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Attempt to skirt labor laws by using staffing firms fails

A Massachusetts company that tried to use staffing agencies to shield itself from liability must now pay nearly $1.2 million in damages for labor violations and retaliation against employees, the Massachusetts Attorney General’s Office reported last week.

UnWrapped Inc., which primarily sells reusable grocery bags to supermarkets, and its president, Steven Katz, agreed to pay:

An investigation found temporary workers were paid below the state minimum wage between April 2014 and April 2016, according to the Attorney General’s Office. These workers will receive double damages for these violations.

Other allegations included that the company did not have an earned sick time policy as required by law and fired two employees who cooperated with the investigation; Katz has agreed to hire them back. The state investigation also found an 11-year-old child working at the factory and that workers were not paid the overtime rate for hours worked over 40 in a week.

UnWrapped will pay restitution to workers regardless of the company’s claims they were employed by staffing firms, according to the Attorney General’s Office. The company will also strengthen its recordkeeping practices as well as those of any staffing agency they work with to ensure compliance. It is also now posting information on Massachusetts wage and hour laws.

More than 500 workers will receive restitution, according to the Attorney General’s Office.

UnWrapped is based in Lowell, Mass., and the investigation was a joint effort of the Attorney General’s Office and the US Department of Labor’s Wage and Hour Division.