Labor leaders are calling foul on a settlement reached earlier this month between the city and Sky Chefs—an airline catering firm—over that company’s noncompliance with Seattle’s minimum wage ordinance.
In January, the Office of Labor Standards fined Sky Chefs $335,000 for paying workers below the city minimum wage between April 1, 2015 and Oct. 27, 2016. But in the settlement reached Oct. 5 and publicized this week, Sky Chefs has agreed to pay just a fraction of that—$190,500. This amount waves penalties and damages originally levied against the company for the violations, as well as any interest on the back wages. In addition, the union that represents the workers says that the settlement ignores 11 months that Sky Chefs continued to pay below the minimum wage as it fought Seattle’s ruling.
“As Sky Chefs dragged this out, our expectation has always been that once the city process concluded, workers would be made whole for the entire period, not just the period of the initial investigation,” says Abby Lawlor with Unite Here 8, which represents the workers.
Furthermore, Lawlor says, it is the union’s understanding that the settlement waives the city’s right to go after more back wages at Sky Chefs, meaning that a new investigation could not be opened to cover the time period in question.
Sky Chefs, which operates a kitchen in West Seattle that provides pre-made meals for airlines, claimed it was forced to pay below the minimum wage because when the ordinance went into effect, it was in negotiations with the union representing the workers at the Seattle location. The company claimed that federal law prohibited it from changing wages during labor talks.
Both the city and Unite Here 8 disagreed with that argument, and OLS claimed Sky Chefs obstructed the city’s investigation into its practices. The resulting $335,000 fine, which included back wages plus interest to 156 employees, damages, and penalties, was the largest ever issued by the city under the 2014 wage ordinance.
The settlement, though, sets a “dangerous” precedent for several reasons, according to Unite Here. In a memo about the settlement prepared for the union, labor attorney Laura Ewen writes that the settlement could encourage employers to flout Seattle’s minimum wage law.
“By waiving both … damages and interest, OLS is sending a message that employers get to take out essentially an interest-free loan, at the expense of their employees’ paychecks—money that service industry employees rely upon to care for their families,” Ewen writes. She continues, “The City cannot continue to tout itself as ‘a national leader on labor standards implementation and enforcement’ if it continues its current approach in settling cases.”
The memo notes that Unite Here 8 wasn’t even informed about the settlement, and instead had to file a public-disclosure request to obtain it.
Cynthia Santana, a spokesperson with OLS, says the confidentiality agreement in the settlement bars her from commenting on the case. However, she says OLS disagrees with some of the conclusions made in the memo.
Lawlor says that, according to workers at Sky Chefs, they were told this week that they would be getting raises so their wages complied with Seattle law. That’s a positive development, Lawlor says, but notes that the workers should be entitled to the money they would have been paid had Sky Chefs complied with the law last year after OLS found it in violation.
She says workers could file their own suit seeking back wages.
A spokesman for Sky Chefs would not comment on the case; he said in a statement: “The matter between LSG Sky Chefs and the Seattle Office of Labor Standards has been resolved.”