GRAND RAPIDS, Mich. (Legal Newsline) - A staffing company that claims its business could be ruined by a federal investigation failed to make its case, a magistrate judge has written in a dispute over just how much the Department of Labor is allowed to interfere with the company's business partners.
Magistrate Judge Phillip Green in Grand Rapids, Mich., granted the DOL's motion to enforce its subpoenas issued to Forge Industrial Staffing last year, but decided a report and recommendations was more appropriate. District Judge Paul Lewis Maloney will now decide whether to adopt Green's Feb. 23 report, which adds Forge should pay for the costs the DOL incurred by going to court to enforce the subpoena.
The DOL wants access to a list of Forge's clients to determine whether employees provided by Forge are of age and are being compensated fairly. Forge says having federal investigators roaming its clients' facilities would ruin its reputation.
It's an investigation that was kickstarted by a New York Times article and is overseen by acting Labor secretary Julie Su, who has failed to win confirmation in the U.S. Senate but still gets to head the agency.
Though Forge has said in court papers that it has lost 17 clients and about $9.5 million as a result of the attention generated by the Times article and ensuing investigation, Green wrote it "offers nothing to suggest" providing the client list would be burdensome according to the U.S. Court of Appeals for the Sixth Circuit.
"Instead, Forge argues that the Court should consider 'burden' in the form of embarrassment and interference with client relationships," Green wrote.
"But Forge is unable to cite any authority for the proposition that this is the type of burden the Court may consider, and the undersigned (Green) has found none."
The subpoenas are within Su's authority and seek relevant information, Green wrote. Forge provides temporary workers to nearly 600 businesses in Michigan and Indiana.
It also thought it had a deal to avoid giving up the client list in October, but the Labor Dept. reneged about a week later.
The New York Times published an article in February 2023 on possible child labor violations in 20 different states. It quoted a former Forge employee, Nubia Malacara, who said a Forge client - Hearthside Foods - was knowingly employing minors.
"Hearthside didn't care," Malacara is quoted as saying.
Fake IDs are a concern, Forge says. The company placed Malacara with Hearthside in 2011 for a three-day stint - the only job Malacara was placed into by Forge, the company says.
Malacara said her birthday was in November 1992, which would have made her 19. But 10 years later, Forge hired her to a full-time administrative position and she reported a birthday in 1995 this time. She resigned after less than a year.
She also used a different social security number than the one she used 10 years earlier. The United States Citizenship and Immigration Services says employers should accept documentation that "reasonably appears to be genuine."
Forge employees are periodically tested when the company intentionally sends "applicants" who are out of compliance with company policy to try to gain employment, the company says.
"In sum, based on an article from last February that quoted one former Forge employee in one of Forge’s offices involving one of Forge’s clients, the Department seeks the identification of every single client from every single Forge location in two different states, based on no claimed violations and nothing more than the stated purpose of determining whether Forge is complying with the FLSA," Forge says.
"These losses have resulted in layoffs at Forge, and Forge's overall revenue with its existing clients is down approximately 40%, much more so than industry trends would dictate.
"As of last month, Forge is struggling to break even."
Hearthside first suspended then terminated its relationship with Forge last year.