Just Pay It: Nike Agrees to Start Fund for Laid-Off Honduran Workers

"Just Pay It" is what sportswear giant Nike (NKE) said it would do on Monday after it agreed to give $1.5 million to a relief fund for 1,800 workers who lost their jobs when two of its suppliers closed factories in Honduras.

The announcement comes on the heels of campaigns run by a student group called United Students Against Sweatshops (USAS) and a university apparel watchdog group named the Workers Rights Consortium (WRC) to pressure Nike to pay severance to workers who lost their jobs when factories run by its contractors closed in January 2009.

The WRC, which is made up of 186 universities that review factories that produce college-logo wear, found that Nike's contractors were required to pay more than $2 million in severance under Honduran worker laws. After the contractors failed to pay up, Nike refused to pick up the tab. The University of Wisconsin-Madison ended its contract with Nike over the dispute and Cornell University had threatened to take similar actions.

Students Launch Grassroots Campaign of Shame

To get their point across, students organized through the USAS picketed at Niketown stores across the country, mimicking Nike's "Just Do It!" slogan by chanting "Just Pay It!" They also posted on Nike's Facebook and Twitter pages in an attempt to publicly shame and pressure company.

"The 'Just Pay It!' Campaign marks the first time a U.S. university has ever cut their contract with Nike after decades of labor violations in their overseas factories. This is a watershed moment for the student anti-sweatshop movement," says USAS International Campaigns Coordinator Linda Gomaa. "Our university officials told us contract cuts wouldn't work, but we've proven twice in less than a year that the only way these brands take responsibility is when universities cut their business – money talks."

Nike Says Money Is Not a Severance Payment

In a statement announcing the payment to the fund, Beaverton, Ore.-based Nike said the agreement with the group representing the workers will help the former factory workers receive financial and medical support. These workers will also be first in line if the factories reopen, Nike said.

"Nike and (the Honduran workers' union) are committed to working together, in conjunction with other stakeholders in Honduras, to develop long-term, sustainable approaches to providing workers with social protection when facing unemployment," Nike said in its statement.

Nike had argued that no collegiate-licensed products were produced at the two factories, and that it was the subcontractors, Hugger de Honduras and Vision Tex, that were responsible for paying severance to the workers. In its statement, Nike makes it clear the money is not for severance, but for job training and health care.