COMPANY SETTLES CLAIMS RELATED TO PROPER REPORTING OF HARMFUL PRODUCT

FROM:  U.S. JUSTICE DEPARTMENT 
Wednesday, December 31, 2014
Manufacturer Fiskars Brands Inc. Agrees to Pay $2.6 Million Civil Penalty for Delay in Reporting “Gator Combo Axe” Safety Hazard

The Department of Justice has announced today that Gerber Legendary Blades, a division of Fiskars Brands Inc., of Madison, Wisconsin, has agreed to pay a civil penalty of $2.6 million to settle allegations that it knowingly failed to immediately report to the U.S. Consumer Product Safety Commission (CPSC) a safety hazard associated with Fiskars’ Gator Combo Axe.  Fiskars has also agreed to establish and maintain a compliance program with internal recordkeeping and monitoring systems to keep track of information about product safety hazards.  The settlement agreement is awaiting judicial approval.

“Fiskars received numerous reports from consumers who were harmed by this product,” said Acting Assistant Attorney General Joyce R. Branda for the Justice Department’s Civil Division.  “The company had an obligation to immediately report to the CPSC and it failed to do so.  We will take action against those who fail to abide by the law so that our partners at the CPSC can protect consumers from injuries.”

The Axe was a combination product that had a knife embedded in its handle that was supposed to be secured by two small magnets.  In a complaint filed on behalf of the CPSC in U.S. District Court for the District of Oregon, the United States alleged that Fiskars became aware that the knife in the Axe handle could and did dislodge from the Axe’s handle when the Axe was in use, causing serious injuries to consumers.  Fiskars imported approximately 103,000 Axes from Taiwan through its Gerber Legendary Blades division in Portland, and distributed those Axes to retail sporting good chains and stores throughout the United States.

“CPSC’s job is to protect consumers,” said Chairman Elliot F. Kaye. “The sooner a firm informs CPSC about incidents or injuries with defective products, the quicker we can act to protect the American public. Failure to report in a timely basis is not only illegal, it can endanger consumer safety. We will not tolerate such irresponsible and dangerous behavior.”

Under the Consumer Product Safety Act (CPSA), manufacturers, distributors and retailers are required to report product hazards to the CPSC.  A knowing violation of the CPSA subjects a firm to civil penalties.  The United States alleged that beginning as early as 2005 and continuing over the next several years, Fiskars received consumer complaints and warranty claims indicating that the knife fell out of the Axe handle while the Axe was being used to chop, pound or hammer.  In several instances, the knife dislodged from the handle during use and caused injuries including lacerations requiring stitches, permanent nerve damage and surgery to repair severed tendons.

“In this case, Fiskar's failure to report to the CPSC not only put consumers at risk, it contributed to people being injured as a result of the unsafe product design,” said U.S. Attorney S. Amanda Marshall for the District of Oregon.  “The settlement not only addresses the product safety issue, but also holds the company accountable and sends a message to others that these violations will be taken seriously.”

In March 2011, Gerber and the CPSC announced a voluntary recall of the Axe.  At that time, consumers were advised to remove the knife from the axe handle and contact Gerber to receive a free handle cap for holding the knife in the axe handle during transport and storage, instructions and a warning label.  Information on the recall can be found on the CSPC website.

The matter is being handled by Trial Attorney Roger Gural of the Civil Division’s Consumer Protection Branch, Assistant U.S. Attorney Neil J. Evans for the District of Oregon and Harriet Kerwin of the CPSC Office of the General Counsel.

In agreeing to settle this matter, Fiskars has not admitted that it knowingly violated the CPSA

U.S. DEPARTMENT OF LABOR FINDS VIOLATIONS OF LAW AT LOS ANGELES FASHION DISTRICT LOCATION



Credit:  Wikmedia Commons. 

