During the depths of the pandemic, sales at Alo Yoga surged as its popularity exploded on social media. Kendall Jenner appeared on Instagram wearing the brand’s high-waist leggings. Alessandra Ambrosio and Jennifer Lopez were seen in Alo gear, too. In just one year, business reportedly almost doubled, surpassing $1 billion.
Alo’s sister company, Bella+Canvas, a wholesaler of basic apparel, also reached a milestone, selling directly to consumers through its website. To keep up, the two companies turned to a vast new distribution warehouse in Nevada.
Finding workers for such facilities is no small task, but corporate America often looks to a time-tested strategy: contracting with staffing agencies that temporarily employ migrants, including some who enter the country illegally and are desperate for jobs.
This year, America’s southern border was once again a flashpoint in a presidential election, with President-elect Donald J. Trump pledging to deport millions of people who he said were “poisoning the blood” of the country. Within days of his re-election, he announced his intention to appoint hard-liners on immigration.
But despite the tough talk, the broken border has been a lifeline for America’s on-demand economy under both Democratic and Republican administrations, including Mr. Trump’s first term, an investigation by The New York Times found. Thousands of companies have exploited its porousness by plucking workers from the ranks of unauthorized migrants, sometimes with impunity.
Hidden from public view is the middleman role often played by staffing agencies. They recruit workers for warehouses, factories and distribution centers that serve up billions of dollars in goods for brand-name companies.
One of the most notorious agencies, BaronHR, worked with Alo Yoga and Bella+Canvas for years, including at the Nevada warehouse. The reporting shows that the agency’s founder, Luis E. Perez, cast himself as a benefactor for immigrant workers, but in many cases his firms cheated them out of wages and stole their tax payments.
While BaronHR provided jobs to migrants — and employees to companies — it was also an active player on the darker side of the immigration economy. Until the firm collapsed early this year, it was an agent for the exploitation of laborers who were often underpaid and working in unsafe conditions, all while shielding brands from direct responsibility.
To examine this secretive world, The Times scoured thousands of pages of court records, internal corporate documents and regulatory filings, and interviewed 100 migrant employees, as well as regulators and industry experts.
Mr. Perez is now in jail awaiting sentencing after pleading guilty to federal tax crimes involving nearly $60 million. But since 2018, while his case went unresolved, records indicate that BaronHR and affiliated firms entered into contracts and collected more than $750 million from corporate partners, including Alo Yoga and Bella+Canvas. Much of the business occurred even as Mr. Trump cracked down on illegal immigration.
The privately held clothing retailers did not respond to repeated requests for comment, including a detailed list of findings addressed to their founders and hand-delivered to their Beverly Hills headquarters. A representative for Ms. Jenner, Ms. Ambrosio and Ms. Lopez declined to comment.
In a statement from jail in Santa Ana, Calif., Mr. Perez said, “There are significant limitations on my ability to meaningfully engage with you,” because of his legal situation and what he characterized as serious health problems.
He said BaronHR was often an employer “in name only” because “clients dictated the employment terms and conditions” and that since 2018 he had had “restricted involvement.” Some of his detractors, he said, were “former disgruntled employees, competitors and less-than-ideal clients.”
On any given day, Mr. Perez’s agencies had upward of 8,000 workers at partner locations, according to a 2021 deposition by a former top executive. Over more than a decade, they provided staffing for at least 800 companies large and small, publicly traded and privately held, client lists and other records obtained by The Times show. In addition to Alo Yoga and Bella+Canvas, the companies included well-known giants like TJX — the parent of T.J. Maxx, HomeGoods and Marshalls — and Keurig Dr Pepper, the beverage maker.
Those records do not identify the workers’ legal status, but a former BaronHR manager, Stacy Mohler, said some companies were adamant about vetting workers, while others just wanted “a warm body.” Another former manager said word spreads quickly about staffing firms that “hire anyone.”
Staffing agencies were among the top employers of unauthorized workers at sites inspected for immigration violations over the past decade, according to data collected by U.S. Immigration and Customs Enforcement. The records indicate that at least 160 staffing firms, most of them identified during the Trump administration, employed people with suspicious documents or no evidence of authorization.
