WASHINGTON - A State Department official charged yesterday that a South Carolina firm violated federal minimum wage laws when it placed hundreds of foreign management trainees imported under the J-1 visa program in low-level jobs at hotels and resorts.
Stanley S. Colvin, acting director of the bureau that oversees the visa program, told a three-member State Department panel that by the most generous estimate, American Hospitality Academy was paying its workers only $3.94 an hour, more than a dollar below the $5.15 federal minimum.
"The economic reality is that these are employees who are working and should be paid the minimum wage," Colvin said, labeling the AHA program a form of "outsourcing."
Colvin said the jobs assigned the foreign workers - ranging from face painting to baby-sitting - were officially classified as unskilled and thus violated longstanding rules of the J-1 program, designed to foster international cultural exchange.
His testimony came on the last day of the hearing at which AHA sought to overturn an order revoking its authority to participate in the J-1 program.
Colvin said AHA's program was so flawed it was impossible to bring it into compliance with federal regulations.
In final arguments, AHA attorney Laura Reiff said the government hadn't proved its case and made an emotional appeal to allow the firm, based in Hilton Head, to keep operating. "Now, more than ever, after 9/11, it's important to promote this program," Reiff said.
AHA has brought about 2,000 foreigners to the United States since 1997 to work in Florida and South Carolina.
The firm deserves a chance to amend its training programs to eliminate any violations, Reiff said, adding that government investigators should have made another site visit before revoking AHA's permit. She also argued that minimum wage laws do not apply to trainees in an authorized exchange program.
Mary Ann Craven, a State Department employee who chaired the hearing panel, promised that a final decision on the appeal would be issued within 10 days.
Reiff and AHA's director of training, Scott Anthony, also attempted to discredit the testimony of Michele Patiag, a 21-year-old Filipino student who fled the program last year.
Anthony said he was convinced Patiag, who said she left the program after being ordered to hand over her visa documents to the company in violation of federal law, had signed up only in order to get into the United States under false pretenses. AHA had the same problem with many of its students from the Philippines, he testified.
Colvin said that contracts between AHA and companies like Sea World proved conclusively that AHA is really running an employment agency, not providing a management training program. Under the contracts, he said, AHA agreed to supply workers for 45 hours a week for a monthly fee of $1,300.
The Sun reported in April that AHA student interns received only $300 of this sum, which works out to a pay rate of just $1.67 an hour. AHA paid for housing.
Colvin said a South Carolina golf club told him that the AHA workers assigned to waiting on tables there didn't get a share of the 18 percent tips, money that went to their American colleagues.
He said two audit reports submitted by AHA that attempted to show the workers were getting minimum wage computed an average wage for all the workers, but federal law requires a computation based on each individual employee.