FROM: U.S. DEPARTMENT OF LABOR

Extensive violations of federal, state laws found among garment contractors at Los Angeles Fashion District location

Shops producing garments sold by major retailers underpaid 185 workers by $326,000

LOS ANGELES — The U.S. Department of Labor's Wage and Hour Division and the California Division of Labor Standards Enforcement found serious violations of federal and state labor laws by each of 10 garment contractors inspected during a sweep of a single building in the Los Angeles Fashion District earlier this year. Division investigators found widespread violations of the Fair Labor Standards Act's minimum wage, overtime and record-keeping provisions, resulting in the recovery of more than $326,200 in back wages for 185 employees.

The garments being produced by violators were destined for sale at more than 30 retailers nationwide, including Aldo Group Inc., Burlington Coat Factory Warehouse Corp., Charlotte Russe Holding Inc., Dillard's Inc., Forever 21 Inc., Frasier Clothing Co. (Susan Lawrence), HSN Inc. (Home Shopping Network), Rainbow Apparel Inc., Ross Stores Inc., TJX Cos. Inc. (TJ Maxx and Marshall's), Urban Outfitters Inc. and Wet Seal Inc.

"The extent of the violations discovered by these investigations was disappointing. Retailers need to actively ensure that clothes produced in the U.S. for sale to the American public are made by workers who are paid at least the U.S. minimum wage and proper overtime," said Secretary of Labor Hilda L. Solis. "Federal, state, local and industry stakeholders can work together to foster a vibrant, and compliant, domestic fashion industry."

"The garment industry is a vital part of the economy of Los Angeles and California," said Julie Su, California's labor commissioner. "State law prohibits garment manufacturers from operating without a proper license, from violating state minimum wage and overtime laws, and from playing shell games to avoid paying workers properly. We are intent on making sure that sweatshop practices are eliminated so that consumers can proudly purchase garments made in L.A., honest companies can compete and garment workers can thrive."

Teams of federal and state investigators conducted unannounced investigations of employers operating out a large garment building at 830 S. Hill St. in downtown Los Angeles, where previous investigations had revealed significant labor violations and sweatshop-like employment conditions.

Investigators found many garment employees were paid a piece rate — that is, paid for each piece they sewed or cut —without regard to minimum wage or overtime pay requirements. On average, workers' wages amounted to less than $6.50 per hour — well below the federal minimum wage of $7.25 per hour and the California minimum wage of $8 per hour. None of these employees received the overtime premium of time and one-half their regular rates of pay for hours worked over 40 per week, as required under the FLSA. Significant record-keeping violations also were disclosed, including falsified time cards and under-reporting or failing to maintain accurate records of actual hours worked by garment employees.

The "hot goods" provision of the FLSA prohibits the shipment in interstate commerce of goods that were produced in violation of the act's minimum wage, overtime or child labor provisions. Upon determining that garments were produced in violation of the FLSA, the division requested that the garment contractors voluntarily not ship the goods until the violations were resolved. Several manufacturers, for whom the violators were producing goods, paid a portion of the back wages due, after which the division lifted its objection to the shipment of the goods.

State investigators issued citations to three establishments not registered as garment contractors and cited the shops for failing to provide itemized deductions, pay the state minimum wage or comply with state overtime pay requirements.

The investigations conducted at this location are part of the Wage and Hour Division's multi-year enforcement initiative focused on Southern California's garment industry, in which it historically has found consistent and widespread violations of the FLSA's minimum wage, overtime and record-keeping provisions. The initiative is concentrating on employers in Los Angeles and Orange counties, including those operating out of large garment buildings in the city's Fashion District.

The FLSA requires that covered employees be paid at least the federal minimum wage of $7.25 per hour as well as time and one-half their regular rates for hours worked over 40 per week. In general, "hours worked" includes all time an employee must be on duty, or on the employer's premises or at any other prescribed place of work, from the beginning of the first principal work activity to the end of the last principal activity of the workday. Additionally, the law requires that accurate records of employees' wages, hours and other conditions of employment be maintained. California's minimum wage is $8 per hour, higher than the U.S. minimum wage, and overtime pay is required after eight hours worked in a day under state law. California employers are subject to both standards.