High Tech’s Low Wages
Two Silicon Valley firms sued over alleged labor violations
By Janet Dang

Amidst the lucre of Silicon Valley’s high-tech industry, two computer electronics companies face a lawsuit filed for alleged labor violations that’s being likened to those found in the garment industry.

In an argument similar to that which holds big clothing manufacturers and its subcontractors liable for an employee’s working conditions, lawyers working on the case are suing San Jose’s Top Line Electronics, Inc. and its contractor Lite-On Inc. for labor violations involving a worker who had manufactured and repaired computer parts in his own home.

In the suit filed last Monday in U.S. District Court, the Equal Rights Advocates and Asian Law Caucus claim both companies jointly owe an undetermined amount in overtime compensation and back wages for Cambodian immigrant Kamsan Mao of San Jose. Lite-On officials could not be contacted for comment. Top Line officials, however, have denied the charges.

Dorris Ng, staff attorney at Equal Rights Advocates (ERA), believes that the case can set a precedent saying that both of the companies are “indirectly or directly liable, similar to bigger [clothing] manufacturers, which have contracts with smaller companies.” And in fact, she said, their business agreement establishes the principle of joint liability under the law.

According to the complaint, Mao,32,had worked a regular eight-hour shift at Top Line’s San Jose facility, where he made power supplies and repaired motherboards for $8 an hour. In addition to that work, he also assembled and repaired components at home, earning a piece rate of $1-$5. His lawyer argued that Mao had worked for more than one hour to complete a piece, making under minimum wage and was never paid overtime. When Mao told his supervisor he did not want to do anymore homework, he was laid off a month later, she said.

Top Line Vice President of Material Sam Ung denied those charges during an interview Monday. “We did our internal audit here,” Ung said. “We didn’t find anything wrong. We didn’t violate any state or federal laws.”

“It’s so one sided -- it’s unbelievable,” he added. Ung said that the way the facility is set up to produce equipment, “it is impossible to take work home. No work was ever taken home.” Ung declined to elaborate, saying that he prefers an in-person interview.

Top-Line, whose original founder is Asian American, employs some 400 workers.

Top Line Inc. manufactures and repairs computers and computer parts for companies such as Lite-On. Lite-On, in turn, manufactures computer components for companies such as Compaq, though it has not been named in the suit.

Mao was first contracted as an independent worker in 1992 and was hired as a full-time employee in 1993, Ng said. In 1994, he began taking work home at night, in addition to working days at Top-Line. After an 8-hour day shift, he worked from home as many as 6 hours in the evening and10 hours on weekends.

The suit also claims that Mao had used soldering tools and cleaning chemicals at home, which his lawyers said put him at a tremendous health and safety risk. Because of the exposure, Ng said, Mao developed respiratory problems including asthma.

“[Mao] did his work at home,” said Ng. “He was never given any protective gear; he was not trained in what to do when working with these chemicals.”

Though Mao was legally an independent contractor, his lawyer maintains that both companies are liable for his working conditions since testing equipment and parts had been provided by Lite-On and that it had “control that was exercised over the employee,” she said.

“We are arguing that [Mao], by law, was an employee,” said Ng. “What the company was trying to do was trying to avoid having to comply [to labor laws]. They were hiding behind this purported independent contract arrangement,” she said.

The booming high-tech industry has spurred an almost unending demand for computer parts. As a result, companies are assigning more home work, said Ng. However, she could not determine exactly how common the practice is or how many other Top-Line employees were asked to take work home.

This practice may be disproportionately affecting poor, mostly Southeast Asian immigrants, said Ng, who researched immigrant women in Santa Clara for an ERA study on welfare to work transitions. Ng cited several examples where Vietnamese women had been encouraged to train in electronic assembly work and had worked at home. The 1999 study, which interviewed150 women, stated: “two women told ERA that they had received job training for electronics assembly. They work at home and are being paid by the piece rate. Their pay adds up to less than California’s minimum wage.”

Ng believes the number of workers is much greater.

“We did some additional investigation, and with our understanding, and other news reports, it is a significant problem in Silicon Valley with people doing homework. It is a problem that’s pretty widespread,” she said, adding that the study did not examine low wage workers in addition to welfare recipients.

Furthermore, “it’s been extremely difficult doing outreach to low-wage immigrant workers who do electronic assembly work,” Ng said. “There’s a lot of fear about complaining about employers. They’re very desperate financially, and they’re afraid that if they say anything they’ll be retaliated against.”

The practice of “homework,” in which the assembly of computer components is contracted out and done at home by laborers has recently garnered much media attention.

Last week, three Bay Area companies were fined by the California Labor Commissioner a total of $185,000 for not paying workers adequately. That was the first time the department confirmed that citations have been made as a result of ongoing violations. At least 10 other companies are being investigated.

Under California law, certain types of industrial homework are permitted. However, electronic assembly is not on the list of permissible work, according to Ng.

She said that a California labor provision assumes someone doing industrial homework for a company is an employee of that company. Moreover, the employer must establish a “homework license” for the worker, which Top-Line did not, she said.