By  on July 27, 2010

WASHINGTON — Apparently bowing to pressure from labor rights groups and universities over its responsibilities at contract factories, Nike Inc. reached an agreement Monday to pay $1.5 million into a fund for workers displaced by two factory closures in Honduras.

Nike’s action is a reversal of its stance in April, when the company said the contract factories bore sole responsibility for paying the workers’ severance and that “Nike will not be paying severance to workers that were employed by Hugger and Vision Tex.” Workers rights and student organizations alleged that 1,800 workers at two factories contracted by Nike to manufacture licensed apparel for universities and colleges were laid off in January 2009 without proper notice and without legally mandated severance. Nike did not own either factory.

The University of Wisconsin-Madison severed its licensing contracts with Nike in April, citing concerns with how the activewear company handled the situation in Honduras. Last month, Cornell University threatened to do the same.

Nike and the Central General de Trabajadores de Honduras, or CGT, union, which represented the laid-off workers, released a statement Monday in which Nike pledged to contribute the money to a workers relief fund. The fund will be administered by the union, the Solidarity Center and the Workers Rights Consortium and it will be supervised by a Cornell professor. The company also said it will pay for workers’ health care coverage for a year or until they find a job.

“Nike and CGT are concerned for the workers in Honduras and have agreed to take important steps to support former employees of Hugger and Vision Tex [the two shuttered factories],” Nike said.

The company said it was pleased to have worked with CGT to provide the workers in Honduras with “needed financial and medical support.”

Nike has been the subject of protests and controversies for years over its culpability in disputes between workers and management at contract factories. United Students Against Sweatshops conducted a prolonged campaign to heighten awareness of the current allegations against Nike over the last year, with demonstrations at stores and Twitter and Facebook pages dedicated to the issue. A group that included students and two former Nike workers visited more than 40 campuses, urging universities to end licensing contracts with Nike.

USAS hailed Nike’s statement as “an unprecedented victory.” Nike also reaffirmed a pledge to offer a vocational training program for the displaced workers and to give them a hiring priority at other facilities it uses in Honduras.

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