American Apparel Sued for Labor Law Violations
A class action lawsuit has been filed in the U.S. District Court for the Central District of California against the clothing retailer American Apparel for violations of state labor laws and the Worker Adjustment and Retraining Notification (WARN) Act.
Facts Alleged in ComplaintIn the case of Hirschberg et al v. American Apparel, Inc., the complaint filed on behalf of the terminated American Apparel employees alleges that many of the workers fired by the clothing retailer had little or no proficiency in English but were still forced to sign severance agreements with "paltry" terms. The agreements signed by the workers were complicated documents that they were unable to understand and left very little room for legal recourse. "As American Apparel's management was well aware, many of these employees receiving these agreements did not speak, read, or write English. Several of these employees did not read or write at all. Notwithstanding the same, American Apparel's management insisted that these employees sign these agreements immediately, even if they could not read or understand them." Furthermore, the lawsuit claims that the company failed to comply with many of the requirements set forth by California labor law and the WARN Act regarding adequate severance and notice that layoffs were coming. The law requires that the company give at least 60 days' notice to workers that could be terminated, which was not followed by American Apparel. In addition, the severance terms to some employees were "unconscionable," with some workers receiving as little as $300 in severance pay. Finally, the lawsuit refers to the actions of upper management within the company and that the layoffs fly in the face of the company's new ethics policy. According to the complaint, the CEO of American Apparel and other top management executives awarded themselves additional stock options and salary increases after the terminations while barely paying any severance to workers. The process of terminating the employees also violated the company's ethics policy that was retooled after the termination of American Apparel's founder, Dov Charney, after multiple allegations of sexual harassment.
ExpectationsThe class action lawsuit is seeking 60 days' payment for each terminated worker, back pay, and other benefits that should have been awarded to the terminated employees that comes to about $1 million in total damages. Representatives from American Apparel have yet to comment on the allegations made in the complaint or respond in court.