A Hyundai (OTC: HYMTF) subsidiary is under investigation by state and federal authorities after a bombshell Reuters report alleged the use of child labor at a factory in Alabama.
According to the report published last week, SMART Alabama LLC, a majority owned subsidiary of Hyundai, had allegedly used workers as young as 12 years old at its metal stamping plant outside of Montgomery. Reuters reporters cited local authorities as well as the families of underaged workers, and workers at the plant.
The descriptions of the alleged underaged labor practices are reminiscent of descriptions of child labor in the early Industrial Revolution, with underaged workers allegedly forgoing school to work long hours in the massive factory. According to the report, the facility has a paper trail of health and safety violations involving the heavy machinery used throughout. The practice appears to have been well concealed for some time; reporters at Reuters were only alerted after hints were dropped during the search for a missing 14-year-old that allegedly worked at the factory.
In an interview with NPR, one of the reporters who participated in the investigation, Mica Rosenberg, noted that the workers were largely migrants without legal work documents.
"For a lot of local migrants in the area who might not have legal work documents, we've learned that they often find jobs through various staffing agencies," said Rosenberg. "From speaking to labor experts and workers themselves, we know that these staffing agencies can often have their own lax hiring practices. They [will often] make minimal checks when hiring."
Hyundai has told reporters that it "does not tolerate illegal employment practices" and has policies in place requiring compliance with labor laws, though the company has said little else about the allegations. SMART Alabama has denied the allegations outright.
In response to the allegations, the Alabama Department of Labor, with the help of the U.S. DoL, is launching an investigation, according to a spokesperson that spoke with the Washington Post. The Alabama DoL has not issued any press releases and has not returned any requests for comment.
The investigative report is the most recent issue that has faced Hyundai's North American operations, with the company facing recalls from exploding seatbelt tensioners earlier in the year.
Potential child labor law violations could bring far worse consequences financially and reputationally, however. A backlog of labor violations stemming from Massachusetts Chipotle (NYSE: CMG) restaurants in 2020 resulted in a fine over $1 million, with overall penalties amounting to $2 million. Putting young workers at risk in a factory environment, however, could draw worse repercussions.