American Apparel Sets Layoffs Tied To Probe

American Apparel Sets Layoffs Tied to Probe

By Miriam Jordan
The Wall Street Journal, September 4, 2009

Hip clothing maker American Apparel Inc. will lay off more than a quarter of its factory work force in Los Angeles amid a probe by U.S. immigration authorities — an early indication of how the Obama administration crackdown on employers of illegal immigrants could play out.

In early July, the company announced that it had been notified by U.S. Immigration and Customs Enforcement, or ICE, that 1,600 of it is 5,600 factory employees, who are largely Hispanic immigrants, might be in the U.S. illegally. An American Apparel spokeswoman said that about 1,500 workers would be terminated in coming weeks.

In a letter to employees in English and Spanish, Chief Executive Dov Charney said he was 'deeply saddened' that the company has to shed workers who have been at the company for several years.

Mr. Charney, a champion of immigration reform, promised to give the workers priority for jobs when 'you are able to get your immigration papers in order.'

Virginia Kice, an ICE spokeswoman, declined to comment on the American Apparel dismissals. She said that whenever the agency conducts an audit, 'we get back to the company with specific documents about individuals working without employment authorization. It is incumbent upon the employer to determine the appropriate next steps.'

On July 1, Department of Homeland Security chief Janet Napolitano announced that ICE, a unit of her agency, had begun audits of 652 companies as part of a new strategy to focus immigration enforcement on employers. That number has since grown, according to ICE officials. By specifically targeting employers, the agency is reversing its tactics during the Bush administration, when it relied on high-profile raids at factories. The raids rounded up hundreds of workers but rarely resulted in penalties for the companies.

American Apparel is likely to face thousands of dollars in penalties for hiring workers who weren't eligible to be employed. The government has said fines may exceed $800 per employee.

Companies that employ low-skilled workers in agriculture, manufacturing and hospitality have been bracing for the crackdown, saying they have no way to ascertain whether the identification presented by workers to secure jobs is authentic.

As of Sept. 8, all federal contractors will need to use an electronic system known as E-verify to determine the employment eligibility of new hires and the validity of their Social Security numbers. Critics say the system is imperfect and encourages racial profiling.