IV. Conditions in the Choe factories

A. The Retailer-Manufacturer: Donna Karan International, Inc.

Donna Karan International, with annual revenues of over 0 million, is among the top twenty women owned businesses in the world and among the top five in the U.S.²⁸ A leading international design house, Donna Karan’s high-end garments are worn by celebrities such as Susan Sarandon, Barbara Streisand and Hillary Clinton.

Donna Karan, founder of Donna Karan International and current chief designer and chairman²⁹ of the board of the company, began her design career at Anne Klein in 1971.  She started Donna Karan International in 1988 and ran the company as chairman of the board and CEO until 1997, when John Idol replaced her because the company was making losses despite high sales.  With her husband, Stephen Weiss, Donna Karan owns almost half the stock of the company, thus giving her and her husband (who does not hold an active position) control over all decisions made by the company.

With annual women’s apparel sales of over half a billion (U.S.$), Donna Karan International is among the top five women’s apparel sellers in the U.S.³⁰ This makes her one of the largest manufacturers of women's clothing in the U.S., which is the largest segment of the apparel industry.  Donna Karan International's entire image is aimed at a chic, upscale, urban audience especially those located in NYC, the "Fashion Capital" of the U.S.

Though Donna Karan International is an "international design house," more than 60% (62% in 1998) of its annual revenues are earned through sales in the U.S. alone.  However, like all major retailers and manufacturers, most of its production is carried out overseas.  The company does not operate its own production facilities, but uses between 440 and 500 contractors in the U.S. and worldwide for the production of its garments. According to the company's 1999 annual report, "None of the contractors engaged by the Company accounted for more than 10% of the Company’s total production during 1998."  Although the Choe factories produced garments solely for Donna Karan, the garments produced by each factory were less than 10% of all garments produced for the company.  In the classic retailer – contractor relationship, typified by the number of contractors Donna Karan utilizes, plus the share of production of each contractor, the company dominates all aspects of the relationship, including prices, and has considerable influence on the contractor.

Donna Karan is like many retailers who have deliberately moved overseas to areas where labor law enforcement is lax and human rights abuses are common.  Close to 60% of Donna Karan's production is contracted to Asian facilities and about 20% is contracted to European factories.  Only about 20 to 22% of Donna Karan Inc.'s production is subcontracted to U.S. contractors.³¹  Even within the U.S., the company's garments have been produced in sweatshops in NYC and the Northern Marinara Islands, a protectorate of the U.S., where sweatshop abuses are rampant and labor law enforcement nearly non-existent.  Earlier this year, Donna Karan International was among several major apparel manufacturers to settle a class-action lawsuit brought against them by garment workers in Saipan.³²

A few NYC garment workers have come forward this year to expose sweatshop conditions typical of the sub-contracting system, while stitching exclusively for Donna Karan International in mid-Manhattan factories.

B. The Choe factories

Chung Suk Choe operated the Choe factories in Manhattan's fashion district at 330 West 38^th Street, 6^th Floor. The contractor stitched exclusively for Donna Karan International, Incorporated.  The workers, about 70 Chinese and Latina women, sewed high-end evening gowns, jackets and coats for 9 to 11 hours a day, six-days per week, under extremely oppressive conditions.  Despite the fact that the factories were unionized, with Local 89-22-1 of UNITE, the workers were never paid overtime.  They were not allowed to use the phone or receive calls, even during emergencies, or go to the bathroom unless they had finished stitching their quota.  They faced a constant barrage of verbal harassment from the supervisors to stitch faster and were forbidden from looking up.  When one of the workers stood up to challenge the conditions after enduring them for seven years, she was fired.

