Following the closure and illegal nonpayment of severance at CSA Guatemala, the factory’s primary buyers—Gap, Hanesbrands, and American Eagle Outfitters—agreed to make contributions totaling a little more than $1.3 million to the factory’s approximately 650 former employees.
CSA Guatemala, located in Guatemala City, fully closed operations on January 19, 2019. At the time of the closure, the factory failed to pay its employees the full amount of their terminal benefits, unpaid vacation and other bonuses, and money deducted from the workers’ paychecks for healthcare, all of which are required payments under Guatemalan labor law and, by extension, buyer codes of conduct.
The WRC engaged with the factory buyers, calling on them to take the necessary steps to ensure that the workers were made whole. Given the failure of the factory’s owner to make the legally required payments, each of the three buyers demonstrated their commitment to social compliance by contributing significantly to a humanitarian fund established for the former employees of CSA Guatemala.
The humanitarian fund was distributed to workers in January 2020 with the assistance of the Guatemalan organization COVERCO. In interviews conducted by the WRC, workers described the hardship that they faced following the factory’s closure and failure to pay severance, and they expressed appreciation for the efforts to remedy these violations by way of the humanitarian contribution.
The WRC recognizes the steps taken by Gap, Hanesbrands, and American Eagle Outfitters, in response to the WRC’s outreach, to ensure compliance with their codes of conduct through the creation and distribution of the humanitarian fund to the former employees of CSA Guatemala.