WRC Factory Investigation

LD El Salvador

Factory: LD El Salvador

Key Buyers: Levi Strauss, PVH, Ralph Lauren, Walmart

Year: 2019

Case Summary

LD El Salvador, a garment factory located in El Salvador, unexpectedly closed down operations in March 2018 and failed to pay its 824 employees approximately $2.3 million dollars in compensation that they were legally entitled to receive for terminal benefits. The factory was owned by a Korean businessman, Young Ryul Kim, and was a key part of the production network of the KT Group. The factory’s buyers—PVH, Levi’s, Ralph Lauren, and Walmart—purchased from the factory through an intermediary known as Global Brands Group, a subsidiary of the Fung Group.

Given that the factory owner left El Salvador immediately after the closure, failing to pay the workers’ the more than two million dollars that they were owed, the WRC engaged with the factory buyers to seek corrective action. The buyers informed the WRC that all of their orders had been placed through Global Brands Group (GBG). Therefore, the brands urged GBG to provide the funds owed to workers. In response, GBG provided a total of $600,000 for LD workers—a total of 26% of the amount that the workers were legally owed. The funds were distributed equally among all former LD employees in late February and early March 2019.

GBG’s contribution of $600,000 is a step toward remediation of the violations but does not fully address the violations that occurred. The WRC continues to recommend that factory buyers take responsibility under their respective labor codes to remedy the violations by paying the approximately $1.7 million that is still owed to these workers.

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