Filipinos threaten lawsuit on behalf of employee discrimination
American Apparel Inc. is in deep water.
The struggling retail store, in operation since 1989, is laying off workers and closing some of its chain stores as part of an ongoing effort to turn things around.
American Apparel did not disclose the number of stores or jobs that will be cut. It also did not say whether the layoffs, which will take effect immediately, will hit employees at stores or at factories. The company currently employs about 10,000 workers worldwide, with some 4,600 manufacturing and office workers based in Southern California.
“The company will streamline its workforce to reflect a smaller store footprint and general industry conditions,” American Apparel said in a statement on July 6.
New CEO Paula Schneider said the changes “are necessary steps to preserve jobs for the overwhelming majority of employees.”
“We are committed to turning this company around,” said Schneider in a statement.
Despite taking cost-effective measures, the retailer said it may still fall short of funding requirements for the next year without raising additional capital. It may also be unable to raise additional capital and meet sales goals, the company said.
American Apparel has been treading rocky waters after its board fired the company’s founder, Dov Charney, as chief executive and chairman.
The company said it is currently fending off about 20 lawsuits and other legal actions recently filed by Charney, who has been vigorously pursuing ways to reclaim the company. American Apparel’s factory headquarters in downtown Los Angeles’ Arts District has also been the site of several employee protests. Workers have been generally unhappy about the number of furloughs and reduced hours.
But American Apparel has indicated its determination to swim forward.
Last month, the company outlined a plan that included toning down the overt sexiness and suggestive undertones of the models being advertised. The clothing retailer, which had $609 million in revenue and 242 stores at the end of 2014, said it hoped to evolve into a business with $1 billion in annual sales.
On July 6, the company said it would debut a new fall line, part of its efforts to rejuvenate its apparel lines.
“Historically, the fall season has not been a major focus for the company,” said Schneider. “The new styles are designed to increase revenue as we continue to evolve our product offering during this important selling season.”
Angered Filipinos threaten discrimination lawsuit
At the end of last month, Schneider promised to meet with a non-profit Filipino American community organization, the West Bay Pilipino Multi Service Center, which threatened to go to court over founder Dov Charney’s alleged slurs against Filipino employees at American Apparel.
A new set of court documents washed up more of Charney’s abusive behavior as former CEO, which included allegations of sexual misconduct toward his models, mishandling of funds, and insulting and making derogatory statements at employees.
According to the documents, which were filed by current AA executives in response to his defamation lawsuit, Charney called his Filipino workers “pigs…with your faces in the trough.”
He also reportedly told Filipino staff that he would be their “Ferdinand Marcos,” ordering them what to do.
Charney was ousted as CEO of American Apparel in June 2014, almost 25 years after conceiving the brand when he was a college freshman at Tufts University.
In a statement, the retailer maintained its respect for employees:
“Respect for our employees is a core principle of American Apparel under Paula Schneider’s leadership. This is clear from proactive measures we have taken, including the adoption of our Code of Business Conduct and Ethics, which reflects our efforts to ensure that American Apparel’s workplaces are free from harassment, bullying, and intimidation, and which promotes fair treatment of employees,” it said.
“While we are pleased that your company took immediate steps to fire Mr. Charney, we are alarmed that it took so long to take this action, allowing Mr. Charney to participate in his blatant racism towards minorities, including Filipino Americans, in your company,” wrote Vivian Zalvidea Araullo, executive director of West Bay Pilipino Multi Service Center, to Schneider.
“We need input. This is one of the ways that American Apparel can make amends,” Araullo said on behalf of the San Francisco-based group.
Rodel Rodis, a legal counsel for West Bay, commented, “If Filipinos allow attacks like this, racial profiling attacks, to go unanswered, then it’s open season on other Filipino workers. So if we set the stage here and say there will be consequences to what you said about Filipinos, then that’s a shout across the board to other employers.”
The group is also calling on all Filipinos to boycott American Apparel products, and requesting that company executives, including Schneider, meet with them to discuss ethical practices.
(With reports from Los Angeles Times, Inquirer, Balitang America)
