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Archived News Release--Caution:
information may be out of date.
For more information call: 202-219-8211
Record back-pay violations uncovered by the U.S. Department
of Labor in New York City sweatshops have been traced to four major national
retailers, Wal-Mart, Kmart, Nordstrom and The Limited, Secretary of Labor
Alexis M. Herman announced today. All four retailers have agreed to take
additional measures -- including more rigorous unannounced monitoring -- to
step-up efforts in their private label fashion lines to ensure that apparel
produced for them is not made in sweatshop conditions in the United States.
"I am pleased that these retailers have pledged to examine
their policies and develop additional steps, beyond the monitoring they now
use, to ensure that the goods they sell under their name are not made under
exploitative labor conditions," said Herman. "Our recent survey demonstrated
the seriousness of the compliance problem in New York. It will take the
cooperation and diligence of all the players in the garment industry to improve
compliance. We must value the people who make the fashion we buy. I am pleased
that these four retail giants are committed to working with the department. I
will continue to keep the dialogue open on this issue and will look for
deterrent strategies toward this goal."
Today's announcement follows the discovery by the U.S.
Department of Labor's Wage and Hour Division of back-pay violations totaling
$214,000 in two sweatshops in New York City's Chinatown section. The
investigations are part of the department's crackdown on garment shops that
fail to pay federal minimum wage and overtime, and comply with the child labor
provisions of the Fair Labor Standards Act (FLSA).
The department found goods being produced for Kathie Lee
Gifford's apparel line sold exclusively at Wal-Mart; Jaclyn Smith's and Basic
Edition lines sold exclusively at Kmart; and Nordstrom's private label
Classique Entier. In addition, Wear It Again, sold at Lerner -- subsidiary of
The Limited -- was also produced at the shop.
Although the shops had been subject to unannounced
monitoring, advance notice of a monitoring visit and an inability to interview
the workers in their languages may have contributed to the violations going
undetected. These retailers have sent messages to their firms which oversee the
work done for them stressing the importance of unannounced monitoring and about
having translators on-hand to speak the language of their workers.
The department found that a sewing shop operating as MSL
Sportswear, Inc., and Laura & Sarah Sportswear, Inc. at 446-448 Broadway
and owned by Lai Fong Yuen a/k/a Lena Mone, had failed to regularly pay workers
since August. Even when the workers were paid, they did not receive overtime at
time and one-half their regular rates of pay as required. The investigation
determined that the shop maintained two sets of payrolls designed to avoid
paying the required wages to workers and to conceal the violations. The back
wages total nearly $214,000 for 73 workers. To date, approximately $50,000 has
been restored to the workers, and $45,000 will be paid in the near future. The
department is working to obtain the remainder of the wages for the workers. In
addition, civil money penalties of $36,500 have been assessed for willful FLSA
violations.
"It is unacceptable that these workers -- among the most
vulnerable - were forced to work without pay," said Herman. "The department is
committed to guaranteeing every worker a fair workplace."
Land n Sea, Inc., Next Day Apparel, Inc., and Profiles
Fashions have all agreed to sign the Labor Department's monitoring compliance
agreement. By signing the agreement, manufacturers agree to:
- Require all contractors, among other things, to comply with the
minimum wage, overtime and child labor requirements of the FLSA, including the
"hot goods" provision; and to obtain approval prior to subcontracting any
work
- Monitor contractors for compliance with the FLSA
- Perform pre-contract review of pricing terms with each
contractor
- Guarantee the payment of back wages to employees of their
contractors for violations of the FLSA
- Submit semi-annual reports summarizing monitoring results
- Maintain and make available records pertaining to monitoring
activities
Since the Labor Department uncovered these violations in
late October, the Wage and Hour Division has been working with the
manufacturers using the shops to remedy the violations. Land n Sea, Inc., which
was using the shops to produce the Kathie Lee product line for Wal-Mart, has
paid $26,611 in back wages.
Next Day Apparel, Inc., which was using the shops to
produce under the Jaclyn Smith and Basic Edition labels for Kmart, paid $21,207
in back wages.
Profiles Fashions has paid $6,756 and agreed to pay an
additional $29,000 of the back wages. That manufacturer was repairing items of
Nordstrom's private label Classique Entier.
Kmart has been working in cooperation with the Labor
Department on this issue and has a third-party monitoring program in place for
its private label and branded goods. The department will participate in its
training program for buyers and merchandise managers which will take place
early next year.
Nordstrom has and will take additional steps for all phases
of its private-label production and recently hired a new domestic compliance
auditor to enhance its private label compliance efforts.
"We want to do the right thing and we expect our vendors to
respect and obey the law," said Co-President Erik Nordstrom. "We take this
violation by our vendor very seriously and have enhanced our private-label
compliance efforts so that we do our part to stop labor abuses."
Herman said that she will meet with Floyd Hall, Chair,
President & CEO of Kmart and Nordstrom early next year to explore
additional steps that retailers can take to ensure that private-label garments
are not made in sweatshops in the United States.
