WRC Factory Investigation

Estofel S.A.

Factory: Estofel S.A.

Key Buyers: Gear for Sports, Hanesbrands, PVH, Team Edition

Last Updated: 2009

Case Summary

After identifying labor rights violations at the Estofel facility, the WRC worked jointly with the University of Washington and the FLA to achieve significant remediation. When the factory closed in November 2007, management failed to pay workers a large portion of the severance and other terminal compensation owed to them by law. The Estofel plant, located on the outskirts of Guatemala City, had been disclosed as a producer of university logo apparel for Team Edition Apparel and Gear for Sports (which produces Champion brand university logo apparel under license from Hanesbrands). It also produced non-collegiate apparel for Hanesbrands and Phillips Van Heusen, among other clients.

The WRC found that upon closing the factory’s two manufacturing units in October and November of 2007, Estofel had paid workers less than 50% of the legally mandated severance and other terminal benefits. The non-payment of this compensation affected nearly 1,000 workers. Very substantial remediation of these violations was achieved – thanks in great part to the University of Washington (UW), whose administration, faculty, and students put significant effort into achieving a positive outcome. The UW administration helped convene an ad hoc group consisting of the WRC, FLA, Gear for Sports, Hanesbrands, and the Collegiate Licensing Company. As a result of this process, and extensive engagement with Estofel’s former parent GLG, Estofel agreed to provide workers with the compensation due to them.

The WRC and FLA jointly engaged Coverco, a Guatemala-based monitoring organization, to conduct an audit to determine how much each worker was owed and to carry out an outreach project to inform workers of Estofel’s offer to pay. Coverco was able to reach nearly 95% of the workers it identified as being due compensation. By February 20, 2009 – the end date set by Estofel for the payment period – 871 workers received compensation, with the total amounting to roughly $535,000.00

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