After Pocketing Workers’ Wages, Nike Supplier Paid Shareholders a Bonus

I write to update you on the case of Hong Seng Knitting, the Thai factory that produced collegiate apparel for Nike and deprived thousands of workers of wages they were legally due.
 
Brief Recap of the Case and Nike’s Position
 
Hong Seng wanted to reduce its workforce temporarily after orders declined early in the Covid-19 pandemic. Thai law requires factories to pay partial wages to laid off workers. To avoid paying these wages, Hong Seng management concocted a scheme in which it forced the workers to take leave without pay, then falsely reported the leave as voluntary.
 
The facts of this case are clear. As the WRC originally reported, there is overwhelming evidence that workers’ surrender of their pay was coerced—under blatant threat of retaliation by the factory—not voluntary. And Thai government labor authorities, who examined the management’s actions, ruled that the factory had no lawful basis for placing workers on unpaid leave.
 
Nike’s defense of the factory’s actions is not credible. According to Nike, thousands of workers were presented with an entirely free choice between getting paid and not getting paid—and chose not to get paid. Nike has also never refuted the overwhelming evidence that workers were coerced.
 
Nike Still Refuses to Address the Violations
 
Unfortunately, there has been no progress on this case. Despite the clarity of the evidence and the gross unfairness of Hong Seng’s actions to thousands of workers, Nike continues to refuse to take corrective measures.
 
New Evidence: At the Same Time It Was Stealing Wages from Workers, Hong Seng Paid Its Owners a Dividend
 
We have new information to share with you about the case. When WRC affiliate universities engaging with Nike have cited the implausibility of workers volunteering to give up their wages, Nike has suggested they did so because the factory was facing such grave financial challenges during the pandemic that workers were afraid it would close—and they supposedly gave up their pay to keep the factory afloat.

Since we learned that Nike is offering this rationale, the WRC examined Hong Seng’s financial status in 2020, when the violations occurred. We did so by obtaining and reviewing the company’s financial reports for the year. Here is what we found:

• Hong Seng was not failing financially: the company reported a profit for the year.
• Hong Seng paid its owners a dividend of nearly half a million dollars at the same time it was forcing workers to go unpaid.

Hong Seng stole money from workers not because it had to, but because it could. The company’s owners did not want to pay partial wages during a layoff, as the law requires, so they decided to cheat the workers and evade the law.
 
Nike Has the Power to Resolve This Case at Any Time
 
Nike has the power to resolve these violations of university standards any time it chooses.

While Nike technically stopped sourcing from Hong Seng last year, very little has changed: Nike is now sourcing from a company substantially owned by the same family, located in the same buildings, and employing many of the same workers. Its leverage over Hong Seng’s owners remains intact. If Nike asks Hong Seng to pay the workers the money it owes them, we are confident that Hong Seng will do so. The total amount due, at current exchange rates and with legally mandated interest, is an estimated $800,000.

We continue to urge Nike to honor its obligations to its university licensors, and to workers who made its products, and correct the violations at Hong Seng Knitting.

We will update you on this ongoing case as warranted. As always, please reach out with any questions about this update.