The WRC and other labor rights
advocates (including trade unions
representing affected workers)
have, in a growing number of cases, prevailed on brands to ensure
that workers are made whole after
their employer refused to pay severance. In some of these cases, the
brands themselves have provided the necessary funds; in others,
brands have responded to pressure by compelling the suppliers
to make good on their arrears. In
many, though not all, of the cases where remediation has been
secured, one or both of these enabling conditions were present: (a)
the closed factory was a subsidiary of a larger manufacturing company, which remained
in operation and had valuable ongoing partnerships with apparel brands, or (b) one or
more of the brands that were buyers from
the factory were, themselves, contractually
obligated to ensure payment of severance,
as a condition of licenses from US universities to produce college logo apparel.
In several high-profile cases
of severance theft,
a number of brands that
were buyers from these
factories contributed
funds themselves to make
workers whole.
Under Armour were persuaded to require
their supplier, Gimmill, to pay $2.6 million in
severance owed to 4,000 former employees
of the latter’s June Textile factory in Cambodia.44 In 2019, the WRC convinced Gap, Under Armour, and Fanatics to prevail on their
supplier, Hojeon, to pay 2,000 employees of
the latter’s PT Kahoindah factory in Indonesia, $4.5 million in severance.45
Brands Can Require Factories’ Parent
Companies to Pay Severance
Brands Themselves Can Remedy
Severance Theft by Paying Workers
An early instance of successful engagement
by the WRC and other advocates to rectify
nonpayment of severance was the case of
the Estofel factory in Guatemala in 2009.
After the factory’s closure, university licensee Gear for Sports (Hanesbrands), a former
buyer, was prevailed on to require the factory’s former owner, Ghim Li, to pay more than
$500,000 to nearly 900 workers.43
Importantly, in several high-profile cases of
severance theft—at factories that were not
part of a larger parent company that could
be compelled to pay—a number of brands
that were buyers from these factories contributed funds themselves to make workers
whole. As noted, a key factor in a number of
these cases has been that at least one of the
buyer brands from the factory was a licensee
of US universities and thereby obligated, as
a binding term of these licenses, to ensure
that all violations committed by its suppliers
of licensed goods are corrected.
Subsequent cases, where the WRC and other advocates have called on brands to require parent companies of closed factories
to correct severance theft, have resulted
in substantially greater sums paid to much
larger numbers of workers. In 2011, Gap and
WRC
yz
The first significant instance of a brand committing its own funds to correct large-scale
Fired, Then Robbed
zy
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