City Gives a Break to Airline Catering Company Found to Be Stiffing Workers

Sky Chefs workers in Seattle prepare meals to be sold in 7-Elevens and on Alaska Airline flights. JAMES YAMASAKI

Nine months ago, the City of Seattle found that LSG Sky Chefs, a subsidiary of the German airline Lufthansa, failed to pay workers the right minimum wage at its West Seattle facility. Seattle's newly formed Office of Labor Standards issued a heavy mandate: The company would have to pay $335,000, most of that in back pay and damages directly to the workers.

Now, the city has walked back those demands and signed a confidentiality agreement preventing city officials from explaining why.

Instead of $335,000, Sky Chefs will pay $190,500, which the city will distribute "as it deems appropriate." That amount equals slightly more than the back pay owed to workers, but less than back pay with interest, as the city initially demanded. That means the city essentially waived the interest, damages, and civil penalties it initially said it would charge the company. In the settlement agreement, the company continues to deny it violated the law.

The reduced penalty combined with how the city investigated the case "sets, at best, a troubling precedent—and at worst, a dangerous one," according to a lawyer for the union representing the workers, Unite Here Local 8.

Employees at Sky Chefs' West Seattle location assemble sandwiches and salads that are sold in 7-Elevens and on Alaska Airlines flights. The workers say they arrive by 4 am, spend much of their day inside a walk-in cooler, and live paycheck-to-paycheck.

Early this year, a city investigation found that Sky Chefs paid some workers $11 to $12.50 an hour when they should have been making $13. About 50 workers are employed at the West Seattle location at any given time, but 156 workers had been underpaid over two years, according to documents in the case. In total, the Office of Labor Standards (OLS) order the company to pay workers $319,533 in back wages, interest, and damages, plus another $15,500 in fines to the city for “willful[ly] resisting, impeding, preventing, or interfering" with the investigation.

During the nearly two-year-long investigation, the company had caused significant delays, the city said. Sky Chefs released weekly payroll records for 165 employees, for example, in a "non-alphabetized stack of 14,000 individual pieces of paper, resulting in investigators’ spending 201 hours to calculate individual employees’ wages, shift differentials and overtime payments," according to OLS.

After that finding and a press release from OLS touting the large amount the company would pay, Sky Chefs appealed to the city's hearing examiner. The company asked for a dismissal of the city's findings. The hearing examiner denied their request in June.

The union says it received no meaningful updates from the city after that ruling. Then, the city and Sky Chefs signed the new agreement on October 5. Neither Sky Chefs nor the city would comment to The Stranger about the agreement or the union's concerns. A representative from OLS cited the confidentiality agreement included in the settlement. A representative for Unite Here Local 8 said OLS told the union it intends to distribute the full $190,500 to workers. (That backpay also only covers underpayment from April 2015 through October 2016, but the union alleges the company has continued to underpay workers in 2017. The minimum wage for workers at large companies who do not receive health insurance is now $15 an hour in Seattle.)

Unite Here Local 8 argues OLS' handling of the case indicates the office's unwillingness to truly hold companies accountable for violating workers' rights or delaying city investigations.

In a memo delivered to the mayor and other city officials, a lawyer for the union, Laura Ewan, writes that by waiving damages and interest for Sky Chefs, "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." Ewan also cites the failure to penalize the company for delaying the investigation. "This further underscores the apparent precedent OLS is setting here—delay is a tool employers can wield against OLS, without consequence, in order to maximize their gains at employee expense," Ewan writes.

The union also worries the case could discourage people from seeking help from OLS if their boss is violating the law.

"OLS’ decision to initially refuse to work with Local 8—and later to affirmatively cut Local 8 out of the process entirely—serves to undermine unions and collective bargaining in a time where workers’ rights to collective representation are already under attack nationally," Ewan writes. That approach will "only hinder the process of holding employers accountable for their actions, and may actively dissuade unions from using OLS as a remedy in future cases."

"The city cannot continue to tout itself as 'a national leader on labor standards implementation and enforcement,'" Ewan writes, "if it continues its current approach in settling cases."