SPLC suit: Company with Mississippi state contracts defrauded guest workers

A landscaping contractor paid by Mississippi to maintain the shoulders and medians of rural roadways broke federal racketeering laws and cheated its Mexican guest workers out of their wages, according to an amended federal lawsuit filed by the Southern Poverty Law Center (SPLC) today.

The suit describes how Culpepper Enterprises and its president, Kathy Culpepper, used the nation’s H-2B guest worker program to hire the workers but failed to pay the wages that were promised to the workers and reported to the U.S. Department of Labor, which oversees the program.

It claims that false statements to the federal government by Culpepper and its labor recruiter, North American Labor Services, violate the Racketeer Influenced and Corrupt Organizations (RICO) Act.

The suit was filed on behalf of six workers in the Southern District of Mississippi, Northern Division, in Jackson

Culpepper Enterprises has received more than $9 million in state contracts to maintain landscaping along roads in several Mississippi counties. The lawsuit was originally filed in June, but was amended today to include the RICO claims.

“These guest workers were exploited for profit,” said Sarah Rich, SPLC staff attorney. “Year after year, Culpepper Enterprises landed lucrative state contracts while defrauding these workers and the U.S. Department of Labor to enrich itself. This abuse occurred under the noses of state officials. This lawsuit also shows how our broken guest worker program allows these abuses to happen.”

Collins-based Culpepper Enterprises employed the workers from 2012 to 2014 to fulfill contracts with the Mississippi Department of Transportation. The contractor pledged to pay guest workers the prevailing wage for the area, a legally required wage that is supposed to ensure employers don’t use the guest worker program to undercut local workers.

Instead of paying the prevailing wage – which ranged from $10.26 per hour in 2012 to $11.11 in 2014 – the H-2B workers were paid the federal minimum wage of $7.25 per hour. In one year, they were underpaid by almost $6 an hour in overtime pay. Culpepper pushed their wages even lower than the minimum wage by illegally deducting fees for equipment, protective gear and overpriced housing.

The company worked with North American Labor Services to recruit seasonal workers from Mexico – each year attesting to the Department of Labor that there was no local labor to fill the positions.

During the 2014 season, their employer housed them in an apartment complex on the outskirts of Jackson. Five workers were assigned to each two-bedroom apartment. Every two weeks, $130 was deducted from each worker’s paycheck for housing, a monthly rent payment of $1,300 per apartment.

Under the H-2B program, workers cannot change jobs. This means if their employer cheats them out of wages or is abusive, they must choose between continuing to work or returning home, typically in debt from the various fees paid to secure the job.

Defendant North American Labor Services dissolved as a corporation in 2009, but its agents, Jon and Cheri Clancy, continue to do business. They are also named as defendants in the lawsuit. Culpepper Enterprises dissolved as a corporation in 2014.

The SPLC is committed to winning justice for exploited guest workers and finding permanent solutions to America’s broken immigration system. It recently coordinated labor trafficking lawsuits on behalf of more than 200 exploited guest workers from India. That effort ended in July with a $20 million settlement agreement with the Gulf Coast marine services company that employed them.

The SPLC examined the systematic exploitation of foreign workers in the H-2 guest worker program in its groundbreaking report Close to Slavery.