IR #2001-11
Thursday, December 13, 2001

Dean Fryer
Susan Gard
(415) 703-5050

Labor commissioner collects $900,000 back wages owed to employees

SAN FRANCISCO - Under terms of an agreement with the California Division of Labor Standards Enforcement (DLSE), the Disney Store has volunteered to pay over $900,000 of more than $1.5 million in back wages owed to employees of KTBA Inc., a company that primarily manufactured crowns and wands sold in Disney stores.

These funds would have otherwise paid for the inventory of manufactured but unsold goods. In addition, the Disney Store will donate or destroy all merchandise received from the supplier.

"This agreement allows us to pay the back wages of people who worked hard to manufacture these products," said California Labor Commissioner Art Lujan. "This is money they earned and should receive. We appreciate Disney's cooperation in this matter."

The settlement will compensate 800 employees of KTBA, Inc., a manufacturer of toys and accessories, with whom Disney contracted to assemble products sold in Disney stores in the United States and abroad. An investigation of KTBA, Inc., begun in mid-July, revealed widespread violations of minimum wage, overtime, industrial homework and child labor laws. The investigation culminated in the confiscation of goods from KTBA, Inc. in October.

Employees of KTBA, illegally assembling goods at home, typically worked a 48-hour week and were paid a piece rate that earned them an average $1.35 per hour, well below the California minimum wage of $6.25. Workers also were not paid overtime for work in excess of eight hours per day as required by state law.

In addition, investigators found 15 minors between the ages of seven and 15 assembling products for KTBA. California law prohibits minors under the age of 16 from doing manufacturing work and requires minors under 18 to have a valid work permit.

Disney has agreed to place $902,777.78 into a special account to be maintained and administered by DLSE for the purpose of paying money owed to these workers. No findings were made against Disney in the investigation.

Products made in violation of state labor law can never enter the market, therefore DLSE and Disney are exploring the possibility of donating the crowns and wands to charity. If it's not possible or practicable to donate the goods, Disney will destroy them and provide a certificate of destruction to DLSE.

DLSE, headed by the state labor commissioner, investigates and works to resolve wage and hour issues in addition to other standards for working conditions in California. For more information on DLSE visit their web site at