Immigration experts say this pattern of hiring reflects a far broader phenomenon tracked in the Biden and Obama administrations as well, but staffing agencies contacted by The Times disputed the accuracy of the data or suggested that workers had misrepresented their status.
The industry group representing staffing firms says partners sometimes use them as scapegoats.
“Clients are constantly trying to shift responsibility to us,” said Ed Lenz, senior counsel of the American Staffing Association. (BaronHR was not a member.) “And it’s a chronic longstanding tussle that we have with clients because they’re trying to relieve themselves of as much responsibility as possible.”
Dozens of staffing agencies have been accused of violations at their partner companies’ work sites, including sexual harassment, racial discrimination, wage theft or safety lapses that resulted in amputations, crushed body parts and death.
Federal, state and local regulators have pursued at least 80 investigations of agencies over possible violations involving immigrants, including many who are in the United States illegally, according to records from the Department of Homeland Security obtained through public records requests. They were compiled during the Biden administration but document accusations stretching back at least as far as the Trump era. They do not indicate the status of the investigations, and a department spokesperson did not provide more information.
Three staffing firms, for example, are under investigation by the Illinois Labor Department for concerns related to improper training at Ferrara Candy, the maker of SweeTarts and Jelly Belly jelly beans.
The candy company is also under investigation, records show. In a statement, it described the investigation as “frivolous” and said “all temporary and full-time workers understand the hazards and appropriate safety measures of their assigned role.”
Interviews and regulatory records show that BaronHR and its affiliates have been the subject of at least three investigations involving discrimination or failure to pay workers assigned to dozens of job sites, including at TJX.
In a statement, TJX said it requires staffing partners to provide authorized workers. “As these individuals are Baron employees,” the company said, “it would be inappropriate for us to comment on BaronHR’s business practices.”
Mr. Perez, the BaronHR founder, described “the vast majority” of its workers as “rollover” employees who had been hired by another agency or already worked for the partner company.
Across the country, BaronHR became known for issuing paychecks that shortchanged wages or bounced because of insufficient funds. The Times obtained BaronHR emails, interviewed employees and reviewed lawsuits describing more than a decade of payment problems.
A worker from Colombia said even check-cashing operations that were popular among undocumented immigrants often turned him away. “It was always a headache,” said the man, who worked at the Alo Yoga and Bella+Canvas warehouse in Nevada.
The retailers were among many companies that enlisted Mr. Perez’s services after he and his firms endured government raids, arrests, bankruptcies, indictments and lawsuits, according to interviews, BaronHR client records and court filings.
The relationships are a case study in how companies can benefit from illegal immigration — and can sidestep responsibility as workers are exploited.
In a sworn statement in May, the warehouse operations and safety manager for the two retailers said they had moved the BaronHR workers in California and Nevada to new staffing agencies and had paid missing wages. The intervention came after a work stoppage at the Nevada warehouse in January.
A ‘Game of Whac-a-Mole’
Last year about 13 million people worked in temporary jobs, more than a third of which were in warehouses, distribution centers and other industrial settings, according to the American Staffing Association.
For many unauthorized migrants, staffing firms offer a way to get their footing. In interviews, some recounted that their first job at BaronHR felt like a godsend.
One man from El Salvador had earned $40 a day selling oranges in Los Angeles. When he later made his way to Nevada, BaronHR sent him to the Alo Yoga and Bella+Canvas warehouse for $17 an hour.
A woman who had fled violence in South America worked for two staffing agencies in New Jersey before BaronHR sent her to Pennsylvania. There, she said, she unloaded mannequins, clothes and store decorations for a center owned by TJX for $18 an hour.
Elizeth Peláez, a migrant from Mexico, earned $400 a week as a domestic employee in Florida, before landing work with BaronHR in Nevada. At first, she packed potato chips and vitamins for $10 an hour, and welded wires for casino machines for $11. Eventually, she said, she drove a forklift for $18 an hour.
But her BaronHR paychecks bounced so often, she couldn’t reliably make rent. She slept in an office at a building she cleaned on the side.
“You have to do what they ask,” she explained, “or you’re left with nothing.”
To find such compliant workers, BaronHR relied on social media platforms, like LinkedIn, and word of mouth. It posted fliers in laundromats and stores, and opened offices in immigrant neighborhoods.
