Case Update: Outerstuff/Style Avenue
February 8, 2024
Dear Colleagues,
I write to update you on the nonpayment of $1.8 million in legally mandated compensation at Outerstuff’s supplier Style Avenue.
I met with Outerstuff executives to discuss the case at the end of December. At that meeting, Outerstuff indicated that it would be sending the WRC a proposal to remediate the violations of university labor standards at Style Avenue. We expected their proposal in early January and have been waiting to receive it before updating you. The proposal arrived last week, and we have reviewed it carefully and discussed it at length with worker representatives in El Salvador.
Unfortunately, Outerstuff proposes to pay workers only 54% of the money they legally earned ($968,644 out of $1.8 million). Since there is no other licensee at the factory to fill the gap and since Outerstuff has acknowledged that the factory owners will never pay these workers, accepting this proposal would mean workers never seeing close to half of their legally owed compensation.
Outerstuff also states in its proposal that the WRC and the workers must not only accept this partial payment as a full remedy for violations of university standards, but that the WRC must publicly endorse the payment to workers of 54 cents-on-the-dollar as a “fair and reasonable settlement”. Of course, paying workers barely 50% of the money they legally earned is neither fair nor reasonable, especially at a factory where Outerstuff, by its own admission, accounted for “basically 100%” of production.
There are a number of reasons why the WRC cannot endorse Outerstuff’s proposal:
- The amount owed to workers is determined by the laws of El Salvador. University licensing agreements require that workers be paid in accordance with the law. The WRC cannot negotiate away (or negotiate down) workers’ right to be paid the money they earned under the law and under university standards.
- The impact on workers of depriving them of nearly half the money they earned would be devastating. When the factory was open, these workers were paid only $1.70 an hour while sewing apparel for Outerstuff. Workers could not accumulate savings on these wages. Many accumulated debts instead. The severance they earned through many years of labor is all these workers have. Under Outerstuff’s proposal, the average Style Avenue worker would be forced to sacrifice the equivalent of 10 months’ pay. For families already living on the edge financially, this is not a hit they can take without severe and lasting damage.
- If the WRC endorses an outcome in which workers receive 54% of the compensation they legally earned, other licensees whose suppliers close without paying their workers will surely demand the same concession. Licensees will ask “why should I pay workers the full amount they legally earned when Outerstuff only had to pay half?” Licensees will point out that Outerstuff represented virtually all of Style Avenue’s business for a decade, a much more sizeable and ongoing buyer-supplier relationship than is typical in the industry. They will ask why they must achieve full remediation at factories where they were one of many buyers, when Outerstuff was allowed to do far less at a factory where it was virtually the only buyer. There would be no good answer to these questions. If we endorse partial payment as full remediation in the case of Outerstuff, it will be much harder to achieve full remediation of university code violations in all the cases ahead.
Just in the short time since the Outerstuff case arose, other licensees have ensured 100% remediation in multiple cases of unpaid compensation at other factories making university logo product. In those cases, the licensee, or an intermediary, covered the entire cost of making workers whole. We reported on one such fully remediated case recently. Another will be reported next week. In a third case, involving arrears substantially greater than those at Style Avenue, the licensee has also committed to payment in full.
Other licensees are consistently stepping up in these cases—fulfilling their obligations to universities by paying workers 100% of the money they legally earned while making collegiate goods. To accede to Outerstuff’s demand for the WRC to endorse partial payment would be unfair to licensees that have done the right thing and would disincentivize all licensees from acting responsibly in the future. This would weaken worker rights protections across the collegiate supply chain.
We recognize that Outerstuff’s proposal is better than its previous position in this case, which was to refuse to pay anything to correct the violations and assist the workers. While its current proposal falls short on multiple counts—short of what workers are legally owed, short of what university codes require, and short of the full remediation licensees are delivering in other cases—it indicates that Outerstuff’s position is evolving and that full remediation is achievable. And, while it is disturbing that Outerstuff is threatening to punish workers (by paying them nothing) if the WRC does not endorse its proposal, we prefer to give the company the benefit of the doubt and assume that they would not actually behave in such a cruel manner.
We have offered to meet again with Outerstuff to seek a way forward. While we cannot rewrite the law or university codes to reduce the amount that the workers are owed, we will be as flexible as constraints allow. For example, we have told the company that a payment schedule might be feasible, provided it is not protracted, and that reasonable interest is included.
We will continue to make all efforts to ensure that the violations of university standards at Style Avenue are remedied in full and that workers receive all the compensation they earned.
The WRC will be holding a Zoom call for affiliate universities on the Outerstuff case on Monday, February 12 at 12:00 p.m. EST. We will provide additional updates and provide time for questions/discussion. Please join us if your schedule permits. Please also feel free to reach out to me one-on-one at any time.
Best,
Scott