WASHINGTON--The Labor Department next month will begin enlisting retailers in its campaign to clean up what it sees as the continuing widespread federal wage and hour violations among apparel contractors.
Although the agency holds little legal sway over stores, Labor officials are hoping the threat of bad publicity will prompt retailers to pay close attention to the conditions under which their apparel orders are filled.
This latest tactic by Labor's Wage and Hour Division will begin after Labor Day. It builds on the agency's two-year enforcement strategy of forcing manufacturers, under the threat of delaying shipments, to police labor practices at their apparel contractors.
"Manufacturers and retailers have more incentive to cooperate with the department because they are more concerned than contractors are about their reputation and public relations. It has consequences to them if they are associated too closely with bad labor practices," said Maria Echaveste, Wage and Hour Division administrator, in an interview.
The cudgel Labor investigators have been holding over manufacturers is a federal statute known as the hot-goods provision, which makes it illegal for persons to traffic in goods they know are made in violation of wage and hour laws. The legal recourse for such violations is securing court orders to prevent goods from entering commerce.
While Echaveste says her investigators have made inroads in cracking down on flagrant sewing-shop operators by pressuring manufacturers, the strategy just scrapes the surface of a problem plaguing garment districts of Los Angeles, San Francisco, New York, Chicago, Miami, Dallas and Atlanta.
"Going after the 20,000 contractors who can close up shop one week or the next, then open up a new workroom, is like killing ants. You step on them, and they're over here," Echaveste said, explaining the need to include retailers in their enforcement strategy in order to focus on the entire apparel production chain, from contractors to stores.
"You need to go to places that are more stable and those are the manufacturers and the retailers," she said.
Labor officials tested their new strategy in April with Mervyn's, the West Coast mass merchandise chain and division of Dayton Hudson Corp., Minneapolis.
In that case, investigators had found a contractor for a Mervyn's supplier, Sungdo Manufacturing, Los Angeles, to be in violation of wage and hour laws. The Los Angeles contractor, called Unique, owed 223 workers $223,000 in back wages for producing brightly colored fashion T-shirts. Sungdo, a subsidiary of Sungdo International, a large South Korean retail concern, then paid the back wages.
Labor officials, who had cited another Sungdo contractor a year earlier, then brought the problem to Mervyn's attention.
"In the Mervyn's situation, they have cooperated by handing out to their manufacturers a [wage and hour] compliance guide," Echaveste said, adding the store is also making compliance with these laws a part of a checklist of criteria in their agreements with manufacturers.
Mervyn's officials could not be reached for comment.
Echaveste said retailers' participation in Labor's enforcement efforts will largely be voluntary, but based on the experience with Mervyn's and with manufacturers, she expects wide participation from stores.
Regarding the hot-goods provision and how it might legally relate to retailers, Echaveste said the statute's scope is limited since it excludes those who accept in good faith goods made by companies that are violating the law. The law's reach might be interpreted, though, to extend to retailers who are made aware of violations and continue to accept shipments.
"It may require some litigation and what we need to do is stretch the limits of the law to try and deal with this problem," she said.
Rob Hall, vice president and government affairs counsel with the National Retail Federation, said stores are responding in a way similar to what they have been doing in recent years about sourcing apparel overseas. However, Hall said he hoped Labor would not require retailers to investigate the contractors used by manufacturers.
Hall noted that retailers that produce their own apparel domestically through their own contractors have shown diligence in monitoring for violations.
Retailers that source directly from contractors are already treated by Labor officials as manufacturers and thus subject to hot-goods scrutiny. One such case involved The Gap, which last year worked with Labor officials to secure $80,000 in back wages from one of its contractors, Kong Manufacturing, San Francisco, which went bankrupt.
So far this year, the Labor Department has recovered a total of $2.35 million in back wages from contractors and manufacturers. Last year, the total was $2.32 million.
--Fairchild News Service

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