New WRC Report: Wage Theft against Salvadoran Homeworkers Producing for Licensee Vive La Fete

To:WRC Affiliate Universities and Colleges
From:Scott Nova and Ben Hensler
Date:September 17, 2018
Re:New WRC Report: Wage Theft against Salvadoran Homeworkers Producing for Licensee Vive La Fete

Please find here a new WRC factory report concerning extensive wage theft and related violations of university labor codes by Konffetty S.A. de C.V., a garment producer in El Salvador that is the sole disclosed supplier to university licensee Vive la Fete, a maker of high-end university logo children’s clothing, and Recursos Humanos de Latinoamérica (RHLA), a labor subcontractor to Konffetty. Unfortunately, although these violations were reported to Vive la Fete last year, the licensee, despite extensive attempts at dialogue by the WRC, has refused to require Konffetty and RHLA to end the violations or provide meaningful back pay.

The violations by this supplier and its subcontractor, which affect between 200 and 300 workers who perform hand embroidery for Konffetty and RHLA in their homes, include the most severe and systematic minimum wage violations we have encountered in the university supply chain. The minimum wage for garment workers, including homeworkers, in El Salvador is $1.23 per hour; Konffetty and RHLA pays these embroidery workers, who are compensated on a piece rate basis, between from $0.41 to $0.45 per hour, roughly one third of the legal requirement. This wage theft is compounded by the factory’s failure to pay the required premium for overtime performed by these workers, which averages more than 100 hours per month, and by its failure to pay any of the legally mandated benefits the workers are due.

All forms of underpayment combined deprive the average Konffetty embroidery worker of $5,892 per year in legally mandated compensation, of which $4,764 is for underpayment of wages and $1,128 is for the cash equivalent of unpaid benefits. To come into compliance with university standards, Vive la Fete must ensure that Konffetty and RHLA increase pay for these workers to the legal minimum, commence paying all legally mandated benefits, and provide back pay to workers, pursuant to the requirements of Salvadoran law, for its underpayments.

Konffetty and Vive la Fete justify these pay practices by claiming, in glaring contravention of Salvadoran law, that Konffetty has no obligation to obey labor standards where these homeworkers are concerned. They argue that these workers are all independent contractors with no rights as employees. Salvadoran law explicitly applies all laws concerning wages, hours of work, and benefits to homeworkers and requires employers to pay these workers accordingly. In effect, Vive la Fete, Konffetty, and RHLA refuse to acknowledge, and abide by, the labor laws of El Salvador – which they are, of course, required by university codes to respect.

Konffetty and RHLA have also retaliated against workers for communicating with a Salvadoran women’s organization, Mujeres Transformando, that brought the complaint concerning Konffetty and RHLA’s labor practices to the WRC. Konffetty has deprived some homeworkers of embroidery assignments, threatened to deprive others, and, via a communication to the WRC through Vive la Fete’s attorneys in the US, threatened to deny work permanently to all of these workers by moving embroidery operations in house.

The WRC has made extensive attempts to secure remedial commitments from Vive la Fete, but the licensee refuses to take adequate corrective actions. The company has proposed a wage increase that represents a tiny fraction of the increase needed for Vive la Fete to come into compliance with the law. It refuses to require Konffetty and RHLA to pay legally mandated benefits. And it offered compensation for workers that amounted to less than 1% of what they are owed.

The WRC continues to urge Vive la Fete to require compliance and remediation by Konffetty. We have repeatedly offered to work with the companies to develop a corrective action plan that will bring Konffetty and RHLA into compliance with the law and university standards. The companies continue to decline to cooperate.

As always, please let us know if you have any questions or would like to discuss this report. We will keep all affiliates updated on this case.

Scott Nova
Executive Director
Worker Rights Consortium

[email protected]