Hyundai Sued by The Labor Department After Violations Linked to Child Labor in Alabama Exposed

By Moon Harper

May 31, 2024 01:13 AM EDT

Hyundai Motor Co., an auto parts plant and a labor recruiter, had been sued by the US Department of Labor on Thursday for using illegal child labor in Alabama and was asked to relinquish any profits made out of it.

The Labor Department named three companies in its filing: Hyundai Motor Manufacturing Alabama LLC, SMART Alabama LLC, an auto parts company, and Best Practice Service LLC, a staffing firm that hired a 13-year-old child.

Hyundai Subsidiary: SMART Alabama LLC

Children as young as 12 were found working for a Hyundai subsidiary and other parts suppliers in the Southern state, according to a Reuters report in 2022. The Department's Wage and Hour Division discovered that one child had worked up to 60 hours per week on a SMART assembly line to operate machines that shape sheet metal into auto body parts.

The SMART plant provides parts to Hyundai Motor Manufacturing Alabama, where popular cars like the Hyundai Santa Fe, Tucson, and Santa Cruz are assembled.

As per the complaint from the Labor Department, SMART notified the staffing firm that two more employees were not allowed to return to the facility because of their appearance and other physical traits, indicating they might also be underage.

The Shared Accountability of Child Labor Violations

Solicitor of Labor Seema Nanda emphasized in a press release that companies cannot escape responsibility by attributing child labor violations solely to suppliers or staffing agencies, as these entities also hold employer status.

A Reuters inquiry uncovered the extensive and unlawful employment of migrant children in factories across Alabama that supply parts to both Hyundai and its sister brand, Kia.

Underage workers at the Hyundai supplier SMART in Luverne, Alabama, had been discovered by Reuters after a Guatemalan migrant child briefly went missing from her family's residence in February 2022. The 13-year-old girl and her two brothers, aged 12 and 15, were then employed at the plant and were not attending school, as reported by individuals familiar with their employment status. During that period, SMART operated as a subsidiary of Hyundai.

According to the Labor Department, during the reported violations, SMART's operations were so closely linked with Hyundai's primary manufacturing plant in Montgomery that, under US labor law, the two companies were considered a single employer for liability purposes. Along with the staffing firm, the three companies were also supposed to have jointly employed the minor.

Hyundai Denying Involvement with SMART

In an emailed statement, Hyundai clarified that the company no longer owns SMART. According to the court filing, SMART changed its name to ITAC Alabama in 2023.

Hyundai spokesperson Michael Stewart stated that the company had conducted a thorough investigation over several months into the matter and promptly implemented extensive corrective actions, which it had shared with the Department of Labor to address the issue. Hyundai also mandated its Alabama suppliers to conduct independent workforce audits.

Stewart criticizes the Labor Department's approach, arguing it unfairly blames Hyundai for its suppliers' actions and could set a worrying precedent for other automotive companies and manufacturers. The parts supplier and the staffing firm have not yet responded to requests for comment.

Rampant Child Labor Violations Exposed

The reports by Reuters in 2022 played a significant role in rescuing multiple children from one factory floor. They triggered at least ten state or federal investigations, followed by other media examinations of the child labor issue in the US.

In the 2023 fiscal year, the US Labor Department reported a notable increase in child labor violations, with investigations involving 5,792 children across the nation. Among them, hundreds were found to be employed in hazardous occupations.