4 U.S. Retailers Settle Saipan Labor Suit
Four major U.S. retailers have settled a class-action lawsuit by agreeing to an unprecedented court-supervised monitoring of factories that produce their clothing in Saipan--a U.S. territory notorious for labor abuses.
Nordstrom Inc., Cutter & Buck Inc., Gymboree Corp. and J. Crew Group Inc. admitted no wrongdoing in the deal reached Monday but agreed to pay $1.25 million to help finance monitoring by the nonprofit group Verite of Amherst, Mass.
Four more U.S. retailers--Phillips-Van Heusen, Donna Karan, Ralph Lauren and Chadwick’s of Boston--submitted letters to the court saying they would reach a similar agreement, probably in the next week, attorney Al Meyerhoff said. He filed the lawsuit on behalf of thousands of garment workers in Saipan, with backing from three U.S. human rights groups and the Union of Needletrades, Industrial and Textile Employees.
Together, the eight retailers account for about one-third of the $1 billion in annual garment production in Saipan, a Pacific Island that is part of the U.S. Commonwealth of the Northern Mariana Islands. The factories involved employ about 7,000 workers, nearly all of them immigrants from China, the Philippines and Taiwan.
Numerous retailers have instituted monitoring programs in recent years, largely in response to public pressure or U.S. government action, but never has a program been supervised by a federal court. Unlike other monitoring programs, which are usually voluntary, paid for by the retailer and mainly made up of spot checks, this one will be independent and maintain a permanent presence in Saipan, employing a full-time ombudsman.
Also significant is the selection of Verite, the only nonprofit monitoring organization in the United States, which is known for social advocacy. Along with the usual factory tours and audits of payroll records, Verite investigators look at living conditions, such as dormitory space and availability of food and water, conduct interviews with workers away from the factory, and talk to local human rights activists.
Labor abuses are systemic in Saipan, which has grown into a major apparel production center during the last decade, said John Fraser, acting director of the U.S. Department of Labor’s wage and hour division. About 15,000 immigrant guest workers in 31 factories produce clothing for the U.S. Although most U.S. laws apply to the territory, the island is exempted from minimum wage and immigration laws.
Fraser said the settlement was “significant,” particularly when combined with Department of Labor investigations that have resulted in millions of dollars in fines in recent years. However, he added, “Each of these steps, including the partial settlement, are aimed at trying to reduce the scope and depth of the continuing problems. But we need a structural solution.”
Congressional hearings on the Saipan work force and labor laws are scheduled for September.
A typical problem faced by Saipan workers is deduction of high “recruitment fees,” which can reach as high as $10,000 and take years to pay off. As part of the settlement, the companies agreed not to do business with companies that charge recruitment fees, except to cover the cost of a one-way plane ticket.
Attorneys for more than a dozen retailers asked Monday that the case be moved to Saipan. A ruling is expected within the next two weeks.
