By  on July 1, 2009

Up to one-third of American Apparel Inc.’s manufacturing employees in Los Angeles may be working illegally, according to the U.S. Immigration and Customs Enforcement agency. The ICE has notified the company that 1,800 of the 5,600 workers in American Apparel’s Los Angeles production facilities do not have the proper paperwork to legally work in the U.S.

“Unless these employees, within a reasonable time frame, are able to resolve the discrepancies in their work records, or present valid identification and employment eligibility documents that are subsequently verified by the ICE, such employees will not be able to continue their employment with the company,” wrote American Apparel in a Tuesday filing with the Securities and Exchange Commission.

While this would result in a significant reduction in the firm’s production workforce, American Apparel said it did not believe the decrease would have a materially adverse impact on its financial results, due to its healthy inventory levels and manufacturing capacity. However, the company warned, “As the ultimate impact is difficult to predict at this time, no assurances can be given as to how, if at all, the loss of a significant number of manufacturing employees will affect [our] business and operations.”

The notice from the ICE comes after a Jan. 3, 2008, inspection of American Apparel’s facilities, with the results released to the company last week.

Reached by phone Tuesday, Dov Charney, chief executive officer of American Apparel, declined to comment further on the issue. Charney is known as an advocate for immigration reform and American Apparel has run advertising billboards and sold T-shirts publicizing the issue.

On May Day earlier this year, Charney led a march of thousands of American Apparel employees through the streets of Los Angeles to push for immigration reform. “It’s not just about workers and immigrants; it’s about humanity,” he told the assembled crowd, as seen on a video clip on the American Apparel Web site.

In its SEC filing, American Apparel said the ICE did not charge the company with knowingly or intentionally hiring unauthorized aliens, and no charges have been filed against it or any of its employees. “It is the company’s policy, and has been at all times, to fully comply with its obligations to establish the employment eligibility of prospective employees under immigration laws,” noted the company.

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