For the past 15 years, “Marisol,” a 44-year-old single mother of four children, hunched over a sewing machine stitching clothing for American Eagle Outfitters, Lucky Brand, Puma and others at Industrial Hana in Guatemala. It was hard, modest-paying work but she managed to get by because she had to—her youngest was only 5.
But the daily rhythm that Marisol had fallen into ended abruptly last October when the garment manufacturer permanently shuttered without paying its nearly 250 employees the severance they were legally owed. Overnight, they were “left with nothing,” and it was only in July that she finally managed to get another job. Before that, Marisol found herself literally knocking on doors to ask for help so she could continue to pay rent and keep her children in school. She’s racked up a not-insignificant amount of debt, which she has to pay back with interest. “This whole situation has been very stressful,” Marisol said.
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Marisol considers herself more fortunate than others. Many of Industrial Hana’s erstwhile employees are still struggling to find employment. The single owner of the factory, Sun Kyou Lee, also known to workers as Jesus Lee, has been unreachable. Before he disappeared, Lee had told workers that the factory was insolvent and he could not afford to pay them for the severance or other terminal services they were entitled to by Guatemalan law.
“Industrial Hana did not have the decency to pay us,” Marisol said.” They just closed up overnight and left us like this. We are just trying to survive. There are many single mothers, some of them have small children and need money to pay for food and school fees. There has been no willingness on the part of the company to pay us for all of our years of service.”
Who is responsible for compensating a factory’s wage theft is a perennial question with few clear answers. It’s not something many laws provide clarity with, either. California’s Garment Worker Protection Act, signed into law in 2021, holds so-called brand guarantors jointly liable for unpaid compensation no matter how many layers of subcontracting might conceivably insulate it from the offending manufacturer. The Fashioning Accountability and Building Real Institutional Change, or FABRIC, Act, aims to take its protections nationwide. There is no similar equivalent in Guatemala.
The Worker Rights Consortium, a nonprofit based in Washington, D.C., has been trying to get the factory’s buyers to pay the $1.5 million that the Guatemalan Ministry of Labor and Social Welfare estimates they’ve been deprived of. American Eagle Outfitters and Puma, which claimed that their orders were subcontracted at Industrial Hana through a third party without their knowledge or authorization, have so far agreed to rectify the wage theft, committing $500,000 apiece for a total of $1 million in disbursements. In Puma’s case, it facilitated payment from the supplier with which it had originally placed the orders.
“As unauthorized subcontracting is forbidden in Puma’s supplier handbooks, we entered into a dialogue to ensure the supplier, which was responsible for placing the orders with Industrial Hana without authorization, would provide the required funds,” a spokesperson said. “As a responsible business partner for our suppliers, we recognize that our business practices, and our trading terms and conditions can have a significant impact on the organization at our suppliers’ factories.”
Lucky Brand also used a supplier that passed the orders on to Industrial Hana without its approval. Unlike American Eagle Outfitters and Puma, however, the denim label has yet to engage in the process beyond a couple of emails from Sparc Group, the strategic partnership that includes Lucky Brand owner Authentic Brands, said Tara Mathur, field director, Americas, at the Worker Rights Consortium. One of those missives said it was investigating the matter and the other identified the vendor it used.
Sparc Group named INT S.A., from Guatemala City, as the supplier it worked with in an email to Sourcing Journal. It never had any direct relationship with Industrial Hana, it said, and INT S.A. was fully compensated for the production order placed under the subcontracting agreement. INT S.A. did not respond to a request for comment.
“Sparc Group places great importance on the welfare of the employees who manufacture our products, and we expect our vendors to do the same,” a spokesperson said. “We have a robust manufacturer code of conduct that—along with a host of other mandates—requires vendors to ensure that employee wages and benefits are paid in accordance with local laws. Allegations of unpaid employee wages are of significant concern to us, and we take them very seriously.”
But Mathur isn’t convinced. American Eagle and Puma both pleaded the same ignorance about their production being bumped to Industrial Hana, but, “to their credit” responded with significant contributions. The fact that Lucky Brand’s production was also placed at the factory by an intermediary “in no way” absolves it of its ethical responsibility to remedy the severance theft, she said.
“When a garment factory closes and fails to pay workers what they are legally owed, brands whose apparel was made at that factory have an ethical responsibility to ensure that workers are paid the wages and severance that were stolen from them by the factory owner,” Mathur said. “This responsibility applies whether the orders for this production were placed directly by the brand or—as is extremely common in the industry—through intermediaries.”
Marisol agrees. She said that Lucky Brand has a responsibility to the workers because they worked hard to get their orders in on time
“We sewed a lot of garments for Lucky Brand,” she said. “We made T-shirts and other garments for Lucky Brand and we were still sewing their products up to the last day that the factory was open. We need their help to be able to pay back all of the debts we incurred after the factory closed.”
