Here is a communication I received from Chelsea Rudman of WRC. I have posted it without any changes. Students of Industrial Relations will find this episode interesting. I suggest perusal of the reports to which links have been provided.

Something very unusual happened on December 20: an apparel company called the WRC to tell us about a labor rights violation. As you know, this usually happens the other way around.

In this case, a collegiate licensee, Fanatics, had received advance notice that one of its suppliers in Honduras was abruptly closing. The factory, Direct Ship Americas (DSA), informed Fanatics—but not its workers—that it planned to shutter operations in early January and would not have enough money to pay the workers their severance. The 240 production workers were collectively owed $468,000, or an average of nearly $2,000 each.

Garment workers are frequently cheated of their severance pay. Severance is a crucial source of support for workers when factories close—since most apparel-producing countries lack unemployment insurance, severance pay is the only resource most workers and their families have while they seek new jobs. Unfortunately, many factories fail to set aside enough money to cover workers’ severance in the event of a closure—in large part because brands squeeze suppliers to reduce costs by any means possible. The New Republic covered this form of wage theft in Indonesia in the article we sent you last month.

Fanatics knew that it had an obligation, under its licensing agreements with our university affiliates, to ensure its suppliers complied with our affiliates’ labor codes of conduct. And the company knew, from previous engagement with the WRC, that we would not rest until workers received their severance. So when the company learned about the DSA closure, it contacted the WRC and committed to ensure the workers were made whole—even though either Fanatics itself or its licensing agent, AGI, would need to pay.

A WRC field representative for Central America speaks with DSA workers on the day of the closure, reassuring them that they will receive their severance pay
The WRC worked with Fanatics and AGI, as well as the Honduran Ministry of Labor, to ensure that each worker was paid their full severance. Our report has more details. All of the workers received what they were owed within two months of the factory’s closure—an unusually short timeline in a severance case. Workers will be able to use this money to support themselves and their families while they look for new jobs. Delmy Reyes, for example, told the WRC: “In my experience, when factories close, they don’t even pay us the wages we are owed. … Thanks to the WRC, I was able to get the money I was owed. I will use this to buy heart medication for my mother…and spend money on my daughter’s education.”

It is notable that Fanatics not only took the step of contacting the WRC, but also committed to make sure workers were paid. The case is a testament to how the WRC and our allies have changed brands’ expectations around their responsibility to ensure the workers who make their clothing are paid what they are owed.

We are happy we were able to help workers at DSA receive their severance pay. We will continue to work with our allies to ensure that workers around the world can combat wage theft and receive what they have earned.

Chelsea Rudman
Director of Development & Strategic Partnerships, Worker Rights Consortium

This report is published unedited, except the title, and with the permission of Chelsea Rudman, WRC.