In 2024, the WRC investigated serious violations of worker rights at the Guatemalan garment factory, KOA Modas. Thanks to successful engagement with the factory’s primary buyer, Target, and its intermediary, SAE-A Trading, the WRC is pleased to report that the factory has committed to full remediation of all violations documented by the WRC.
The WRC investigated a complaint filed by the SITRAKOAMODASAC workers’ union and, in February 2024, sent exhaustive findings to the factory and its buyers. Through our investigation, the WRC found that the company had committed a number of serious violations of Guatemalan law and buyer codes of conduct. As noted, thanks to the subsequent engagement of Target and SAE-A with the factory, KOA Modas made commitments to fully remedy all violations. The violations that occurred and the appropriate remediation were as follows:
- Nonpayment of back wages. Workers who were illegally fired from KOA Modas in 2013 and reinstated under court order in 2015 were never paid the court-ordered back wages. KOA Modas repeatedly refused to make the appropriate payments to these 43 workers for more than 10 years. Thanks to the WRC’s investigation and buyer engagement with the factory, KOA Modas has now committed to payments of more than US$300,000 to the workers. This money will be paid to workers in installments between July and December 2024. Once all payments have been delivered, the violation will be fully remedied.
- Nonpayment of social security. For more than 10 years, KOA Modas failed to make full and regular payments to the Guatemalan Social Security Institute, even though it deducted worker contributions to this fund from its employees’ paychecks. Records issued by the Guatemalan government in 2022 showed that, at that time, the factory owed the government more than US$3 million for workers’ Social Security benefits. The nonpayment of these funds to Social Security resulted in reduced access to healthcare for factory employees and the denial of their pension benefits at the time of their retirement. In coordination with the SITRAKOAMODASAC union, KOA Modas has now undertaken a review of all of the factory’s outstanding debts to Social Security and will ensure that these accounts are paid in full, prioritizing payments for workers who have reached or are nearing retirement age. The WRC will continue to monitor compliance in this ongoing process to ensure that the factory does not commit further violations of workers’ right to Social Security.
- Nonpayment of wages following Covid lockdown. After Guatemala lifted lockdown restrictions following the onset of the Covid-19 pandemic, most KOA Modas employees were called back to work, but some were not. The factory itself had provided the complainant union with a list of workers who were not recalled, along with a calculation of the wages owed to them, but never made the payments. To remedy this violation, KOA Modas has agreed to make payments to 374 workers totaling approximately US$160,000. The factory has committed to providing these payments in November 2024. Once they are made, the violation will be fully remedied.
- Illegal advance vacation. The WRC’s investigation found that, in January 2024, KOA Modas illegally required workers to take advance days of vacation for the period of 2025–2026. To remedy this violation, the factory agreed to restore vacation for this period to all workers who were illegally required to take advance vacation.
- Violations of freedom of association. Finally, the WRC found the company violated workers’ right to freedom of association by threatening union leaders and by interfering in the union’s right to organize. To remedy these violations, KOA Modas affirmed its respect for workers’ right to join the union of their choosing and agreed to issue a statement to the workforce affirming the right to freedom of association. The factory is also providing mid-level managers, area managers, and other supervisors with training on workers’ right to freedom of association. The WRC considers that the violations have been remedied but will continue to monitor to ensure ongoing respect for workers’ associational rights at KOA Modas.
The WRC recognizes the important steps taken by Target, SAE-A Trading, and KOA Modas to work with the WRC and the SITRAKOAMODASAC union to ensure full remediation of the violations that occurred. The WRC will continue to monitor compliance with these commitments.