State files lawsuit against national Temp firm

State Attorney General Janet Napolitano has filed a lawsuit against Labor Ready, Inc. (NYSE: LRW) under the Consumer Fraud Act in Pima County Superior Court. The total amount of the penalties resulting from the lawsuit could exceed several million dollars, and follows a similar lawsuit filed in California last month.

The suit alleges that temporary staffing giant Labor Ready has routinely charged its Arizona workers check-cashing fees in violation of A.R.S. 44-1522, a state law enacted in July 2000. The law prohibits temporary employment agencies, such as Labor Ready, from charging workers a fee to cash their paychecks. The state seeks an immediate injunction to prevent further violations, as well as a penalty of $10,000 per violation since the law took effect.

The complaint (No. C20023210) alleges that Labor Ready requires employees who wish to receive cash at the end of each work day to use a Labor Ready cash dispensing machine. Labor Ready then imposes a fee of $1.00 on each transaction, plus any change from the worker's pay for each transaction. According to the suit, in the year 2000 Labor Ready employed 10,844 temporary employees in Arizona who worked in 4,804 customer businesses. Labor Ready workers were paid an average of $5.98 an hour. In one case cited in the suit, a worker paid $1.31 to cash her paycheck of $34.31, meaning the fee reduced her take-home pay by nearly 4%. The suit indicates that Labor Ready acknowledged having retained close to $200,000 from the take-home pay of its Arizona workers between January 1, 2000 and August 2001, but has refused to disclose the amounts extracted since September of 2001.

"We believe that Labor Ready's practices have deprived thousands of Arizona's poorest workers of a significant share of their hard-earned wages," stated Karen Novachek, President of the Arizona Coalition to End Homelessness, a statewide network which helped win passage of the 2000 state law.

"We applaud Attorney General Napolitano's enforcement action," added Karin Uhlich of the Southwest Center for Economic Integrity, a non-profit organization dedicated to combating the commercial exploitation of marginalized people. "In an era of renewed focus on corporate accountability and integrity, these kinds of practices should be aggressively challenged rather than in any way rewarded. Labor Ready is a publicly traded company supplying workers to businesses throughout the country. We urge Labor Ready investors and customers to strongly protest to management against this grossly unfair practice."

In neighboring California, Labor Ready workers recently filed a private lawsuit over these fees. On June 26, 2002, the case of Wilkerson v. Labor Ready was certified as a class action lawsuit by California Supreme Court Judge Joseph F. Biafore. Labor Ready was directed to notify past and present employees in California of the lawsuit in that state.