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El Salvador: Workers from garment factory producing for Levi’s, Ralph Lauren, Walmart, PVH, Global Brands Group reportedly still owed $1.7 million; companies respond

On 7th March 2018, the 824 workers at the LD garment factory in El Salvador lost their jobs when the factory suddenly closed without warning, and the employer failed to pay them their legal severance. These workers sewed clothes for Levi’s, Ralph Lauren, Walmart and PVH, owner of Calvin Klein and Tommy Hilfiger.  The Maquila solidarity Network is joining with the International Labor Rights Forum (ILRF) in calling on these companies to take responsibility for the remaining US$1.7 million still owed to workers.

The Business and Human Rights Resource Centre contacted the companies mentioned to respond to the allegation.  The responses from PVH, Walmart and Levi Strauss can be found bellow.  Ralph Lauren and Global Brands Group did not respond.  In March 2019, the Business and Human Rights Resource Centre sought a response from Global Brands Group for the closure of the factory, the company did not respond.  See the full story here

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Company response
8 January 2020

PVH response

Author: PVH

...We take these matters very seriously and have worked extensively on this matter to ensure that workers receive compensation. Since the closure of L.D. El Salvador in March 2018, PVH has engaged with our licensee, Global Brands Group (GBG), the Fair Labor Association, peer brands, and other stakeholders to ensure workers from LD El Salvador received compensation upon closure of the factory, which was more than commensurate with PVH’s production percentage at the time of closure. As a result of the engagement, $600,000 was paid to L.D. workers in March 2019. At the time of closure, GBG managed the production of PVH goods that represented approximately 13% of the production in L.D El Salvador.

Since 1991, we have required all of our suppliers and business partners to adhere to our “A Shared Commitment,” code of conduct, and our Corporate Responsibility Supply Chain Guidelines. We take a proactive approach and address any violations in partnership with our suppliers and business partners to ensure long term sustainability and improve performance...

Download the full document here

Company non-response
17 December 2019

Global Brands Group did not respond

Author: Global Brands Group

Company response
17 December 2019

Levi Strauss response

Author: Levi Strauss

...We were sorry to learn about the sudden closure of LD El Salvador in March 2018 and the negative consequences it had for the workers. Levi Strauss & Co. had sourced from LD El Salvador indirectly through Global Brands Group until January 2018. Our volume constituted approximately five percent of LD El Salvador’s overall capacity at the time. Our business relationship with Global Brands Group ended shortly thereafter.

Together with other brands, Levi Strauss & Co. ensured that Global Brands Group contributed USD 600,000 through the local organization FESPAD and the Ad Hoc Committee comprised of worker representatives to provide payments to LD El Salvador workers following the factory closure...

Download the full document here

Company non-response
17 December 2019

Ralph Lauren did not respond

Author: Ralph Lauren

Company response
17 December 2019

Walmart response

Author: Walmart

Walmart engaged directly with our supplier, encouraging a speedy resolution on behalf of workers.  It is our understanding our supplier has contributed to the workers fund and the factory is currently going through a liquidation process with the proceeds going to benefit workers.  We look forward to the workers receiving the remainder of the compensation owed to them through the official legal processes underway in El Salvador.

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17 December 2019

WRC Factory Investigation: LD El Salvador

Author: Workers´ Rights Consortium

LD El Salvador, a garment factory located in El Salvador, unexpectedly closed down operations in March 2018 and failed to pay its 824 employees approximately $2.3 million dollars in compensation that they were legally entitled to receive for terminal benefits. The factory was owned by a Korean businessman, Young Ryul Kim, and was a key part of the production network of the KT Group...

Given that the factory owner left El Salvador immediately after the closure, failing to pay the workers’ the more than two million dollars that they were owed, the WRC engaged with the factory buyers to seek corrective action. The buyers informed the WRC that all of their orders had been placed through Global Brands Group (GBG). Therefore, the brands urged GBG to provide the funds owed to workers. In response, GBG provided a total of $600,000 for LD workers—a total of 26% of the amount that the workers were legally owed. The funds were distributed equally among all former LD employees in late February and early March 2019.

GBG’s contribution of $600,000 is a step toward remediation of the violations but does not fully address the violations that occurred. The WRC continues to recommend that factory buyers take responsibility under their respective labor codes to remedy the violations by paying the approximately $1.7 million that is still owed to these workers.

Read the full post here

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10 December 2019

Workers abandoned in LD El Salvador factory closure owed US$1.7 million

Author: Maquila Solidarity Network

On October 21, 2019, six labour rights organizations sent letters to four major brands expressing their deep concern about the lack of follow-up by those brands to ensure that former workers at the LD El Salvador factory be fully compensated for US$1.7 million outstanding severance owed following the factory’s sudden closure. In March 2018, LD El Salvador, a garment factory located in the San Marcos free trade zone and owned by Korean group KT, was shut down without prior notice...

LD was a supplier for several major brands, through an intermediary called Global Brands Group (GBG). Those brands included PVH (owner of Calvin Klein and Tommy Hilfiger), Walmart, Ralph Lauren, and Levi Strauss & Co. The workers took their case to the Ministry of Labour, which ruled that the total amount owed to the LD workers at the time of closure was approximately US$2.3 million.

Despite this positive decision by the Ministry, LD El Salvador’s owners fled the country, leaving the workers empty-handed. In response to months of engagement and repeated requests for action from the Worker Rights Consortium (WRC), the International Labor Rights Forum (ILRF) and MSN, a group of major brands that had products made at LD pressured GBG to pay part of the severance owed to the workers. GBG eventually agreed to pay US$600,000, or 26% of the total money owing to workers. Workers agreed to accept the amount as an interim payment...

On July 27, worker representatives wrote to GBG and brand representatives reminding them of their outstanding debt, US$1.7 million, approximately US$2,000 per worker...

Read the full post here

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27 June 2019

Worker Rights Consortium report on LD El Salvador: Findings, recommendation and brand responses

Author: Worker Rights Consortium

...This report outlines violations of worker rights at a factory known as LD El Salvador (“LD”), which unexpectedly shuttered is operations in March 2018 and failed to pay its 824 employees approximately $2.3 million dollars in compensation that they were legally entitled to receive. LD produced goods – via an intermediary, Global Brands Group – for PVH (owner of Calvin Klein and Tommy Hilfiger), Walmart, Ralph Lauren, and Levi’s. All of these brands publicly state that they require their suppliers to obey the law and all acknowledge that LD failed to so. However, more than one year after the closure, these brands have failed to take adequate measures to remedy the violations that they admit took place in their supply chains. As a result, nearly 75% of the compensation legally due to workers remains unpaid...

Read the full post here