Squeezed garment factories use check cashing services to mask true wages, workers say
Some workers in California’s garment industry, where underpayment of wages has been a long-standing issue, are told to use check chasing services to receive their wages – a ploy that some Los Angeles garment makers use to cloak wages that don’t meet minimum wage requirements. Squeezed by competition from China, Bangladesh, and other Southeast Asian countries, and facing minimum wage increases in the future, many garment factories have closed, while others are escaping wage-theft accountability by forming relationships with check cashing companies. The unofficial payroll checks misrepresent true hourly wages by decreasing the number of hours actually worked; they also often don’t have the required deductions for taxes, disability, or unemployment insurance, which is illegal. In some cases, wage payments are made via vouchers, cashable only at check cashing storefronts or vans parked outside factories. Labor Department investigations in the southern California region over the last five years have uncovered $11.7 million in unpaid wages.
See "Squeezed garment factories use check cashing services to mask true wages, workers say", Natalie Kitroeff, Los Angeles Times, August 3, 2016