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The following findings are organized under the headings from LCI's Standards of Engagement. (See Appendix 1). They arise from COVERCO's monitoring and verification program and cover the period from November 2, 1998 to July 31, 1999.


A.1 COVERCO has found no evidence of any use of forced labor, be it prison labor, indentured, bonded or otherwise.


B.1 There have been no reported cases of workers younger than 15 years of age.

B.2 Guatemalan labor laws state that minors under 18 years of age cannot work overtime. However, COVERCO has discovered violations where minors under 18 years of age feel strongly pressured to work overtime. Following our reporting on this situation, the factory has agreed to consider setting up a two-shift system to accommodate current workers who are under 18 years of age. The factory is also considering hiring only workers 18 years or older in the future. At present there continues to be pressure on young workers to work overtime.

COVERCO received 54 complaints from young workers who claimed they were pressured into working overtime.

B.3 Current shift arrangements prevent young workers from pursuing education during weekday evenings or on weekends. In response to our reports the factory has agreed to consider changing the hours of work to allow these workers adequate time to pursue studies. One option under discussion is the possibility of the factory developing a separate production line if there are sufficient numbers of workers who wish to study and cannot work overtime.

COVERCO received 42 complaints from young workers who claimed they wish to study and cannot work overtime.


C.1 One morning, Mrs. “X”, a worker at the factory who was pregnant, was found to be in serious condition. She advised her line supervisor she was in pain. The line supervisor advised her to sit at her work station and rest. Mrs. "X"'s pain got progressively worse. When she and her line supervisor requested permission to leave, management did not allow it immediately. From the time Mrs. "X" first complained to her line supervisor to the time she left the factory to receive medical attention, almost five hours passed. Shortly after noon on the day of the incident, Mrs. "X"'s husband took her to the Social Security hospital in Guatemala City . The child she was carrying was stillborn early the next morning.

About ten days before this incident, Mrs. "X" had visited the local Social Security clinic where the medical personnel refused to recommend that she be given leave for a high risk pregnancy. Dissatisfied with this result, the next day Mrs. "X" visited a private clinic. There the physician provided her with a written diagnosis describing the high risk nature of her pregnancy. Mrs. "X" promptly gave this document to management who introduced it into her file.

In COVERCO´s discussions with factory management following this incident they agreed that their lines of command and grievance procedures would be clarified. This has been completed.

Factory management also agreed to send a letter to all workers referring indirectly to the incident and setting out new emergency and grievance procedures. This did not happen. However, information about procedures in case of medical emergencies has been posted in visible places in the factory.

The factory also offered to install an infirmary and a medically trained nurse. A rudimentary infirmary has been set up staffed by a full-time nurse's aide.

The manager who refused permission to Mrs. "X" to seek immediate medical attention resigned from the factory. Senior management did not take any disciplinary action against the Personnel Manager.

The worker in question is currently on medical leave and is scheduled to return to work in mid-August. In a future report, COVERCO will document her reinsertion into the workforce.

C.2 On 25 January, 15 workers left the production line complaining of an ongoing problem of forced overtime. (See Finding H.1). On 26 January five of these workers claimed they signed resignation letters under duress. One of the workers claimed that the Personnel Manager forced her to sign by intimidating her verbally and grabbing her arm. The factory claims that the workers resigned voluntarily and paid them the full severance package. The factory also claims that the Personnel Manager grabbed the worker's arm to secure her thumbprint on a receipt for her severance pay. LCI encouraged the factory to reinstate the workers. To our knowledge the factory management has not responded to LCI's suggestion. Subsequently the five workers have indicated to COVERCO that they do not wish to return to the factory.


D.1 Mayan workers who wear traditional clothing reported a lack of advancement opportunities. They also complained of racial slurs. The factory has denied this. On our monitoring visits we have noted that there appear to be no line supervisors or assistant line supervisors who wear traditional Mayan dress.

COVERCO received 8 complaints from Mayan workers who claimed they had been the object of discrimination.

E.1 See the case of Mrs. “X” mentioned above.

E.2 The two factory units have two types of emergency exits: some are rolling steel curtains, others are regular doors. In repeated monitoring visits we found both types were locked. When our monitor pointed out this violation to factory management, they responded that they kept the doors closed due to fear of theft or inclement weather. Nevertheless, factory management agreed to keep the rolling steel curtains slightly open and the other doors unlocked. After receiving these assurances, our monitor still found the steel curtains completely closed during an unannounced visit.

LCI intervened on several occasions to correct this problem, including raising the issue with the President of the factory. Since our joint meeting with the President of the factory in June, this problem has been resolved: now the normal doors are kept unlocked and the steel curtains are kept partially open.

E.3 While a diagram that signals fire exits is posted in the factory, few procedures appear to exist to deal with emergencies such as fire or earthquake. The factory has promised to provide training to all workers on emergency procedures and to carry out simulations. The factory has not done this to date.

E.4 Supervisory personnel do not have basic first aid training. The nurse's aide and clinic were recently installed to respond to this need.

