Shark Tank-backed startup Her Fashion Box and its founder Kath Purkis has been taken to court by the Fair Work Ombudsman for allegedly running an unlawful unpaid internship program and underpaying three workers more than $40,000.
The Sydney business, which sells online subscribers “fashion boxes” containing fashion accessories and beauty products, attracted $200,000 from high-profile investors Janine Allis and Andrew Banks for a 16% stake when it appeared on season two of Shark Tank.
But last October, NSW Fair Trading issued a “do not deal with” warning against Her Fashion Box, following several complaints about the product, payments and difficulties with making contact with Purkis.
Yesterday, the Fair Work Ombudsman (FWO) began legal action in the Federal Circuit Court against Her Fashion Box and its sole director and majority shareholder, Kathleen Enyd Purkis.
The FWO alleges the company underpaid three employees, aged in their mid-20s, a total of $40,543 for various periods of work between 2013, when the company was founded, and 2015. The alleged underpayments included minimum hourly rates, overtime, public holiday pay and annual leave entitlements.
One was a graphic designer with a university degree, who allegedly worked two-days a week for almost six months without pay under a purported “unpaid internship” and received $1000 in a one-off payment. She was allegedly underpaid $6913.
The Ombudsman alleges she was should have been paid minimum Award rates and entitlements.
Another graphic designer engaged by Her Fashion Box was allegedly underpaid $15,511 over two years of full-time work, while the third person, a brand partnerships manager, was allegedly underpaid a total of $18,119 over 12-months.
The FWO also alleged that Her Fashion Box failed to comply with four Notices to Produce documents or records issued by Fair Work inspectors.
Ombudsman Natalie James says legal action began because of the lack of co-operation. She said the FWO received a number of requests for assistance from Her Fashion Box workers since 2015, with employees claiming they were underpaid due to allegedly unlawful “internship” arrangements.
Her Fashion Box faces maximum penalties of up to $51,000 per contravention and Purkis faces penalties of up to $10,200 per contravention.
The Fair Work Ombudsman is also seeking Court Orders requiring the company and Purkis to back-pay the employees in full. The FWO says they have been only partially back-paid to date.
Her Fashion Box charges subscribers $59.95 for a quarterly box of beauty and fashion products, but in July last year, a TV expose featured subscribers complaining that orders didn’t arrive and subscription cancellations didn’t happen.
Consumer advocacy group Choice said it had a similar experience, with the box not turning up and then being charged for the next one.
Complaints continue across social media as recently as a fortnight ago, with one of Her Fashion Box’s 100,000 Instagram followers demanding the return of products and complaining that Purkis failed to respond:
Business Insider has contacted Purkis for comment and will update this story if we hear back.
* Disclosure: Business Insider is published by Allure Media, which owns the subscription fashion business Bellabox.
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