For years, Mr. Perez also leveraged his cultural connections.
Born in Mexico and raised in Orange County, Calif., he focused recruitment on Southern California’s Hispanic population. In his statement, he emphasized his humble origins. “I am very familiar with the experience of immigrants struggling to make ends meet,” he said, “because I was one.”
By 2003, his first firm, then called Checkmate Staffing, had hundreds of millions of dollars a year in business, Mr. Perez told government investigators, according to court records. Other disclosures showed that Checkmate workers were deployed to more than 1,200 companies.
Staffing agencies make money by charging companies a “markup” on hourly wages. Some find underhanded ways to gain a competitive edge. Mr. Perez could afford slim markups because he cut corners on required expenses such as workers’ compensation payments and payroll taxes, according to interviews and two decades of criminal cases against him.
Without providing details, Mr. Perez said in his statement that BaronHR relied on third-party contractors that “misled” the staffing agency about workers’ compensation coverage or withheld wages when “clients didn’t pay on time.”
David Weil, former administrator of the U.S. Labor Department’s wage and hour division, said operators like Mr. Perez go “in and out of business under multiple names,” skirting responsibility by creating a “game of Whac-a-Mole.”
He added, “If you create an environment where essentially you’re allowing some businesses to compete on the basis of wage theft, it starts pulling down the standards.”
Mr. Lenz, of the Staffing Association, said that law-abiding firms feel “deeply frustrated” because “they’re being hammered in the marketplace.”
BaronHR and its affiliates flourished, eventually expanding into about 15 states. “We were making hundreds of placements every hour,” said Becky Romero, a former BaronHR executive vice president who has a pending sexual harassment and wrongful termination suit against the company.
‘Nothing Is Getting Fixed’
BaronHR’s practices were hardly an industry secret.
Beginning over a decade ago, there were lawsuits, civil rights complaints and other public actions against the firm. And on multiple occasions, executives at a rival staffing agency emailed BaronHR clients about the problems. A person familiar with the emails said they went to more than 120 undisclosed partner companies.
One executive with the competitor, Partners Personnel, wrote in March 2021 that Mr. Perez’s run-ins with the law had the “potential to significantly disrupt your operations” and put “an unfortunate stain on the staffing industry.”
Some BaronHR clients backed away as the agency’s troubles became more widely known, but hundreds remained steadfast.
When Keurig Dr Pepper signed a new contract with BaronHR in 2019 to staff a facility in California, Mr. Perez and two of his executives were facing state charges for tax and workers’ compensation premium fraud.
Later that year, as federal prosecutors unsealed an indictment charging Mr. Perez with not paying millions in payroll taxes, Keurig Dr Pepper expanded the partnership to include more warehouses.
The partners then deepened their relationship with a national contract, according to a wrongful termination lawsuit by a former BaronHR employee.
Agency records show that workers were sent to Keurig Dr Pepper locations across the country, including manufacturing and warehouse sites in Florida and Illinois. Like the other BaronHR records reviewed by The Times, these do not indicate workers’ immigration status.
In a statement, Keurig Dr Pepper did not comment on the contract extensions but said it had later terminated its relationship with BaronHR because the firm was “not able to meet the standards expected in our internal vendor processes.”
The company added that it requires all suppliers to comply with the law and its ethical standards, including screening applicants for immigration status. It also said that it “did not observe any conduct” that ran counter to its standards.
Similarly, food affiliates of CJ Group maintained a relationship with BaronHR while they and the staffing firm faced worker lawsuits, records show.
The Times reached out to Schwan’s, which last year merged with the food affiliates and produces products under Red Baron, Bibigo and other brand names. In a statement, a Schwan’s spokesman acknowledged there had been “a handful of situations” when “BaronHR failed to pay workers,” but said “we always paid BaronHR for the work performed,” and “we expect the companies we work with to abide by all laws.”
In interviews, several former employees at BaronHR offices described workers from a variety of sites, including Alo Yoga and Bella+Canvas, complaining about missing wages and bounced paychecks. In some cases, they responded to calls from partner companies about why the workers were not getting paid.
Often, they said, they offered empty promises. But one recalled telling companies, “Nothing is getting fixed.”
