Disney Settles Back Wages Case

Walt Disney Co. paid more than $900,000 in back wages for 800 employees of a Laguna Hills toy company who were paid less than minimum wage working at home to make pink tiaras and magic wands for the Disney Store chain, a state agency said Thursday.

The payment came after a five-month investigation by the state Division of Labor Standards Enforcement into the labor practices of longtime Disney contractor KTBA Inc.

The agency said that it had not found any wrongdoing by Disney, which did not admit any liability in settling. But the agency found that KTBA violated minimum-wage, overtime, industrial home-work and child-labor laws.

The payment represents about 60 cents on the dollar owed to KTBA employees over a three-year period, the farthest back the agency could go, said spokesman Dean Fryer. Disney used KTBA for about nine years, he said.

The state will try to collect the remaining amount, about $600,000, from the now-closed KTBA and its owner, Carol A. Schelin. Neither Schelin nor her lawyer could be reached for comment.

Disney halted shipments and removed the products from its shelves when the state first revealed the probe in mid-July.

According to the state’s findings, KTBA employees illegally assembled goods at home without proper permits, typically worked 48 hours a week and earned 60 cents apiece for tiaras and 40 cents for each wand. The amount of time it took to assemble the products left them earning only $1.35 an hour, far below the current $6.25-an-hour minimum wage, the state said.

Disney was selling the tiaras for $9.95 to $15.95 each and the wands for $2.65 apiece, Fryer said.

Disney agreed to put $902,778 in a special account run by the agency to pay workers, and will destroy the tiaras and wands removed from store shelves, Fryer said. The agency has seized 75,000 tiaras and 42,000 wands and will donate them to children’s charities.