A Bangladeshi factory that produces garments for The Gap and Old Navy kept two sets of books to conceal how it is coercing employees to perform 17-hour shifts every day of the week, a new report says, underlining the inability of clothing retailers to improve working conditions among their suppliers.
The report says management at the Next Collections Limited factory, which is owned by local business giant Ha-Meem Group, issued phony pay slips to cover up the fact that employees are forced to work twice as many hours.
The workers were paid cash, were often shortchanged on their overtime pay and were at their stations until 10 or 11 p.m., sometimes even up to 3 a.m. the next day.
"They were exhausted, skinny, dazed and with deep shadows under their bloodshot eyes. In nearly 30 years of interviewing workers across the developing world, we had never seen workers who looked so exhausted," said the report by the Institute for Global Labour and Human Rights.
The institute also reported that workers were physically abused and female employees who became pregnant were denied their legal paid leave and forced to quit.
The Pittsburgh-based NGO said that the hours listed in the bogus computer-generated pay stubs were contradicted by handwritten documents, such as night sign-off sheets, which record actual overtime and the food stipends issued to keep the employees working late.
"We received this report yesterday and are carefully reviewing it. If true, these allegations are in direct violation of Gap's contract with this vendor," Gap spokeswoman Laura Wilkinson said in an e-mailed statement.
She said Gap wants people who work for its supply chain to be treated "with fairness, dignity and respect."
One worker interviewed in the report, Morium Begum, an assistant button machine operator, said she lost her baby, seven months into her pregnancy. She was forced to work more than 14 hours a day, every day of the week.
Her pay stub said she had done 50 hours of overtime in June 2013 but in fact she worked 210 hours of extra time, the report said.
The Wall Street Journal, which was shown the report's findings before its release, said that on a recent Saturday night, bright fluorescent lights flickered well past 10 p.m. at the factory.
A manager told the Journal that the company had to meet production targets set by foreign clients.
"It is easy, because auditors and buyers never come around late at night to check these things," the factory manager said in an interview. "Sometimes, it is the only way to meet the orders on time."
The report said it was easy to fool retailers visiting the factory, which is located outside the capital, Dhaka, and employs 3,750 people.
Earlier this summer, the report said, "white foreigners" – buyers from Gap and Old Navy – visited the factory late in the morning of June 22.
A loudspeaker alerted the workers ahead of the visit. They were instructed to respond to questions by claiming that conditions were good and that they needed to do "just two hours of overtime a day."
The bathrooms had been cleaned and the workers handed masks and caps.
Gap monitors only spent 20 minutes per floor before going to the office to meet management, the report said.
"How easily Gap and Old Navy monitors have allowed themselves to be duped. A high school student would know better," the report said. "All you need to do would be to drive past the Next Collections facility, where the lights are always on as workers toil well into the night"
Ms. Wilkinson, the Gap spokeswoman, said her company regularly audits its suppliers' factories, including Next Collections.
"Half of our audits are unannounced and our team in Bangladesh includes local experts who are in regular communication with the workers."
Even though their overtime contributions are secretly entered in off-the-book records, the workers are routinely cheated of up to 15 per cent of their overtime wages, the report said.
Workers are paid on the seventh day of the month, when accountants set up several stations on each floor, the report said, describing how people were called one by one to receive cash along with a bogus pay slip.
"They receive no record of the actual amount of money they receive, but they are asked to sign a salary sheet, which is retained by the accountants and which, presumably, Gap and the other buyers never see," said the report, which was based on interviews conducted at a safe location near Dhaka.
One of the interview subjects, Taniya Begum, a 24-year-old sewing line supervisor, told the report's authors that she was told to resign when she became pregnant. She would have been owed the equivalent of $724 for a 112-day maternity leave.
"Do you think your father owns the factory? We will not keep you. You must resign and leave the factory immediately. I do not want to see you again," a manager yelled at her, the report said.
The report said that her husband, Mazharul Islam, who also worked at the factory, was beaten up, told to resign and forced to sign a blank sheet of paper.
"I thought they would kill me. I was all alone. Six or seven people were violently beating me with sticks. I was forced to sign the blank sheet. I put down my signature, despite the fact that they did not pay my salary for August and other dues," he said in the report.