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WRC Factory Investigation

Direct Ship Americas

Factory: Direct Ship Americas

Key Buyers: Fanatics

Year: 2019

Case Summary

In January 2019, the university licensee Fanatics, the WRC, and other stakeholders worked together to ensure compliance with university codes of conduct following the closure of Direct Ship Americas (DSA), a factory located in Choloma, Honduras. Fanatics informed the WRC about the closure before it occurred and reported that the factory, which owed its 240 production employees approximately $468,000 in legally mandated compensation, did not possess the resources to pay them. To its credit, the licensee committed to ensuring that the workers would be paid all of the money they were owed. The WRC worked with Fanatics and with its intermediary AGI, the party that ultimately provided the funds owed to workers, to ensure that the payment process was executed smoothly and in the shortest amount of time possible. Most of the DSA workers were paid in early February 2019, just one month after the factory closure, and the remaining workers, who had not come forward in time for the February payment, were paid the following month.

The WRC frequently documents the closure of garment factories, including factories making university logo apparel, in which the employer cannot or will not comply with the law requiring terminal compensation. Under university labor codes, licensees are contractually obligated to ensure that workers are paid in these circumstances and the WRC has achieved substantial and growing success in securing compliance with this obligation, averting severe hardship for tens of thousands of workers and their families. However, it has often required protracted engagement with licensees in a given case to get to a positive resolution. The DSA case is notable because Fanatics informed the WRC of the problem and then recognized and committed to honor its university code obligations from the outset. As a result, the WRC was able to work with Fanatics and its agent to get workers all of their compensation with minimal delay.

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