BISMARCK -- A bar-restaurant in Crystal, N.D., is defying court orders to either buy workers' compensation coverage for their employees or shut down, Workforce Safety and Insurance officials say.
WSI has been ratcheting up an enforcement case against the Spud Pub & Grub and its owners since January, when an anonymous tipster reported it pays employees with cash out of the till and has no workers compensation coverage.
Workers' compensation coverage through WSI, a state agency, is required by state law for businesses' employees.
Since then, the bar and its owners, John and Paula Langerud of Edinburg, N.D., have ignored letters and an administrative order from WSI, a June preliminary injunction ordering them not to operate without WSI coverage, a permanent injunction issued last month ordering them to close, and have been found in contempt of court, according to court records.
Crystal is northwest of Grafton, N.D., in Pembina County, the county in which the case is filed.
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Business as usual
Wednesday, the Spud Pub & Grub continued to operate and still has no workers compensation coverage. An employee who answered the phone said it is open from 2 p.m. to 2 a.m. and that the Langeruds were not there.
Paula Langerud, who answered the phone at the couple's home Wednesday evening, said she wouldn't comment on the case.
WSI's attorney, Special Assistant Attorney General Jacqueline Anderson of Fargo, recently wrote to a judge that "The defendants' conduct, therefore, is inexcusable and in complete violation of the court's (order)."
Rob Forward, an attorney at WSI, said that with the business still operating, the agency now "will seek further sanctions from the district court for continued contempt."
An attorney for the Langeruds, Robert Charles Fleming of Cavalier, N.D., disputed in a brief phone interview that the Langeruds can necessarily be said to be operating illegally. But he added, "Without talking to my client (for permission), I'm not free to talk."
Fleming also said he did not think the case warrants a news story.
Neither Fleming nor the Langeruds themselves have filed any answers or rebuttal documents in the court case, nor have they ever responded to WSI's letters, WSI says.
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Issue since 2003
Spud Pub & Grub last had WSI coverage in 2003, when the Langeruds wrote to say they no longer had employees for which they needed to buy coverage.
The bar formerly operated in Hoople, N.D., and moved to Crystal last year, where it rents the local American Legion Post on a verbal agreement for $200 per month.
According to court documents, WSI's private investigator visited the bar in May to check on the number of employees and interviewed several of them.
One part-time bartender told the investigator she isn't paid but works to pay off her bar tab at a rate of $7.50 per hour. Another employee said the Langeruds don't pay her and she only works for tips, which she splits with other workers, netting an average of $7 to $8 per hour.
Others, including some who cook or serve food three nights a week, said they're paid $7.50 per hour, in cash.
The American Legion commander, Harold Johnston, whom the private investigator also interviewed, said Langerud "probably doesn't pay Social Security (taxes) either," according to the court file.
The investigator, John Ramberg of Great Plains Claims, reported the bar did have a sales tax permit and a state license to sell liquor posted.
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Ramberg interviewed John Langerud on May 6. WSI's order sent to the Langeruds later that month says, "You (Langerud) stated that the original plan for employment was to have all family members, but there have been people in the community that have volunteered to help. You try to have family members working in the bar but believe it is just one big happy family working there now."
Later in the summer the investigator went back and found some of the same employees and also the Langeruds' sons and daughters-in-law, whom WSI said are not exempt from workers' compensation coverage.
What's next
WSI's May order to the Langeruds warns that an employer who "willfully fails to secure coverage for employees is guilty of a class A misdemeanor." If there is more than $500 in unpaid premiums, it can be prosecuted as a class C felony.
Some state officials said it's possible the business or the Langeruds could face enforcement actions by the state Job Service if they are not paying unemployment insurance on their workers, the state Labor Department if they are paying workers in cash or through tips only, or by the IRS and state Tax Department if they are not withholding income taxes on employee pay.
Job Service and the Tax Department are barred by law from acknowledging whether they are investigating Spud Pub & Grub. State Labor Commissioner Lisa Fair McEvers said her agency has no case against the business because no employees have complained.
Cole writes for Forum Communications Co., which owns the Herald.L
