The Worker Rights Consortium (WRC) confirmed that the North Carolina-headquartered clothing giant, which was GO Haiti’s main buyer, fanned out in August severance checks totaling $330,000, the equivalent of three months’ pay for each of the more than 800 employees affected.
Ongoing political and economic tensions in Haiti, the Western hemisphere’s poorest country, have already strained its population past the breaking point, the labor group said. Hanesbrands’ payment is notable not only because of the “desperate situation” facing the country’s garment workers, who are facing inflation that blew past 30 percent in July, but also because wage theft has soared to epidemic proportions in the wake of Covid-19. The WRC estimates that workers were denied between $500 million to $850 million from terminations without severance pay in the first year of the pandemic alone.
In GO Haiti’s case, it was also the responsible thing to do. The factory’s owner decided to shutter after several major clients, including Hanesbrands, told him they wouldn’t be placing further orders, the WRC said. Suppliers, it added, operate on razor-thin margins to attract and retain buyers, which means that many of them, without external pressure, cannot or do not squirrel away funds for workers they might lay off in the future. Buyers that pull out of a factory can trigger layoffs or even closure at a time when the employer is least able to scrounge up sufficient arrears.
Hanesbrands, which did not respond to a request for comment, recognized that its decision to sever its sourcing relationship could lead to dire consequences for workers, the WRC said. To prevent this from occurring, it requested information from the factory owner to determine how much each worker would need to be paid. Then it provided the funds necessary to cover the amount.
By Aug. 31, the underwear purveyor reported that 827 out of 835 workers—more than 99 percent—had collected their severance checks.
“Hanesbrands notified the WRC of the closure and committed from the start that it would ensure the GO Haiti workers received full payment of their legal severance, even if the direct employer failed to pay them,” Tara Mathur, the WRC’s field director of the Americas, told Sourcing Journal. “Hanesbrands’ approach, in this case, reflects the growing recognition in the industry that brands cannot just wash their hands of the problem when suppliers fail to pay workers money they have legally earned.”
The WRC has worked closely with Hanesbrands over the past two decades to ensure that workers received what they were owed, it said. In 2009, the company pushed the owner of the Estofel Factory in Guatemala to pay $500,000 in severance owed to nearly 900 workers. In 2015, it provided $550,000 to remedy nonpayment at the Salvadoran factories Manufacturers del Rio and Central American Cutting Center. The following year, the company ensured that Multiwear, another facility in Haiti, paid terminal benefits to workers when it closed. In 2019, Hanesbrands, along with American Eagle and Gap, contributed to a fund totaling $1.3 million for severance payments at the CSA Factory in Guatemala. More recently in 2020, it provided $400,000 to correct severance theft from workers in Indonesia.
While WRC praised Hanesbrands’ “proactive stance,” it noted that the company was the exception rather than the rule. Because brands don‘t typically own their own factories, many are slow to take action when wage violations occur. It’s for this reason that it and other labor campaigners have been urging brands to pay into a legally enforceable severance guarantee fund that ensures workers receive their full arrears whenever large-scale nonpayment happens. Such a scheme would require companies to contribute an annual premium estimated at less than 10 cents per garment.
“Few brands act as forthrightly and responsibly as Hanesbrands did at GO Haiti—which is why the WRC believes it is essential to create a binding brand-labor agreement at the global level to guarantee that workers will not be robbed of their severance,” Mathur said.