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By Workers rights Consortium.

WRC Report re Gokaldas 06.22.15

I. Executive Summary The tragic death of the two-year-son of a woman garment worker while in the care of an employer-run nursery in a garment factory in Bangalore, India, has raised concerns regarding safety conditions in onsite childcare facilities in the country’s export apparel manufacturing sector. These concerns arose after a WRC investigation of the death in July 2014 of a garment worker’s child in the care of the Gokaldas India factory in Bangalore found violations of regulations regarding staff qualification and equipment for onsite childcare and emergency medical facilities that major garment factories are required by state law to provide. 1 This tragedy is of particular concern not only on account of the worker’s loss and the failure of the factory to comply with applicable safety laws governing such facilities, but also because the facility in question is operated by India’s largest garment manufacturer and supplies two of the world’s leading athletic apparel companies. Gokaldas Exports, Ltd., whose factory in Bangalore, called Gokaldas India, was the site of this tragedy, employs more than 32,000 workers in the country.2 The Gokaldas India factory supplies adidas and Puma, and the company’s other factories in the country supply such brands as Columbia, Nike, Gap, H&M, Levi’s, and Marks and Spencer.3 Gokaldas Exports is owned by the US private equity firm, Blackstone Group, L.P., which recorded more than $4.3 billion in profits in 2014.4 While the factory where this tragedy occurred is not a supplier of collegiate licensed apparel, the incident raises concerns that similar noncompliance may exist in other factories in Bangalore, and elsewhere in India that have been disclosed as manufacturing university goods. For this reason it is important that the violations that have been identified at Gokaldas India in relation to this tragedy be thoroughly remedied to set a standard of good safety practice in this area for other factories providing onsite nursery and emergency medical facilities for employees and their children. While the ultimate cause of the child’s death appears related to respiratory causes, there are strong indications that the emergency treatment he received while in the factory’s care was deficient in multiple aspects – all of which appear to be related to the company’s failure to meet legally required standards — and that these deficiencies likely contributed to the tragic outcome. The specific legal standards with which the WRC found that the Gokaldas India factory failed to comply are state laws requiring that factories with more than 500 workers maintain: (1) an emergency medical clinic staffed fulltime by a licensed medical doctor, (2) a medical ambulance for transporting victims of serious accident or illness, and (3) an onsite nursery for employee’s children that is under the direction of a caregiver with prior pediatric healthcare training These requirements may appear excessive in the North American context, where childcare providers undergo state licensing and where emergency medical care is typically available on an urgent basis from public safety authorities, but in India, public oversight of such services is more limited, and response times for emergency services can be much longer. This is why, in India and many other major garment-exporting countries, local laws often obligate factories to provide such care and services themselves, and provide detailed standards for how this is to be done. In this case, there is strong reason to believe that, if Gokaldas Exports had complied with the legal requirements, the death of the employee’s child might well have been avoided. The child first fell unconscious in the factory’s nursery facility which was under the supervision of a caregiver who – in violation of state laws6 – lacked any training in nursing or pediatric healthcare. The child was then taken to the factory’s first aid clinic which, rather than being staffed by a medical doctor, as the law required,7 had on duty a single nurse – who, to make matters worse, lacked legally required credentials. Furthermore, although state laws required that the factory maintain an ambulance on the premises for use in emergencies (in order to provide emergency care enroute to hospitals),8 none had been provided, so the child was taken from the factory in a manager’s private car – in which he did not receive any care while being transported. Finally, despite the fact that a government hospital that is well-equipped to deal with pediatric emergencies was only two kilometers (1.25 miles) away, the child – while in the care of the unqualified factory nurse – was first taken to two less-equipped private healthcare centers. These facilities both refused to admit the child and he ended up being taken to a hospital nearly 30 kilometers (19 miles) distant, where he was found to be dead upon arrival. A subsequent autopsy determined the cause of the child’s death to be pulmonary edema – death by accumulation of fluid in the lungs. After completing a preliminary investigation in September 2014, the WRC contacted Gokaldas Exports, as well as its business partners, adidas and Puma, and recommended that the deficiencies identified in the company’s facilities for onsite childcare and emergency medical care be corrected, and that the worker who is the mother of the child who died in the company’s care receive adequate compensation (so far she has been given roughly US$2,400, about two years’ wages). Gokaldas, for its part, responded to the WRC with letters from its attorney denying the deficiencies, refusing to provide additional assistance to the mother, and suggesting that the worker, herself, was at fault in her son’s death, implying that she knowingly placed an ill child in the factory’s care.9 The WRC also wrote to those university licensees that have disclosed factories in Bangalore as among their current or recent suppliers of collegiate goods – Bruzer, Columbia Sportswear and its business partner, Outdoor Custom Sportswear, Cutter and Buck, and Glory Haus – requesting that they confirm that these facilities comply with the relevant legal requirements with regard to employer-run onsite nurseries and emergency medical care. Two of these licensees, Bruzer and Cutter and Buck, indicated that they no longer purchase apparel from factories in the Bangalore area. Glory Haus, for its part, indicated that its supplier in the area is a small factory that is not covered by the legal requirement to provide onsite childcare. Columbia and Outdoor Custom, however, indicated that they would review these requirements with their suppliers and ensure compliance. With respect to the companies doing business with Gokaldas India, the factory in whose care the worker’s child died, adidas and Puma indicated that the incident and the factory’s compliance with relevant laws governing workplace childcare and medical facilities would be investigated by the Fair Labor Association under that organization’s third-party complaint procedure. As discussed below, the FLA’s report of its investigation subsequently confirmed many of the WRC’s previous findings with respect to the factory’s failure to comply with relevant laws governing onsite childcare and emergency medical facilities.10 The FLA’s investigation also found, and the WRC’s own research confirmed, that, following the issuance of the WRC’s original findings, the factory, in fact, had corrected a number of the incidences of noncompliance with relevant legal standards.11 The FLA’s report, however, which it shared in advance with the WRC, did not issue recommendations that would correct two key issues: (1) the inadequacy of the compensation paid by the factory to the worker for the loss of her child; and (2) the lack of a legally qualified caregiver in charge of the factory‘s childcare center. With respect to the lack of qualifications of the persons overseeing the onsite childcare center, as discussed below, the FLA noted that adidas and Gokaldas Exports had agreed upon a corrective action plan that included obtaining additional training for the existing caregivers. 