NEW YORK — A handful of the industry’s largest brands and retailers on Wednesday became ensnared in a scandal of an alleged sweatshop factory in Queens that overworked and underpaid its workers.
An investigation conducted by the New York State Department of Labor uncovered significant labor violations at two factories manufacturing garments for Macy’s, Gap, Banana Republic, Express, Victoria’s Secret, Limited and Coldwater Creek.
Jin Shun Inc., a garment contractor operating out of Long Island City, in Queens, is alleged to have underpaid more than 100 mostly immigrant workers by nearly $3 million in minimum wage and overtime pay since 2005. The investigation found that prior to 2005, Jin Shun Inc. operated under the name Venture 47 and allegedly withheld nearly $2.5 million in minimum and overtime wages. Officials are seeking repayment of the more than $5 million total owed to workers. Both companies are owned by Jikai Lin and Zhang Yun Chen. Neither could be reached for comment.
The owners have already changed the company name to Garlee NY Inc.
Officials raided two facilities Wednesday morning and tagged more than 10,000 garments with a label stating the garments were unlawfully manufactured. The garments included items for Express and Macy’s private label brands Ultra Flirt and INC.
Manhattan-based manufacturer Urban Apparel contracted with Jin Shun. Urban Apparel has already paid $60,000 in underpayment to have the tags removed.
New York State Labor Commissioner M. Patricia Smith said the factory had been under investigation for some time, but it wasn’t until two workers came forward in May that it was discovered exactly how the operation was hiding its labor practices.
With the help of the workers, who have remained anonymous out of fear of reprisals, the Department of Labor’s Apparel Industry & Fair Wages Task Force was able to ascertain that workers faced 12-hour days, often working six or seven days a week. Employees were paid on a piece-rate basis, earning 22 cents a garment. For more complex garments, workers could earn 40 cents. All told, employees received an average of $250 a week, despite typically putting in 66-hour work weeks.
“That means [the workers] were basically bilked out of $375 a week, or $1,600 a month,” said Smith, citing the state-mandated $7.15 minimum wage, as well as the higher overtime rate workers were denied.
Smith also noted that a typical worker who was employed by Jin Shun and Venture 47 over the last six years was likely owed an average of $35,000 for his or her work.
The factory owners are alleged to have played an active role in circumventing labor laws. They instructed workers to fill out two time cards — one for Monday through Wednesday and a second card for the remainder of the week — ensuring that no more than 40 hours of work would show on any card, investigators said. According to the one set of time cards the factory owners would present to labor investigators, workers were completing an entire item of clothing in less than a minute. Investigators even found a question-and-answer sheet meant to coach workers on how to respond to labor investigators without raising suspicions.
No arrests have been made, but Smith said the department will be seeking payment of the millions owed to workers. She also is working with the Queens district attorney to determine whether criminal charges can be brought for falsifying payroll records and coaching workers to lie to investigators. If asked how they were paid and how often, workers were told to respond, “Every Friday, the funds go into my bank account via direct deposit.” If asked if they were happy with their work environment, workers were told to respond with: “I am happy here. We get along with our boss. He is very nice to us and treats us well.”
Dan Henkle, Gap Inc.’s senior vice president of social responsibility, said the company took the matter seriously and would be cooperating with the state’s Department of Labor.
“At this time, we have no production in this factory in Queens and we are suspending any future production with this facility until this investigation is satisfactorily resolved,” said Henkle. “As we do with all of our garment suppliers, we monitor working conditions, including wages, working hours and many other issues on a regular basis. We have a team of more than 80 employees located around the world dedicated to improving the lives of the garment workers who make our clothes. In fact, our team conducted approximately 4,000 inspections, including unannounced inspections, of 1,879 factories last year. We revoked 24 factories for failing to comply with our standards.”
Henkle added, “We realize that monitoring alone is not enough, so we work with factories, local civil society organizations and governments to find solutions to systemic causes of poor working conditions in garment factories.”
Macy’s said the allegations represented a “serious violation” of the company’s code of conduct and that it has “begun our own internal investigation on this matter.”
A spokeswoman for Limited Brands Inc. said the company’s primary concern was for the well-being of the workers involved.
“We are committed to continuing to improve our procedures and programs, and we have a policy of zero tolerance for those vendors and factories that are unwilling or unable to work with us to achieve such compliance,” she said.
Jeffrey Parisian, senior vice president of administration at Coldwater Creek Inc., said the company was also launching its own internal investigation and would cooperate with the Labor officials.
“Coldwater Creek has done no business with Jin Shun and has done no business with Urban Apparel for over a year,” said Parisian. “However, Coldwater Creek is diligently investigating this matter as a result of the allegations.”
Smith said there are about 1,700 garment manufacturing facilities operating in New York City, and encouraged major brands and retailers to improve their monitoring and compliance procedures. In the Nineties, the manufacturing industry in New York was much larger and was the subject of numerous sweatshop scandals and violations. But as the industry has shrunk from an onslaught of importing, less labor violations have come to light.