Alta Gracia Workers Have Received Their Severance, on Time and in Full

June 24, 2021

Dear Colleagues,

In April, the university licensee, Alta Gracia, was on the verge of a decision to permanently close. As many of you know, the company did indeed decide to proceed with closure. Over recent weeks, the company has been carrying out the closure process.

The WRC’s primary concern has been to ensure that all workers at Alta Gracia’s factory in the Dominican Republic receive their full terminal compensation. Fulfilling its severance obligations constituted an unusually large financial burden for Alta Gracia, because, under Dominican law, severance and related terminal compensation are calculated based on workers’ actual wages and length of service.

The living wage paid to workers at Alta Gracia was 2.5 times the wage paid at other garment factories in the Dominican Republic. And, because of its better wages and working conditions, turnover at the factory was very low and the average tenure of the factory’s employees very long, with many employed since the facility opened in 2010. As a result, Alta Gracia’s terminal obligations, per worker, were more than five times higher than those of the typical garment factory in the Dominican Republic.

I am very pleased to report to you that Alta Gracia nonetheless has honored its obligations to workers under Dominican law and university codes of conduct in full. Every Alta Gracia worker has been paid their severance and other terminal compensation. The WRC has confirmed this by verifying the accuracy of the calculations of these payments for each worker, by helping facilitate the logistics of the payments, and through post-payment communications with workers.

Having made the decision to close, Alta Gracia recognized the vital importance of fulfilling its severance obligations. The company made no attempt to reduce its severance obligations through strategies sometimes employed by less responsible garment factories in the Dominican Republic and around the world. And the company worked closely with the WRC and the Alta Gracia workers’ union to achieve, and confirm, full and timely payment.

Alta Gracia was aided in this process by the willingness of a number of its university licensors to forgive some or all of Alta Gracia’s outstanding royalties and by the successful sale of its inventory, in the factory’s final months, to two key buyers: Fanatics (which facilitated a substantial sale of blank product to Ross Stores) and Follet. I know the workers greatly appreciate the boost that this provided to the company.

On average, each Alta Gracia worker received US$5,145—the equivalent of nearly a year’s wages. This is five times what a garment worker typically receives in the Dominican Republic when they lose their job. While these workers face an uncertain future, this substantial compensation will protect them and their families in the immediate term and will better position them to weather future challenges.

Despite our sadness that the company was forced to close, we are glad that Alta Gracia closed in the same way it operated for more than a decade: by honoring its obligations to workers and hewing closely to the standards it pledged to uphold.

The WRC has carefully monitored labor compliance at Alta Gracia since it opened. Alta Gracia and its senior managers in the US and the Dominican Republic are still completing the formal closure process, but, with the non-managerial workforce now terminated and compensated in full, the WRC’s monitoring work at Alta Gracia is complete. We are proud of what we helped the factory and its workers accomplish.

We also appreciate the efforts of universities and colleges that supported Alta Gracia over the years. This enabled the factory to survive and pay a living wage to its workers, without fail, for more than a decade. Workers’ lives were transformed, with permanent gains for them and their families in housing, education, and improved health.

We will be sharing more thoughts down the road about the implications of Alta Gracia’s experience for broader labor rights efforts in the apparel industry.

Best,

Scott