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July 24, 2015

Landmark Human Trafficking Case Ends with Bankruptcy for Signal International, Inc.

By Radha Desai

Signal International, Inc., a marine service company headquartered in Mobile, Alabama, was ordered to pay more $14 million to trafficked workers in a landmark lawsuit earlier this year. Last week, the company settled another lawsuit for $20 million. Now it’s filing for bankruptcy.

This is not only a historic moment in the fight against modern slavery, but also a cautionary tale for U.S. companies who knowingly or unknowingly engage in trafficking.

Signal builds large ocean structures such as offshore drilling rigs, floating production units, and barges. Hurricane Katrina severely damaged its operation. Facing a labor shortage, it recruited skilled laborers from overseas under the H-2B guest worker visa program. How Signal went about this was the problem.

The workers paid a recruitment fee—$10,000-$20,000 each—which is illegal under U.S. law. They were also told they’d receive a secure, well-paying job and pathway to citizenship. But the H-2B guest worker visa permits entry only on a temporary basis. Under the H-2B visa, employees are barred from seeking other work and are deported if employment terminates early. Signal shirked an estimated $8 million in labor costs as a result of this scheme.

A more transparent immigration process may have prevented these workers’ exploitation. Empowering immigrants with knowledge of their obligations and rights under immigration law can go a long way in avoiding abuses such as this. 

Signal may have trafficked upwards of 500 Indian nationals. The workers were forced to live in double-wide trailers with up to 24 other men. The trailers were guarded at all times and workers were subject to inspection upon entry and exit. Signal deducted $1,050/month in “rent” from each laborer’s paycheck. In a shocking revelation during the trial, Signal’s CFO referred to these camps as “profit centers” that earned the company more than $730,000 in one year. 

When several workers began to question the legality of their working and living conditions, Signal swiftly detained and threatened them with deportation. However, through the perseverance of a dedicated team of attorneys who worked pro bono for seven years and the determination of the plaintiffs who suffered unconscionable treatment, the sun has finally set on Signal International’s empire of abuse.

Not only were Signal’s actions blatantly immoral, they were also bad for business. They saved $8 million in labor costs; now they owe $34 million in restitution, mounting legal fees, and bankruptcy. Companies who profit from forced labor will have to rethink their approach in light of the Signal International case.