In a shocking development, the United States Department of Labor has filed a suit against the South Korean automaker Hyundai (HYMTF) for the use of child labor at a plant in Alabama.
The suit, filed on May 30, holds the company liable for the employment of children within its supply chain, including a 13-year-old who was subjected to 60-hours per week producing parts for the automaker.
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As per The New York Times, the suit filed in a Montgomery, Ala. federal court alleges the South Korean company is responsible for children employed at a Luverne, Ala. factory operated by SMART Alabama, a supplier who produces body parts for cars assembled at the Hyundai plant in Montgomery. Also named in the suit is a staffing agency called Best Practice Service, which the feds claim had recruited such kids to work at the supplier's factory.
In the nine-page document, the DoL claims that from July 2021 to February 2022, a 13-year-old girl recruited by Best Practice worked at SMART's Luverne facility, where she was subjected to work on machinery that formed sheet metal into body parts for Hyundai vehicles. The suit also claimed that two other children were also employed at the facility.
According to the Labor Department, Hyundai was allegedly in violation of three different child labor provisions of the Fair Labor Standards Act, which include employing an individual under the age of 16 in manufacturing occupations, allowing an individual under the age of 18 to operate a metal forming, punching, or shearing machine and employing an individual under the age of 14 whatsoever.
Additionally, through the alleged employment of children at its supplier, Hyundai is being held in violation of the "hot goods" provision of the Fair Labor Standards Act, which is meant to prevent the interstate commerce of goods "produced in violation of the minimum wage, overtime or child labor provisions" of said law.
In a statement, the Wage and Hour Division Administrator of the Department of Labor Jessica Looman said that the findings within Hyundai and its supply chain are appalling, and that keeping them accountable is the goal of the suit.
“A 13-year-old working on an assembly line in the United States of America shocks the conscience,” Looman said. “As we work to stop illegal child labor where we find it, we also continue to ensure that all employers are held accountable for violating the law.”
Many of the bestselling vehicles in Hyundai's lineup are produced at Hyundai Motor Manufacturing Alabama (HMMA), the plant that SMART Alabama supplied body parts to.
According to the plant's website, employees at Hyundai Motor Manufacturing Alabama assemble Hyundai's Santa Fe SUV, Tucson crossover, and Santa Cruz pickup truck, as well as the $45,700 GV70 and the $66,450 Electrified GV70 crossovers for Hyundai's Genesis luxury brand.
Hyundai told the Times that child labor is "not consistent with the standards and values we hold ourselves to as a company" and that the DoL used "an unprecedented, legal theory that would unfairly hold Hyundai accountable for the actions of its suppliers."
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The suit comes after investigations by Reuters published in December 2022 looked into Hyundai's labor practices and demanding production system. Its investigation found that the demands of Hyundai's "just-in-time" production system enabled its suppliers to cut corners when it came to staffing — relying on staffing agencies who targeted migrant workers and children from Central America to fill production floor positions.
According to the DoL suit, Hyundai North America owns 72.45% of SMART Inc., the Hyundai subsidiary that owns SMART Alabama, the factory where the 13-year-old and three other children were allegedly found to have been employed and working.
“The Department of Labor’s complaint seeks to hold all three employers accountable in the supply chain,” said Solicitor of Labor Seema Nanda in a statement. “Companies cannot escape liability by blaming suppliers or staffing companies for child labor violations when they are in fact also employers themselves.”
Hyundai Motor Company, trading under HYMTF on OTC markets, has closed on May 31 down 0.75%, at $56 per share.
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