Although with assistance from members of a NYC community-based organization, the Chinese Staff and Workers Association (CSWA), this worker managed to fight successfully against the contractor for overtime wages and was eventually reinstated, six weeks later she was fired again because the contractor claimed that there was no work available.  However, the contractor changed the name of the factory and continued to stitch for Donna Karan.  When the worker returned in February 1999 to collect her W-2 form she noticed that most of the old employees were still there and when she inquired "Why is it that other people have work, but I don't?" she was told to get out³³.  She retained a lawyer who filed a suit against the contractor.  Subsequently, the contractor shut down all operations and is suspected to have left the U.S.  The Local 89-22-1 chapter of UNITE has not supported the worker and other workers who lost their jobs in their efforts to organize and to hold the retailer-manufacturer and the contractor accountable.

C. Study Design³⁴

A total of eight workers, including the worker who was fired, reinstated and fired again, have come forward to expose the brutal conditions they were forced to endure in the Choe factories, stitching garments for Donna Karan. The Center for Economic and Social Rights in collaboration with CSWA designed a questionnaire to examine work conditions, health problems, and home lives of garment workers.  The questionnaire, translated into Spanish and Cantonese, was used to interview five Latina workers and one Chinese worker who had worked until recently at the Choe factories.  We were unable to interview a former supervisor and a worker who is in a shelter with her 11-month-old epileptic infant.

Of the six workers who were interviewed, three are currently working in different factories that are worse or as bad as the Choe factories.  Of the three who are unemployed, two were pregnant at the time of the interview.  The five who are not working are on unemployment, which was about to run out at the time of the interview.

D. Study Population

Of the six women who were interviewed, five are of Latin American origin and one emigrated from Hong Kong.  Most have been in the U.S. for more than ten years and are legal residents.  Three of the six had worked for the Choe factories stitching Donna Karan clothing for more than 10 years; two others worked for over six years and one for 4 years.  During these years they had held various jobs such as pressers, machine operators and seamstresses (i.e. stitching by hand).  The workers' ages range from 31 to 48 years, and earnings ranged from to per hour for a 57 to 66 hour workweek.

E. Study Results: Conditions in the Choe factories

The main results of the study are summarized on the following page.  The Choe factories were unionized and five of the six workers were aware of that fact.  They had all spoken with their union representative at some point during their tenure. They had difficulty communicating with the union representative and none of them had ever seen the union contract.  While some felt that the communication problems with union representatives might have been due to a language barrier, others did not find the representative accessible or approachable.  All six workers reported regular visits from a Donna Karan representative who came to the factories every day to check on the garments being produced for Donna Karan.

Workers reported that unpaid holidays were a major benefit of belonging to the union, even though they were not paid for the days they did not work.  One worker reported health insurance as a benefit she received through the union, but she qualified her answer by adding that she had to pay 0 per month for it.  The other union members did not pay for the union health plan and were either on Medicaid or did not have health insurance.

The workers received no benefits such as sick days, paid vacation, paid holidays or maternity leave from their unionized factories.  They all reported that taking a sick day or maternity leave could jeopardize their job since the boss and supervisors would scream at them and threaten to fire them on the spot.

All six women reported working a minimum of 9 to 10 hours per day and an average of 11 hours per day for 0 to 0 per week.  On Saturdays, they worked 7 to 8 hours.  They were allowed one half-hour for lunch at 12:30 p.m. and another 10-minute break at 3 p.m. While the physical conditions, such as ventilation, lighting, emergency exits and temperature control, for the most part were considered adequate, constant monitoring via surveillance cameras, restrictions on bathroom use and telephone use, and the constant harassment by supervisors to work faster made the factories seem like a prison.  Air conditioning or fans were available during the week, but not on Saturdays or holidays.  The provision of heat was similar.  Three workers felt that the lighting was adequate but the other three reported poor lighting.  Since the floor space was large and accommodated various tasks, the condition of lighting changed from area to area.  Although there were informational posters on the floor, they were in English and most of the workers were unable to read them.  There was a separate room with a large table for lunch.  All workers brought their own lunch and water since the water fountain did not work.  There was a kitchen, but it was only accessible to the owner and the supervisors.

All six workers reported that the contractor deducted some amount from their paychecks.  Two of the six reported a deduction of five percent.  The paychecks ranged from 0 to 0 per week, and the Latina workers were paid less than the Chinese workers were paid for the same job.  According to one of the workers, who had been at one of the Choe factories for 12 years, the contractor paid workers in cash for the first six years, then switched to a combination of cash and check, and had paid by check only for the last six months (after workers had been interviewed by the Department of Labor).