In his statement, Mr. Perez said he accepted “ultimate responsibility” for his tax problems, while spreading blame to others.
“My downfall was hiring people with limited training and experience to run the business,” he said, “and retaining professionals who gave me very bad advice.”
‘U.S.A. Strong’
Alo Yoga and Bella+Canvas — which markets itself as “U.S.A. Strong” for creating American jobs — were consistent partners of BaronHR. They are owned by Color Image Apparel, a privately held company based in Beverly Hills, founded by Danny Harris and Marco DeGeorge.
The relationship with BaronHR dates back roughly a decade, when the staffing firm began supplying them workers in suburban Los Angeles, records and interviews show. They also indicate that BaronHR and the retailers were in close communication when problems arose in the Nevada warehouse. BaronHR and other firms providing staffing had representatives stationed in the lunchroom, according to workers and BaronHR corporate employees.
In September 2022, a new contract between Bella+Canvas and BaronHR laid out the agency’s responsibility for screening, hiring and paying workers. Over the previous three years, at least four workers had sued both BaronHR and Bella+Canvas over pay and other claims. Three settled and one, who also filed a discrimination complaint to California’s civil rights agency, has a lawsuit still pending.
The Times interviewed more than 20 people whom BaronHR had hired to work for Alo Yoga, Bella+Canvas, Color Image or their contractors. All of them were undocumented during their employment, and some shared texts, emails, pay stubs and other documents.
Many of the workers described banks rejecting their paychecks for insufficient funds. By last fall, they said, BaronHR often directed them to specific check-cashing businesses that charged high fees.
“The company should not be telling me what to do with my money,” said one worker, Eduardo Olmos.
The designated businesses changed regularly, and by late in the day they sometimes turned people away. Some workers clocked out mid-shift to get paid. In such a rush, Maria Acuña, a former supervisor in Nevada, said she and some co-workers once narrowly avoided a car accident.
“We got out of the car, running,” she said.
Another worker was once stationed in a “V.I.P. section,” packing Alo Yoga items for celebrities and social media influencers. A single mother who was undocumented, she said she fell behind on rent because of bounced paychecks and worried about feeding and clothing her children.
Some said they complained to managers employed by Alo Yoga and Bella+Canvas. Emails document some of the exchanges.
In one of them, a worker complained to a Bella+Canvas manager last year that her bank repeatedly rejected her checks. Their email exchange dragged out over three months and looped in the staffing agency.
While workers struggled to get paid, Alo Yoga promoted steep holiday discounts and, on Instagram, free fast shipping on “party looks” and “winter wish lists.”
Many workers who spoke to The Times had committed to working six-day weeks to meet the demand. In return, BaronHR promised bonuses, but many of those checks bounced too.
After struggling to get paid during the holidays, workers in Nevada occupied the cafeteria and refused to work. Within days, Alo Yoga and Bella+Canvas switched BaronHR workers to other agencies staffing their warehouses.
In May, Delfino Barragan, the warehouse operations and safety manager for the clothing brands, acknowledged in a court filing that, for four weeks beginning last December, BaronHR was “failing to pay its staff.”
He said the brands had paid about $425,000 to the other agencies to cover “labor costs that BaronHR failed to pay,” and blamed the staffing firm’s “breaches” for other potential costs.
Some workers were still reckoning their losses months later. When the Salvadoran man who once sold oranges tried to file his taxes this year, he learned that BaronHR had not reported his income, even though it had deducted federal taxes from his paychecks, he said in interview. In fact, he said, the Internal Revenue Service told him it had no record of his employment at the Nevada warehouse.
‘People Needed This Work’
Employing undocumented immigrants was central to BaronHR’s business.
One company that partnered with the firm determined that two-thirds of its workers from the staffing agency were undocumented, according to a 2019 lawsuit by a former BaronHR executive.
The executive, Michael Morris, who also served on the corporate board, urged Mr. Perez to fire managers “who hired undocumented employees because that practice is unethical and illegal,” the suit said, and raised concerns that workers “were being exploited by BaronHR and its clients.”
Mr. Morris was soon demoted, the lawsuit says, and later fired. Court records show that BaronHR agreed to pay him $250,000 in a settlement that included a nondisclosure clause.
