Business Ethics:

Case Analysis - Dov Charney is an American immigrant success story, but he's not exactly a "Give me your tired, your poor" kind of immigrant. He's a Canadian who came to America to attend an expensive private university.

He ended up founding American Apparel (AA), a clothing manufacturer producing trendy t-shirts and basics selling mainly to a young, edgy crowd.

Based in Los Angeles, their factory is among the biggest clothes-making operations in the nation. It employs almost five thousand workers. Those workers are well known for a number of reasons:

. Just having workers sets AA apart. Nearly all US clothing manufacturers outsource their cutting and sewing to poor countries. From Mexico to China, you can find factories paying locals fifty cents an hour to do the same kind of work they perform for AA. The difference is the sewers working in Los Angeles typically get around fifteen dollars an hour. That's not a lot in Southern California, but it's enough to make themaccording to AAthe best paid garment workers in the world.

The workers don't report to bosses so much as each other. They organize as independent teams paid a base wage of eight dollars an hour. On top of that they receive a bonus depending on how much they produce. So they get together, set their own targets, and go for them. This liberating of the workforce led to nearly a tripling of output and was matched by about a doubling of wages.

The company features a generous stock options program to help workers buy shares in the enterprise.

On its own initiative, the company provides basic health-care services through a clinic tucked into a factory corner. It provides bikes to employees, helping them zip through the downtown traffic morass without adding pollution to the infamous city smog. There are free telephones in the factory for employees to use to call family members at home.

Many of those employees' family members are in other countries; AA has a very large immigrant workforce.

Many of those immigrants are in the country illegally, which partially explains why the company has been on the forefront of amnesty campaigns, organizing public rallies and media events of all kinds for the undocumented. Called Legalize LA, the campaign's title references the fact that a tremendous number of Southern Californians outside AA are also illegal immigrants.

In 2009, the federal government indicated to AA that 1,800 of its workers were using Social Security numbers and other identifying documents that had been purchased, stolen, or just plain invented. In any case, they didn't match up. The company was forced to fire the employees.

1. Workers at Charney's America Apparel are the highest-paid mass-production sewers in the world:

(a) In terms of Charney's duties to others, what ethical case can be Made in favor of this high pay?

(b) Are these wages fair? Why or why not?

2. Eighteen hundred of AA's five thousand workers were using false papers and Social Security numbers to get their job. Charney knew all about that but chose to overlook it.

(a) Leaving the law aside, how can that overlooking be justified ethically?

(b) Leaving the law aside, how would we analyze the action, is it ethically wrong as the company resorted to lies? The company also used people as means instead of ends?

(c) Charney and AA support illegal immigrants in two ways: by giving them jobs and by organizing popular protests in favor of their legalization. Ethically, are these two activities recommendable or not? Or is one recommendable and the other not?

3. (a) Was AA wrong for hiring illegal workers? Did AA know the workers were illegal?

(b) what to think it's ethical for AA to support causes and legislation for illegal immigrants? Does its support for illegal immigration help its workers or the Company? Why?