked over the ruined city and saw opportunity. He anticipated the need for workers as well as sites for the thousands of trailers that FEMA intended to use to house evacuees. By the December after Katrina hit, the owner of Decatur Hotels had (or was in the process of buying up) six new properties.

He was certainly not hurt by good connections. His wife is a state senator, his son was the state Republican Party director and he was able to turn to the powerful Shaw Group for help securing federal contracts.

Quinn courted the image of a man who could help himself to an opportunity and help New Orleans rebuild at the same time. Dreaming of becoming the Donald Trump of New Orleans, according a New York Times profile, he rapidly acquired property and now owns a dozen luxury hotels in the area. He also acquired a lawsuit for illegal labor practices and a reputation as a "scalawag" (a Southern U.S. term that translates loosely as "rascal").

Decatur Hotels is one of many corporations that now stand accused of allegedly withholding wages; intimidating employees; providing toxic and hazardous working conditions; and engaging in trafficking, exploitation and monetary extortion from migrant workers.

"Wild, Wild West"

At a recent U.S. Congressional hearing, Dennis Kucinich, a Democratic Congressman from Ohio, described a "wild, wild West" environment where "the interplay of labor law suspensions, an influx of workers, huge contractors, and non-enforcement of labor law created an environment . . . [created] virtual lawlessness in New Orleans."

"In addition to getting cost-plus and no-bid contracts, corporations receiving federal contracts and subcontracts also benefited from the suspension of many labor laws and the non-enforcement of others," said Kucinich.

In one of the more well-known cases, brought forward by the Southern Poverty Law Center (SPLC), a company called Belfor USA Group Inc. agreed to pay 163 workers unpaid overtime wages totaling $223,000. The workers who were hired by Belfor subcontractors worked 12 hour days, 7 days a week helping with cleanup efforts in Louisiana, Mississippi and Alabama.(114)

A study conducted by the SPLC's Immigrant Justice Project found that even when workers knew that they were being abused, they did not know where to file complaints or seek redress. Jennifer J. Rosenbaum, an attorney at SPLC, reported that the U.S. Department of Labor, Wage and Hour Division (DOL-WHD) was largely inaccessible to the workers, and that it failed to make staff available, communicate with workers in their native language, or to record and report complaints.(115)  

Indeed, Kucinich noted at the U.S. Congressional hearing that "the number of DOL investigations in New Orleans decreased from 70 in the year before Katrina to 44 in the year after Katrina, a 37 percent decrease."

The DOL was not the only federal agency whose actions undermined labor rights. On September 8, 2005, President Bush suspended the Davis-Bacon Act in Hurricane Katrina-damaged areas of Alabama, Florida, Louisiana and Mississippi. That act, which had been in effect since 1931, requires that all workers employed in federally-financed construction be paid minimum wage. The act was reinstated after two months and much protest, but not before many workers received sub-standard wages.

The Occupational Safety and Health Administration also did a bad job according to a report by the Government Accountability Office, which concludes that the agency did not fully meet the safety and health needs of emergency response and recovery workers.

Likewise, the Department of Homeland Security announced on September 6, 2005, that it would suspend employer sanctions for 45 days for those hiring immigrants who could not prove they were eligible to work in the country.

Exploiting Loopholes

With this lax regulatory environment in place, some business owners like Quinn decided to take advantage of the existing guest worker program. The prospective employers ran ads in the local newspaper for three consecutive days, as required under the law. Not surprisingly, considering the chaos, they drew limited response, which then freed up the employers to import workers. But, in reality, many qualified workers never saw the ads: "Local U.S. workers, mostly African Americans," SPLC charged, "had previously worked in this industry in New Orleans and were available to do so again."(116) In August 2005 official unemployment rates had hit 8.9 percent in the city, while those in the surrounding suburbs were at 16.8 percent.(117)       

But with few replies to their ads, the companies took advantage of the H-2B visa rules to import Latin American workers despite the fact that this program only applies when there are no U.S. laborers available to do the job. After Katrina, some 50,000 workers, mostly from Bolivia, the Dominican Republic and Peru, came to the flooded region to help with the rebuilding and clean-up efforts.

Recruiters promised the migrants lucrative jobs, good working conditions and comfortable housing. Even before these foreign H-2B workers left their home countries, many paid out $3,000 to $5,000 to these middlemen along with government fees and airline fares for the chance to work in the United States. A number of them went deeply into debt, but expected that with wages of $6 per hour and a 40-hour work week, plus housing and possible overtime included, they would return home in a year with a modest nest egg. Instead many got little work and paid high rent on squalid quarters, where they were sometimes cramped four to a room.

One worker told Time magazine that he averaged less than 24 hours a week. Another produced a two-week pay-stub for just $18.08. Deeply in debt and bitterly disappointed they sat, three or four to a small room, waiting. And waiting. The terms of their visas bound them to the company that hired them and prevented them from seeking additional work.

The travel costs, fees, living costs, poor hours and bad pay meant that the guest workers ended up earning far less than minimum wage. This violation of worker protection guaranteed under the federal Fair Labor Standards Act became the basis of a lawsuit brought by the Southern Poverty Law Center against Quinn and Decatur Hotels LLC.

In May 2007 the Eastern District of Louisiana ruled against Quinn, and in favor of 82 H-2B workers. The ruling means that employers must reimburse workers for the fees they pay for travel and associated costs. The judge has yet to decide how much the company will have to pay in damages.

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AMP Section Name:War & Disaster Profiteering