Early this year, when the three federal and state labor agencies notified the Homeland Security Department that BaronHR was being investigated, the workplace violations involved unauthorized workers deployed to dozens of companies, according to interviews and financial documents.
These include a snack company owned at the time by Utz, the Las Vegas hotel Circus Circus, and Alo Yoga and Bella+Canvas. None of them responded to requests for comment.
Several former corporate employees of BaronHR said the firm targeted undocumented immigrants because they were less likely to quit or speak up if mistreated.
“These people needed this work,” said Yesenia Murillo, a sales representative in BaronHR’s Chula Vista, Calif., office in 2017 and 2018, adding that the agency and its clients had leveraged workers’ desperation to place them in “dangerous, hazardous, inhumane” jobs.
In 2017, when the Trump administration ratcheted up work-site inspections for undocumented workers, staffing agencies across the country received notices that federal agents would visit.
Around that time, a BaronHR branch manager in Chula Vista ordered employees to throw away hundreds of employment verification documents known as I-9s, according to lawsuits filed by Ms. Murillo and two other former employees.
The next year, employees at the same office were instructed by a compliance auditor to white out portions of I-9s, make faded copies of altered forms, shred forms and forge signatures on unsigned forms, the lawsuits said. The complaints cited an email from Joseph Martinez, BaronHR’s head of sales and operations, expressing frustration at the company’s repeated flouting of the law.
“Clearly there is fraud taking place,” he wrote, adding, “We cannot be falsifying government documents.” According to the employees’ lawyer, Josh Gruenberg, the lawsuits were all settled.
Immigration and Customs Enforcement later inspected the Chula Vista paperwork and issued a warning notice, records show, meaning it found violations that needed to be fixed.
BaronHR was not fined, according to the records. But it was reported to the Homeland Security Department under a Biden administration program that offers some protections for unauthorized workers and temporarily authorized workers who report labor violations.
So far, at least 75 other staffing agencies in 17 states have been investigated, documents show. The Homeland Security Department would not clarify the status of the investigations.
One worker center alone, Arriba Las Vegas, has collected evidence of mistreatment from more than 1,000 people who worked for BaronHR or its affiliates in California, Florida, Illinois, New Jersey, Texas or Nevada, said Bliss Requa-Trautz, the group’s executive director. Almost all of them had been unauthorized to work in the United States, and some had worked for BaronHR stretching back to the Trump and Obama administrations.
‘Scared to Speak Out’
When José Tapia ripped the tendons in his shoulder in 2017 at a warehouse in Carson, Calif., he was rushed not to a hospital but to BaronHR’s branch office to be grilled by a lawyer, according to interviews and allegations in a lawsuit.
Mr. Tapia still has not had the surgery recommended by his doctor, he said, because the staffing agency did not carry the state-mandated insurance that covers such treatment, and he can’t afford to pay for it himself. His case settled, his lawyer said, but he is still awaiting payment.
Over the past 15 years, the Occupational Safety and Health Administration inspected BaronHR’s work sites roughly 65 times, tallying nearly 100 violations with fines totaling at least $335,000, according to federal data. In most of the incidents, BaronHR’s partner companies were also cited.
Some workers have said in lawsuits and civil rights complaints that they were terminated or stopped receiving assignments after suffering an injury or reporting other health concerns. Others did not receive workers’ compensation payments, records and interviews suggest. Recent bankruptcy filings listed about 300 such unresolved cases, with well over $2 million owed to injured workers, medical providers and others.
The workers’ complaints extended beyond health and safety issues. According to allegations in interviews, lawsuits and regulatory actions, BaronHR also created a permissive environment for discrimination based on race, gender, sexual orientation and pregnancy.
Mr. Martinez, the former BaronHR executive who raised concerns about falsifying employment documents, filed a discrimination and harassment lawsuit, in which he accused the staffing firm of having kept coded logs that allowed partners to choose workers based on race and other factors.
An internal document, the suit said, referred to Black applicants as “friendlys,” women as “lights” and men as “heavys.”
This year, the Equal Employment Opportunity Commission settled a discrimination lawsuit against BaronHR and Radiant Services, a commercial laundry company, that raised similar issues involving gender and race. BaronHR agreed to pay $2.2 million, and Radiant $1.1 million.
