WRC Case Brief: K.P. Textil (Guatemala)

This is a brief summary of the WRC’s engagement with American Eagle Outfitters (AEO, Inc.), the parent company of the university licensee, Tailgate, and the retailer, Gap, Inc., following an outbreak of Covid-19 at the factory K.P. Textil in Guatemala in May 2020 that resulted in the death of one of the factory’s workers. At the time the outbreak occurred, K.P. Textil was listed in Tailgate’s disclosure of producers of its university-licensed apparel, although AEO, Inc. has since stated that, while the factory remains among the brand’s suppliers, production of Tailgate’s collegiate goods at the facility ended in 2016.

In May 2020, the Associated Press reported that approximately 200 workers at K.P. Textil, amounting to roughly one-third of the factory’s workforce, had tested positive for Covid-19. This news report cited Guatemalan health and human rights authorities as stating that the factory had failed to take necessary measures to protect workers from transmission of the virus. The factory’s failure to take such health and safety measures represented a violation of not only Guatemalan law but also, because the factory had been disclosed for the production of collegiate apparel, university codes of conduct as well.

Upon learning of the outbreak at K.P. Textil, the WRC contacted AEO, Inc. and Gap, Inc. to urge them to require the factory to act immediately to protect the health, safety, and welfare of its workers. The WRC shared with these buyers the guidelines the WRC developed at the inception of the pandemic, in collaboration with health and safety experts, on infection control measures that garment factories should adopt to protect workers from Covid-19.

AEO, Inc. and Gap, Inc. committed to engage with the factory management to ensure that K.P. Textil would take adequate corrective measures to address the outbreak and protect workers going forward. Through their engagement with the factory, the buyers confirmed that factory management had closed the facility for approximately six weeks in order for employees to quarantine at home and for the factory to implement health and safety protocols that would prevent a future outbreak of Covid-19.

The factory reported to buyers, and workers confirmed to the WRC, that all employees were paid their regular salary for the first two weeks of the shutdown and, for the remainder of this period, were enrolled in a Guatemalan government wage support program that had been established for workers affected by factory suspensions during the pandemic. K.P. Textil also adopted and implemented a number of protocols designed to protect factory employees from contracting Covid-19 including social distancing, installation of sanitizing stations and physical dividers between workstations, and provision of daily temperature checks, face masks, and antibacterial gel to all workers. The factory informed buyers that, before returning to the factory, all workers would be tested for Covid-19.

In June 2020, the WRC learned that one of the K.P. Textil employees who had contracted Covid-19 during the outbreak at the factory had died as a result of complications from the virus. The WRC was further informed that the financial compensation that the worker’s family received after his death consisted of the severance benefits he was legally due at the end of employment, plus an additional GTQ 15,000 ($1,971) as condolences from the factory owners.

These buyers also reported that the worker’s widow has applied to the Guatemalan government’s Social Security Institute for long-term income replacement benefits for herself and her dependent children. The WRC investigated the Social Security Institute’s program for providing income replacement to the families of workers who die as a result of illnesses contracted or accidents occurring at the workplace and found that the level of benefits provided, which is calculated based on an actuarial study conducted by the Institute, is consistent with the international standard for industrial accident and illness compensation established under the International Labour Organization’s Convention 121 on Employment Injury Benefits. This is the same international standard that was used to calculate compensation paid to the families of garment workers killed in the Rana Plaza factory collapse disaster in Bangladesh in 2013.

However, the WRC also learned, from multiple sources, that the Social Security Institute’s process for conducting the actuarial study and initiating payment of income replacement to the families of workers who die from occupationally related illness or injury is so lengthy that it can easily take up to two years before families receive any assistance. As a result, the widow of the K.P. Textil employee who died as a result of contracting Covid-19 at the factory might not receive any further source of replacement for the deceased worker’s income until mid-2022.

Accordingly, the WRC recommended to AEO, Inc. and Gap, Inc. that they engage with the factory to ensure that the worker’s widow receive, in the meantime, additional financial assistance until the Guatemalan Social Security Institute begins making regular payments to her and her children. The factory management agreed to provide an additional $4,000 to the worker’s widow and children, which is equivalent to the additional amount that the WRC had determined was required so that the assistance provided to the family in the interim met the international standard. This payment was made to the family in May 2021.

Given the actions by the factory and its buyers to protect workers’ health, safety, and welfare following the Covid-19 outbreak at the factory and the steps taken to ensure income replacement assistance to the widow and children of the factory worker who died, the WRC finds that the violations of Guatemalan law and university codes of conduct that occurred in relationship to the outbreak have been addressed and resolved.

As always, please let us know if you have any questions or concerns.