WRC Factory Investigation

Elim SA

Factory: Elim SA

Key Buyers: Centric Brands, New Era Cap Company, Outerstuff, PVH

Last Updated: 2021

Case Summary

In late 2020, the WRC conducted an investigation of labor rights violations at Elim, a garment factory located in Mixco, Guatemala. The investigation found serious violations of freedom of association, including retaliatory dismissals, death threats by factory management, and threats of retaliatory firing and plant closure, all of which were in response to the decision of workers to organize.

In response to the WRC’s recommendation for corrective actions, Elim stated its disagreement with the findings and declined to commit to take any remedial actions with regard to the violations that had been identified. Instead, Elim management announced that the company would be closing the factory permanently days later, on December 19, 2020. Elim stated that the reason for the closure was financial difficulty due to lack of orders. However, the WRC found that the decision to close the factory was motivated, at least in part, by anti-union animus and thereby represented a further violation of workers’ associational rights.

Since the management’s decision to close the factory not only further violated freedom of association but also meant that the company’s prior violations of workers’ associational rights could not be fully remedied, the WRC requested that the factory’s buyers commit to refraining from doing business going forward with Elim’s owners at any other garment factory where they might resume operations. To their credit, the buyers made this commitment.

Factory buyers agreed to ensure that Elim employees received all severance payments and other terminal benefits owed to them at the time of the factory’s closure, as well as payments of back wages for the workers who had been fired for participating in associational activities. Part of this severance was paid by Elim at the time of the factory’s closure. However, an independent investigation determined that the payments made by Elim represented only two-thirds of the total amount due to workers. The licensee Outerstuff, together with New Era Cap, PVH, and Centric Brands, ensured that the remaining money owed to workers was paid by an independent, third party organization. These payments to workers were made in March 2021.

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