On November 2, 2013, the Sindicato de Trabajadores de Hilandería de Algodón Peruano S.A. (Union of Workers of Hilandería de Algodón Peruano S.A) filed a Third Party Complaint with the Fair Labor Association regarding the factory Hilandería de Algodón Peruano S.A. (“HIALPESA”). The factory is located in the District San Juan Lurigancho, in Lima, Peru. The complaint alleged violations of the FLA Workplace Code of Conduct with respect to terms of employment, safety and health, and freedom of association. FLA Participating Company New Balance sources from HIALPESA.
Specifically, the complaint alleged: (1) failure on the part of HIALPESA to implement two resolutions by the Peruvian Ministerio del Trabajo y Promoción de Empleo (Ministry of Labor and Employment Promotion) that found the application for approval of temporary employment contracts submitted by the factory to be improper/inadmissible [pursuant to the special regime for the promotion of non-traditional exports (Decree 22342)]; (2) health and safety concerns with regards to the relocation of machinery from one plant (Santuario) to another (Las Lomas), which allegedly resulted in overcrowding at the latter facility; and (3) that the closure of one of the plants and the transfer of workers to other jobs was intended to reduce the number of union members.