E.5 Our initial inspections indicate that there are an inadequate number of functioning toilets in relation to the number of workers in the factory. This is due, at least in part, to the fact that many toilets are out of service through disrepair. Guatemalan law stipulates the following regarding washroom facilities in the workplace:

•  one urinal is required for every 20 men;

•  one toilet for every 25 men for the first 100 workers;

•  one toilet for every 15 women for the first 100 workers;

•  after the first 100 workers, one toilet is required for every 30 of either sex;

•  one washbasin is required for every 26 workers.

The older factory unit serves about 550 workers, of whom about 80% are female. The newer unit serves about 350 workers, with the same gender proportion.

Our initial inspection found the following facilities:


Number on site
Number found to
be usable
Older Factory Unit
Men's washroom
Women's washroom
Newer factory unit
Men's washroom
Women's washroom
10 + 11 blocked off

According to our calculations there is a shortage of women's toilets in the Older Factory Unit. The letter of the law on this issue can be met if all the toilets, urinals and washbasins are fully functional.

Subsequently most of the unusable toilets were repaired and cleanliness improved. Later inspections indicate this remains an ongoing issue.

E.6 In addition to problems with the number of toilets, in the Older Factory Unit the existing toilets were in poor condition. They lacked the proper regular maintenance needed to keep them in service.

E.7 In the period covered by this report there was no evidence of any pattern of workers being prohibited from using bathroom facilities by management .

E.8 Nursing mothers have reported lack of compliance with their right to breast-feed their babies. According to Guatemalan law one hour daily must be given to nursing women for this purpose. If the factory does not provide this time they must let the women leave one hour earlier, with pay. If the women work the full shift, then one hour must be paid as overtime. The factory has not been able to show records proving compliance with the law.

COVERCO received 23 complaints from nursing mothers regarding this legally-mandated benefit. COVERCO has not been able to document how many nursing mothers are currently in the workforce.

E.9 COVERCO has received frequent complaints that permission to seek medical attention on company time at the IGSS (Social Security Hospital) has been refused. Recently the nurse's aide assumed the task of advising whether or not a worker requires medical assistance from IGSS. The final decision continues to be made by the worker's non-Guatemalan supervisor. Further monitoring is required since the nurse's aide has been in her job for less than a month.

COVERCO received 25 complaints from workers who claimed they were refused permission to seek medical attention on company time.


F.1 We have received no complaints about this provision of the Standards.


G.1 Administrative files are disorganized and are often misplaced. In some cases entire personnel files have been lost. The factory has promised to organize its files.

G.2 The majority of the workers do not have legal labor contracts with the factory as required by law. The factory has promised to prepare these documents.

G.3 When a worker resigns, Guatemalan law stipulates that they must provide a signed letter. In most instances this has not happened. The factory has agreed to revise their procedures and ensure that in the future they will have a signed letter of resignation when the severance package is paid. The factory has pointed out that when an employee abandons the job, they have no way of giving closure to the file with a signed letter.

G.4 There have been delays in paying the legally required severance package when workers resign. The factory has promised to pay relevant benefits and to pay within the legally required time period.

G.5 The factory normally pays production bonuses and other incentives in cash. Records of these cash payments have not been kept. The factory has informed COVERCO that accounting books have been bought to keep signed records of such payments. In cases where supervisors purchase perks for their lines the corresponding amounts and receipts will be entered into the books.

COVERCO received 14 complaints from workers concerned about how bonus funds have been administered by line supervisors.

G.6 Workers' files contain apparently contradictory signatures. As proposed by management, the standard reference will be the signature that appears on a worker's national identity card. In the case of minors who do not yet have a national identity card, the reference will be the signature that appears on the job application.

G.7 We have received complaints that wages are sometimes deducted for those who have received authorization to leave work to visit the Social Security Hospital. This would be illegal. The lack of proper payroll records has prevented full verification in this area.

COVERCO received 18 complaints from workers who claimed they received improper deductions for medical visits.

G.8 Our audit revealed that some new workers with prior experience are paid at a reduced “apprentice” rate. This rate can only legally be used for those who are true apprentices (i.e. those without prior experience in using the machinery required in the factory). True apprentices must be paid the full minimum wage upon completion of their apprenticeship.

In addition, the law permits a two month probationary period to test the competency of an experienced worker, but the full minimum wage, not the apprentice wage, must be paid during this time. At the end of the two months the factory has the right to hire the worker on a permanent basis or to dismiss the worker without prejudice.

The factory has agreed to address this issue.

G.9 Personnel files were too disorganized to be able to determine whether vacation payments had been made according to the law. The factory has promised to organize files so that vacation pay can be monitored.

G.10 Holidays and Time Off – Workers have the right to time off as stipulated by law, including Mother's Day for mothers. The factory claims that mothers who worked on that day were paid an extra day. COVERCO is still in the process of verifying if all the mothers who worked on that day were paid.

G.11 Guatemalan law permits factories to employ complex bonus systems. Although the system currently in place at the factory is in the process of being duly registered with the Ministry of Labor, its implementation has caused much confusion among the workers. Many complaints center around the calculation of bonuses, penalties for tardiness and absence and so on. To help resolve this issue, COVERCO put the factory management in contact with a local design team to develop an easy-to-understand leaflet setting out these polices.

COVERCO received 40 complaints from workers who claimed their pay had been docked because of tardiness.

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