The Limited has asked the Labor Department to conduct
briefings and training for the company's management, employees and vendors on
compliance issues. The company has also committed to continue to work with the
department to enhance its compliance programs.
Wal-Mart has made changes to its vendor certification
program based on an on-going dialogue with the department and has requested
that the Wage and Hour Division provide the company with training materials to
be included in a mailing to each vendor, and for use in Wal-Mart's training
program.
The department initiated court action against a fourth New
York City manufacturer, Fashion Headquarters, Inc., which did not cooperate to
produce retailer and other information or agree to refrain from shipping "hot
goods." Under the FLSA's "hot goods" provision, the department may prevent the
shipment of goods in interstate commerce produced in violation of the FLSA.
On November 26, the U.S. District Court for the Southern
District of New York issued a temporary restraining order against Fashion
Headquarters and Paul Cascio to prevent the shipment of "hot goods" and to
enforce an administrative subpoena seeking records regarding the manufacturer's
retailers and contractors. The department was forced to take court action after
Fashion Headquarters refused to submit this information in response to a
November 10 subpoena. Fashion Headquarters was producing goods for Lerner, a
subsidiary of The Limited. Upon notification by the department, The Limited
immediately requested that the manufacturer correct all violations and
implement an effective compliance program.
On December 4, the department's suit against Fashion
Headquarters was amended to include the manufacturer's activities at another
garment shop, MF Fashion, in Brooklyn, NY. Work was subcontracted to this shop
by the Chinatown sweatshop. The department's investigation of MF Fashion is
ongoing.
In October, the department announced the results of the
first-ever survey of the level of compliance with the FLSA garment shops in New
York City. The survey found that only 37 percent of the shops were in
compliance with the minimum wage and overtime provisions of the FLSA. In
Chinatown, the survey found that nearly nine out of ten shops were found in
violation. As a result of the survey, Wage and Hour has implemented a new
strategy to address the serious problems in New York City.
Herman is working with retailers in this effort as part of
her addition to the No Sweat Initiative -- the partnership prong. The
department's No Sweat Initiative promotes consistent, strong enforcement with
education, in all garment efforts.
Sportswear, Inc.
Laura & Sarah Sportswear, Inc.
New York, New York
- On 10/30/97, Wage and Hour initiated an investigation of MSL
Sportswear, Inc. (MSL), and Laura & Sarah Sportswear, Inc.-- two commonly
owned garment contract shops located at 446-448 Broadway, New York City. These
shops are owned by Lena Mone a/k/a Lai Fong Yuen
- Wage and Hour's investigation found these shops had violations of
both the minimum wage and overtime pay provisions of the Fair Labor Standards
Act throughout the entire August 1, 1997 through November 1, 1997 investigation
period.
- Back wages in the amount of $213,700 have been computed for 73
workers. The investigation determined that the workers were paid on a
piece-rate basis. No regular payroll payments have been made since August;
although some employees received payments sporadically. Even when the employees
were paid, they were not paid properly for overtime hours.
- To date the workers have been paid approximately $50,000 of the back
wages; Wage and Hour will be disbursing approximately $45,000 through the back
wage disbursement process. Wage and Hour is working to recover the balance
due.
- The firm also falsified the payroll records to show straight time
payments and overtime premiums were made when in fact no such payments
occurred. Because of the falsification of the payrolls, civil money pen alties
amounting to approximately $36,500 were assessed on December 11, 1997.
- Wage and Hour determined that several manufacturers used the shop
during the investigation period. The back wages are proportioned according to
the amount of the goods produced in the shop for the individual
manufacturer.
- Back Wages Paid: $26,611
- Labels: Kathie Lee
- Retailers: Wal-Mart
- DOL Agreement: Signed
- Back Wages Paid: $6,756 (agreed to pay balance of $29,000 by
2/28/98)
- Labels: Classique Entier
- Retailers: Nordstrom
- DOL Agreement: Signed
- Back Wages Paid: $21,207
- Labels: Jaclyn Smith; Basic Edition
- Retailers: Kmart
- DOL Agreement: Signed
- Back Wages Paid: $22,500
- Labels: None Identified
- Retailers: No national retailers identified
- DOL Agreement: Signed
- Back Wages Paid: $15,666
- Labels: Wear It Again
- Retailers: The Limited (Lerner)
- DOL Agreement: Refused to Sign
On November 26, DOL was granted temporary restraining order
to prevent the shipment of "hot goods" and to compel the production of
documents identifying Fashion Headquarters' retailers and other information
after the manufacturer failed to voluntarily comply with an administrative
subpoena issued on November 10. Negotiations are ongoing and a hearing is
scheduled for December 17.
There is a spin-off investigation of a garment shop in
Brooklyn, NY, which is ongoing and likely to have many of the same
manufacturers.
Archived News Release--Caution:
information may be out of date.
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