By Robert Channick | Chicago Tribune
Rivian subcontractors have agreed to pay $315,000 in back wages and penalties to settle a lawsuit brought by the state alleging the companies owed overtime pay to 59 Mexican laborers who helped build the startup’s electric vehicle plant in Normal.
It is the second such settlement with the Illinois attorney general’s office in less than a year for a chain of subcontractors hired by Rivian as it raced to bring its first electric trucks to market.
The consent decree and lawsuit, filed Tuesday in Cook County Circuit Cook, follows a similar settlement in December, when Rivian subcontractors agreed to pay $390,000 to 54 Mexican workers who were also allegedly denied overtime pay during the $1.2 billion renovation of the former Mitsubishi plant.
The two lawsuits have recovered $705,000 for 113 Mexican workers, who often logged more than 70 hours per week between May and October 2021 installing assembly equipment at the plant, without receiving required overtime pay, according to the state.
Irvine-based Rivian, which launched EV production from its Normal plant in September, was not a defendant in either lawsuit. The company did not respond to a request for comment Tuesday.
The joint investigation with the Illinois Department of Labor began in July 2021 after the state received a tip from IBEW Local 197 about alleged workplace violations. The investigation found that after Rivian hired Guangzhou MINO Equipment to build out its production line, the China-based company subcontracted work to several firms, including Florida-based BIW Automotive Solution.
Under the settlement Tuesday, MINO has agreed to pay 59 workers $170,000 in overtime wages and penalties, while BIW will pay an additional $145,000. The amount represents 150% of the overtime wages the workers should have received under Illinois Minimum Wage Law, according to the state.
The state is still pursuing the lawsuit against a third defendant, Mexico-based SDS Industrialservicio, which did not participate in settlement talks, according to Alvar Ayala, head of workplace rights for the attorney general’s office.
“SDS, which did not cooperate with our investigation, is the Mexican entity at the bottom of the chain that actually paid the workers,” Ayala said. “In October, the subcontractor basically left the country and took all the workers back to Mexico, probably in an attempt to hinder our investigation.”
In the December settlement, the subcontractor chain went from MINO to Spain-based IT8 Software Engineering to Mexico-based LAM Automation, which hired the workers. Mino and IT8 agreed to pay $145,000 each in overtime wages and penalties, while LAM agreed to pay $100,00 to the 54 employees who worked at the Normal plant last year.
The buck stopped just below Rivian in both lawsuits.
“Under the right circumstances, a company like Rivian could definitely be responsible,” Ayala said. “It’s just a question of how much control they are exerting over the subcontractor and the workers. In this case, they’re not there.”
The state has tracked down “a very large percentage” of the workers owed money, and set up a process for them to claim their share of the settlement proceeds.
Rivian, which bought the idled Mitsubishi plant for $16 million in 2017, completed an extensive renovation last year, turning on the lights at a 3.3 million-square-foot factory and breathing new life into Normal, a college town about 130 miles south of Chicago.
While it has generated robust demand for its inaugural products, Rivian has struggled to ramp up production. During its second quarter earnings call, the company announced it had more than 98,000 orders for its R1T pickup and R1S SUV as of June 30. Amazon, an early investor in Rivian, has ordered 100,000 commercial electric delivery vans.
The company has built about 8,000 EVs to date, and reaffirmed a scaled-back production target of 25,000 vehicles this year, far below the 150,000 annual capacity at the Normal plant.
In a move that rankled some customers on the long waiting list, Rivian eliminated its lowest-priced Explore model last week, raising the starting price for its R1T truck from $67,500 to $73,000. Customers have until Sep. 1 to either upgrade to the Adventure version or cancel their preorder, according to the company.
Last month, Rivian announced it had laid off 6% of its total workforce, or about 840 nonmanufacturing employees, including about 50 at its Normal assembly plant. Rivian had about 6,000 employees in Normal and about 14,000 across the company before implementing the restructuring plan.
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