12 But since the legal requirement specifies a minimum of 18 months’ training, that corrective action plan could leave employees’ children in the care of a person lacking legally required qualifications for an extensive period of time. The WRC continues to recommend that Gokaldas Exports immediately hire a person with the requisite qualifications to oversee its onsite nursery. With respect to the lack of adequate compensation for the worker whose child died in the factory’s care, after the WRC pointed out to the FLA the absence of any recommendation concerning this issue, the FLA amended its report to recommend that adidas “engage a recognized independent actuary or forensic economist to review the adequacy of the amount of compensation paid by the factory to the family of the deceased child.”13 The WRC is concerned, however, that the approach the FLA has adopted is inconsistent with an independent assessment of the issue. In particular, there is a conflict of interest inherent in having adidas choose and pay an actuary or economist, no matter how formally independent, to perform this analysis, since any additional compensation would presumably be paid by adidas’ business partner, Gokaldas, or adidas, itself. Moreover, the inadequacy of the compensation Gokaldas has paid so far to the worker whose child died in its care – $2,400 or only roughly 2 years’ wages for the worker – is readily apparent. In the program set up to assist the families of the victims of the Rana Plaza disaster, the compensation being paid for the same type of loss – death of a family member – has been set, based upon international labor standards, local wage rates and current life expectancies, at roughly $30,000.14 While average life expectancy is 10% shorter in India than it is in Bangladesh, 15 wages for garment workers in India have tended to be significantly higher,16 so compensation for the bereaved mother in this case should be somewhat higher, as well – not many times lower, as seems to be Gokaldas and adidas’ position. This is all the more true since, in the case of the brands that have funded the Rana Plaza compensation program, those firms were not, themselves, violating relevant safety laws when those fatalities occurred. By contrast, in this case, Gokaldas’ management was breaking relevant safety laws when the worker’s child died in its care. As this report discusses, the WRC continues to recommend that the worker in question receive additional compensation for her loss from Gokaldas and the multi-billion dollar private equity firm that is its owner – or from the brands and retailers whose codes of conduct were supposed to ensure that the factory complied with local labor laws. The WRC estimates that reasonable compensation in this case is US$40,000. The WRC also continues to recommend that both Gokaldas Exports and other garment manufacturers operating in the Bangalore area, as well as those brands, retailers and licensees with which they do business, ensure that factories that are legally required to provide onsite childcare and emergency medical care do so in accordance with the standards established under relevant laws. Such measures, if taken, should greatly reduce the likelihood of future tragedies of this kind. The following report discusses: (a) The methodology of the WRC’s investigation; (b) The WRC’s factual findings concerning the death of the workers’ child while in the factory’s care; (c) The instances of noncompliance with legal and code of conduct requirements that the WRC’s investigation identified; (d) The relationship of these legal and code of conduct violations to the child’s death; (e) The recommendations of the WRC to the factory’s owners, Gokaldas Exports, and its buyers, adidas and Puma, as well as other brands, retailers and licensees doing business with other garment factories owned by Gokaldas Exports and other garment manufacturers in the Bangalore area; and (f) The responses to date of Gokaldas Exports, adidas and other brands, retailers and licensees to the WRC’s findings and recommendations. The report concludes by discussing the WRC’s continuing recommendations in this case, both those specific to Gokaldas Exports – concerning compensation that must be paid to the worker whose child died in the company’s care and compliance with legal requirements at the factory where this tragedy occurred – and those that apply, more generally, to garment manufacturers operating in the Bangalore area concerning provision of onsite childcare and emergency medical care. II. Methodology The WRC’s factual findings and recommendations, as presented in this report, are based on the following sources of evidence:  Interviews conducted by the WRC India representative and/or by a local physician, Dr. Sylvia Karpagam, who was commissioned by the WRC to assist with the inquiry, with the following persons: o Yashodamma, the female worker whose child died in the factory’s care; o Fourteen other employees of the Gokaldas India factory, including other workers who bring children to the onsite childcare facility; o Representatives of a Bangalore area labor organization whose members include workers employed at the factory, the Garment and Textile Workers Union (GATWU); o Medical officer at the local government hospital in Gorgantepalya, which is the nearest full-fledged hospital to the Gokaldas India factory; and o A local physician, Dr. Bobby Joseph, who was commissioned by the FLA to conduct an inquiry into the death of the worker’s child.  Review of relevant documents, including: o Autopsy report of the deceased child and other documents related to his death; o Letters to the WRC from Gokaldas Exports’ outside legal counsel, Attorney S.N. Murthy, dated October 15, 2014 and January 16, 2015; o Report prepared for the WRC by Dr. Karpagam concerning her investigation; o Report prepared for the FLA by Dr. Joseph, and the FLA’s report of its inquiry; o Relevant state laws and vendor codes of conduct of major apparel brands and retailers. It should be noted that the WRC offered on multiple occasions in the course of its investigation to meet with representatives of Gokaldas Exports. The company declined these offers. Therefore, the WRC accepts the written communications of the company’s attorney and the reported statements of company managers as representing the company’s position on the issues discussed herein.


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