LABOR CHOOSES MERVYN’S FOR TEST OF RETAILERS’ HELP WITH SWEATSHOPS

Byline: Joanna Ramey

WASHINGTON — Labor Department officials are trying a new approach — focusing on retailers — in the anti-sweatshop campaign that’s been waged during the Clinton administration.
Labor’s goal is one that’s been eyed for years: making retailers active players in helping the agency investigate private-label contractors who don’t pay garment workers the federal minimum wage and overtime.
Mervyn’s, the California-based discount division of Target Corp., has been picked as the agency’s test case, according to sources familiar with the inquiry that began last fall into dozens of the retailer’s contractors.
Making good on garment worker wages is a delicate issue for retailers, many of whom have endeavored to combat sweatshop conditions by monitoring contractors producing their private-label apparel. But at the same time, stores have sought to disavow any legal responsibility for wages owed by contractors who are hired by wholesale packagers to produce the merchandise.
Since 1991, when Labor started its sweatshop crackdown under then-Secretary Robert Reich, there’s been tension between agency officials and retailers over the issue of who should pay for wages owed private-label garment workers, particularly when the middle-men won’t pay up.
Store officials have defended their arms-distance relationship with contractors by citing the “good-faith” retailer exemption under the Fair Labor Standards Act, which makes it unlawful to sell goods made in violation of federal wage laws. Labor officials have said this exemption should be voided after a retailer is notified several times of an errant contractor.
They have also bemoaned the need for more retailer involvement in sweatshop investigations, which they apparently are getting with Mervyn’s.
A spokeswoman for Mervyn’s declined to discuss details about the inquiry, but said, “We have been cooperating with the Department of Labor throughout the investigation and we will continue to do so. Since it is ongoing and we don’t know the outcome we’re not in the position to discuss specifics at this time.”
A Labor spokesman also said she couldn’t comment because the Mervyn’s inquiry is ongoing. According to sources, Mervyn’s was picked as the test case for the new anti-sweatshop strategy on a random basis. Labor over the years has cited various Mervyn’s private-label contractors and those of other retailers for back-wage violations.
Until now, the department has focused its sweatshop enforcement efforts on manufacturers, either brand-name companies or the middle-men hired by retailers who in either case farm out orders to contractors.
The investigations have generally started with contractors. After an audit, often triggered by a tip from a disgruntled worker, a paper trail reveals for whom an order is being made. The agency then seeks to collect back wages from the party who placed the order with the contractor. Millions of dollars in back wages have been collected in the last nine years using this approach.
It’s the middle-man example the agency is attacking in the Mervyn’s case. Instead of starting the investigation at the contractor level and tracing an order to the retailer, the agency has started with the retailer. The result has been a more comprehensive investigation of contractors in a supply chain.
An announcement of the number of wage violations at Mervyn’s contractors and who is responsible for picking up the tab is expected to be forthcoming.
Ilse Metchek, executive director of the California Fashion Association, which represents apparel makers in the state, questioned how Labor’s retailer-focused strategy will improve contractor compliance.
“The way to do it is to ask retailers to require [manufacturers to provide] more identification of contractors” so as to keep better track of where garments are being made, she said. “There are a lot of rogue shops.”
The Mervyn’s test case comes at a time when the country’s two largest garment-producing states — California and New York — have recently enacted garment manufacturer liability laws.
In the New York law, retailers escaped liability for contractors’ unpaid wages. The regulations in the California law defining what constitutes a manufacturer, and thus who’s liable for wages, is pending.