‘He Wanted Those Things Again’
For more than two decades, state and federal investigators targeted Mr. Perez, the BaronHR founder, for labor and tax violations. He kept slipping away and starting anew.
In the early years, his riches attracted outsize attention and brought coverage in financial and entertainment publications, where he bragged about owning several homes in Southern California and a fleet of luxury cars including a Lamborghini and a Bentley. He talked of sitting courtside at Lakers and Clippers games, partnering with the actor Mario Lopez on a production company, and rubbing elbows with Andy Garcia and other Hollywood celebrities. His company at the time, Checkmate, made Hispanic Magazine’s “Entrepreneur 100” list.
Contacted by The Times, a spokeswoman for Mr. Garcia said the two men met “briefly at a golf tournament” but had no further association. A spokeswoman for Mr. Lopez said Mr. Perez “was barely an acquaintance” and described the partnership as “a complete fabrication.”
In the fall of 2003, Mr. Perez’s fortunes took a turn when investigators raided Checkmate’s offices. Bankruptcy followed, revealing that Checkmate had debts topping $50 million, including $15 million owed to the I.R.S. Soon Mr. Perez and several of his deputies were charged in California with defrauding insurers of nearly $40 million in premiums.
In a personal bankruptcy filing in 2010, he claimed that he had only $17 in his checking account and owed $8 million in taxes. He also listed a $300 stake in a new agency: BaronHR.
In 2011, the San Bernardino County District Attorney’s Office dropped the criminal case against Mr. Perez after a victim, the State Compensation Insurance Fund, told prosecutors that it would disavow its own audits of the alleged fraud, records show. The supervising prosecutor on the case, now retired, told The Times that it was a highly unusual change of position, and could offer no explanation.
At the time, Mr. Perez announced in a news release that he had been “exonerated.” A number of his Checkmate clients followed him to BaronHR.
His phoenixlike return was emblematic of the “Wild West” nature of the staffing world, said Pollie Pent, a former detective with the California Department of Insurance’s fraud division who now works in the insurance industry. “There is very little oversight.”
In 2017, Mr. Perez was in trouble again and spent two mornings at the U.S. attorney’s office in Santa Ana, Calif., trying to cut a deal. Notes from the meetings reveal a rare unvarnished view of the business.
In Mr. Perez’s telling, the staffing industry was filled with people who used prison inmates’ social security numbers to help staff their work sites. He said the constant opening and closing of companies by the same owners signaled that they were evading taxes.
Agencies that skipped paying employment taxes could underbid the competition, said Mr. Perez, who offered to name firms that were “underpricing and skimming.” He also offered to identify partner companies that got their hands dirty by demanding kickbacks.
When it came to his own problems, he deflected many transgressions onto underlings and accountants, but admitted that he had bought cars, a boat and a plane while owing millions of dollars to the I.R.S. — and then hid assets so they would not be seized.
“Perez had a lot of possessions when he was operating Checkmate, and he wanted those things again,” an agent in the U.S. attorney’s office wrote in the notes.
In March 2018, Mr. Perez agreed to a secret plea deal that entailed admitting to tax evasion and cooperating on a broader industry investigation.
But separately, that August, the Orange County District Attorney’s Office charged him and two of his executives with tax and workers’ compensation insurance fraud.
Mr. Perez hardly missed a beat.
That December, he held a glittering gala at the Beverly Hilton Hotel to celebrate a charity he had created and recognize BaronHR’s success. The party featured live music, awards for top salespeople and the announcement of a goal to double the business within five years.
“Working together,” said Mr. Perez in a white tuxedo, “we can do amazing things.”
Within months of the gala, he retracted his secret plea. A federal grand jury indicted him. Even while free on bail for six years, he was “fundamentally unwilling to comply” with the law, prosecutors said.
This spring, as his trial neared, they denounced him as “a serial tax cheat who has built his staffing empire around the chronic failure of his companies to pay applicable federal payroll taxes.”
By then, he and his associates had already reinvented themselves, this time as StaffLab L.L.C. In September, a client list shows, the new firm had already signed up partner companies.
Today, the firm’s website is a blank page.
“My involvement in the staffing industry gave me a piece of the American dream,” Mr. Perez said in his statement from jail, “and then turned into my worst nightmare.”
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