Factory: KT Embroidery
Key Buyers: Zephyr Graf-X
In May 2018, the WRC launched an investigation into reports of illegal termination of workers from KT Embroidery, which embellished university logo caps, on a subcontract basis, for Zephyr Graf-X.
The case involved:
- the illegal dismissal of more than a dozen workers who sought improvements in the factory’s labor practices; and,
- the imposition of a blatantly illegal requirement, for the entire workforce, that employees refrain from further labor rights efforts as a condition of continued employment.
Unfortunately, at the time the WRC uncovered the abuses, Zephyr’s direct supplier, Han Apparels, had ceased it business relationship with KT Embroidery and thus lacked sufficient leverage to compel full remediation, which would have meant the reinstatement of the dismissed workers and the lifting of the illegal prohibition on workers’ exercise of their associational rights.
Under these circumstances, the most that could be achieved was proper compensation for the dismissed workers. This is the remedy the WRC was ultimately able to implement, with Zephyr’s support. Workers received an average of 15 months’ salary—a sizable amount, heartily welcomed by workers and their families.
The case underscores the importance of vigilant supply chain management by licensees. KT Embroidery was a subcontractor for Han Apparels, but Han Apparels failed to disclose the relationship to Zephyr—which therefore did not disclose it to universities. The WRC identified the factory as a collegiate supplier and informed Zephyr. This is the second time in two years that Han Apparels has used an unauthorized subcontractor that proved to be a violator of university labor standards. In neither case did Zephyr identify the unauthorized subcontracting. Going forward, it is Zephyr’s responsibility to prevent Han Apparels from further violations of university disclosure requirements and labor standards—or to replace Han Apparel with a supplier that is willing to respect university codes.
While we regret that full remediation was not possible in this case, Zephyr took the actions the WRC requested, and we are pleased that workers have been well compensated.