Update: Adidas’s Refusal to Correct University Code Violations at Trax Apparel (Cambodia)

To:WRC Affiliate Universities and Colleges
From:Ben Hensler and Scott Nova
Date:January 30, 2023
Re:Update: Adidas’s Refusal to Correct University Code Violations at Trax Apparel (Cambodia)

In light of adidas’s ongoing refusal to require Trax Apparel, an adidas collegiate apparel supplier in Cambodia, to rehire worker leaders that the factory fired in June 2020, the WRC was asked by universities to comment on a communication that adidas sent late last year concerning this troubling situation. Here is what we found:
In its communication, adidas conveys claims that are demonstrably misleading, omits pertinent facts, and fails to adequately address the central issues in the case, including ongoing violations of university labor standards by its supplier. As we discussed in our report on this case, these key issues are: (1) The overwhelming evidence that adidas’s supplier, Trax, for the past two years has retaliated against the four worker leaders it fired in June 2020 by refusing to reinstate them or pay them the full back pay they are owed; and (2) Trax’s consistent record of misconduct in its dealings with the fired worker leaders, including its attempts to bribe their union to stop seeking their reinstatement.
Adidas’s communication misrepresents the basis of the workers’ labor rights complaint
Adidas observes in its communication to schools that “the [Trax] case was triggered by Covid-19 and a decision taken by Trax to downsize” which was “approved by the local Labor Department”, and which the workers’ union “did not seek to challenge”. This is all true. And it is all irrelevant. In June 2020, Trax dismissed slightly more than 10 percent of the factory’s workforce. What the union has challenged was and is:

  • That in conducting this downsizing, adidas’s supplier, Trax, fired 100 percent (all four) of the workers who were the union’s officers and four more workers who were founding members of the union, firing, in total, 50 percent of the workers on the union’s executive committee, and, crucially,
  • That, a few months later, when Trax made offers of rehiring to most of the workers it had dismissed earlier in 2020, it excluded every one of the fired worker leaders from the rehiring. These are the central facts of the case, yet adidas omitted them entirely from its communication.

As the WRC’s report on the case explained, it is a virtual, statistical impossibility for the termination of all of these union leaders and the exclusion of all of these union leaders from rehiring to have occurred by chance. Intentional discrimination is, from the standpoint of probability, the only plausible explanation—but adidas omitted this information from its communication to universities, as well.

Adidas expects universities to accept a resolution in which only half of the retaliatory dismissals are reversed

Adidas notes that, in April 2022—after the WRC had pressed adidas to secure the worker leaders’ reinstatement—Trax eventually did rehire four out of the eight dismissed workers, while not rehiring the others, and that the workers’ union acceded to this. What adidas leaves out is the reason why the union agreed to this half measure. After having kept all of the worker leaders outside of the factory for nearly two years, Trax gave the union an ultimatum: If the union did not agree to accept partial reinstatement and partial back pay, Trax would reinstate no one and pay the workers nothing.

Adidas’s position, apparently, is that a settlement that only addresses a university code violation with respect to half the affected workers, and then only partially, is an acceptable outcome. By adidas’s logic, if the Trax factory had dangerous electrical hazards on four of its floors, it would be fine if Trax only paid to fix the wiring on two floors—so long as Trax convinced a local workplace safety group to accept this by threatening that it would otherwise make no repairs at all.

Adidas’s communication ignored its supplier’s misconduct in dealing with worker leaders and representatives, both inside and outside the factory

First, adidas says in its communication to schools that it “sees no evidence of interference” by the factory with the four worker union leaders that the factory did reinstate already and says that after these workers “expressed a desire to move their workstations to the main production area…[Trax] agreed to accommodate their request”. Adidas fails to explain, however, why these workers needed to be moved in the first place.

Upon reinstating these workers, Trax, rather than returning them to their prior assignments, put them in a segregated workspace, isolating them from 95 percent of the workforce, a common employer tactic that serves both to punish and stigmatize reinstated workers and prevent them from communicating with their coworkers. The workers were moved back to the main production area only after the WRC repeatedly pressed adidas on the issue (and only after the WRC issued our report on the case to universities in October).

Second, adidas says that Trax has now “offered to rehire the [other] four union members when job openings occur” (emphasis added). Adidas’s suggestion that the reason these workers have not been rehired is a lack of job openings is preposterous. Since these four employees were fired, Trax has hired and rehired hundreds of other workers, but it has consistently refused to reinstate any of these four worker leaders.

Third, adidas omitted from its communication to schools one of the most deplorable aspects of Trax’s behavior—the factory management’s well-documented attempts to bribe the union to abandon the fired workers’ appeals for reinstatement. These bribery attempts are documented in audio recordings of statements made by Trax representatives to leaders of the CATU union federation—the union that represents the Trax workers who are the subject of our report. Adidas has taken no action to hold its supplier accountable for this gross misconduct.

Adidas closes its communication to universities by saying its supplier, Trax, is “committed to building a constructive relationship with CATU[’s] plant level union”. Trax fired the union’s leadership, still refuses to reinstate half of that leadership, unlawfully denied full back pay to those it did reinstate and then isolated them from the rest of the workforce, and tried to bribe the union’s parent federation to make the whole thing go away. Needless to say, this is not how an employer goes about building a constructive relationship with a union.

It is well within adidas’s power to persuade Trax to reinstate the remaining union leaders, provide them full back pay, and deal with these worker leaders and their union in a lawful manner. Given the straightforward solutions available, the small number of workers involved, and the leverage adidas possesses over Trax, we are baffled as to why adidas refuses to bring its supplier into compliance and put this case to rest.
Please let us know if you have any questions regarding this matter.