SUMMARY FINDINGS

The workers were asked to identify and rank the problems they faced at the workplace.  They all identified telephone and bathroom restrictions and supervisor harassment as the worst problems.  Supervisors screamed at them constantly to work faster and forbade them from looking up.  Bathrooms were locked and workers could not use them unless they had finished their quota of garments.  Since these workers were paid by the hour, the contractor intensified the pace of work through abusive supervision, restrictions and surveillance.  Workers were not allowed to make or receive telephone calls even during emergencies without facing threats of being fired.  One worker with a very sick child felt that this restriction was very isolating and in effect completely cut off the workers from their families.  All these conditions were dehumanizing and made some workers feel like slaves.

Verbal harassment was a constant feature of work.  There were 4 to 5 supervisors on the floor and they would yell at workers to stitch faster and to keep their heads down.  The supervisors screamed at the workers if they received a phone call or needed to go to the bathroom.  All workers reported feeling stressed and anxious during work hours.  They also reported experiencing immense anxiety if they were late for work or had to ask to for time off of work, even though they were not paid during that time.

In terms of health problems, all workers suffered from neck-ache, backache, shoulder-ache, and other work-related pains in the buttocks and legs, on a frequent basis.  They all reported taking over-the-counter painkillers for their pain.  They also reported that their general condition and monotonous daily toil resulted in several days of depression during the month.

Five of the six workers had young children and the sixth worker had sent her children back to her country of origin.  These mothers felt that they did not have sufficient time to spend with their children or to engage in leisure activities.  Most also expressed some difficulty in obtaining regular childcare and relied on daycare, baby-sitters, or a family member to look after young children.  They felt that it was very difficult to ask for time off in case of emergencies such as family illnesses, since the likelihood of losing their job was very high.  They would therefore rarely ask for time off and, whenever possible, schedule doctors' appointments on Sundays.

F. The Sweatshop System at Work

Donna Karan International behaves like a classic manufacturer in the garment industry by using the sub-contracting system to exploit workers in order to produce high quality garments at low wages but refusing to accept responsibility for conditions. The company, Donna Karan International, denies responsibility for conditions even though it had a very close relationship with the contractor of the Choe factories and admits as much in public documents: "The company has had long-term relationships with many of its contractors" and "the production and sourcing staff in New York oversees all aspects of…apparel manufacturing, quality control, and production."³⁵ In fact, company representatives visited the Choe factories daily and could not have been unaware of all conditions in the factories. Thus, in this instance, Donna Karan International cannot plead ignorance of workers' rights abuses that took place at the Choe factories.

Donna Karan International's responsibility in perpetuating sweatshop conditions is further evident in the table below, which illustrates how much more Donna Karan – and now CEO John Idol – earn compared to the workers at the Choe factories.  For instance, a worker in the Choe factories (making on average 0 per week) would have had to work about 200 years to make what Donna Karan made in 1995 alone!  (See Table 1 below for details.)

Table 1.  Annual Compensation Comparisons by Year

*Does not include payments for licensing agreement for using the Donna Karan trademark, which Donna Karan owns.

** Worker's average annual salary is calculated as 0/week for a 52-year week.

***Includes dollar value of stock award for 1997; does not include stock options for Idol for 1997 and 1998.

The eight workers who are fighting for back-wages, including overtime wages over the past several years, are owed around 0,000 to 0,000 in contrast to the .3 million that Donna Karan and her husband received between 1995 and 1998 alone. Furthermore, even though the company was making losses in 1995 and 1996, Donna Karan and her husband made millions in both of those years.³⁶

Although mere compensation comparisons do not reflect other aspects of the sub-contracting system, such as the harassment, abuse and dehumanizing conditions workers must tolerate, the huge disparity in what workers are paid versus what CEO's and chief designers are paid highlights why these conditions exist.