LOS ANGELES — The Wet Seal Inc. said Wednesday it has settled a wage dispute with four garment workers who claimed they were not paid minimum wage or overtime at DT Sewing, one of the teen retailer’s contractors.
This story first appeared in the January 22, 2004 issue of WWD. Subscribe Today.
Wet Seal agreed to pay the workers a total of $90,000, an amount the California Labor Commission said was the retailer’s responsibility in December 2002 when it awarded the plaintiffs a total of $240,000. The other $150,000 was deemed to be the responsibility of DT Sewing and another apparel manufacturer, Rad Clothing.
Wet Seal appealed the commission’s decision and the matter was referred to Los Angeles Superior Court.
The workers filed a suit against their employer under California statute AB633, which holds other firms jointly liable for unpaid wages. The law is controversial because some retailers believe they should not be held legally responsible for another firm’s practices, a view Wet Seal chief executive Peter Whitford espouses.
“While we do not believe we are legally liable for the unpaid wages, as we had already paid for the garments, we have compensated these workers because it is the right thing to do,” he said in a statement. Wet Seal will also make an additional $40,000 contribution to Bet Tzedek Legal Services, the plaintiffs’ law firm, and has vowed to find DT Sewing and Rad Clothing, which both closed without paying the remaining $150,000 in damages.
Neither Whitford nor the plaintiffs’ attorney could be reached for comment but a spokesman for the retailer confirmed Wet Seal’s plans.
At a financial conference in Huntington Beach, Calif., last Thursday, Whitford said the company has implemented a new code of conduct, human rights and compliance practice. The ceo also stressed the company is committed to “value, ethics and culture,” and to rebuilding the firm’s morale.
The 621-store chain had a tough 2003, expecting a wider loss than Wall Street had anticipated in the fourth quarter as December comparable-store sales fell 7.3 percent from higher markdowns on slower-moving inventory. The company also operates Arden B., Contempo Casuals and Zutopia stores. Zutopia is set to be closed by the end of March.