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Abercrombie to Settle State Dress Code Policy Charges

The apparel retailer will pay $2.2 million to reimburse employees for clothing purchases.

June 25, 2003|Hanah Cho | Times Staff Writer

Trendy youth retailer Abercrombie & Fitch Co. has agreed to pay $2.2 million to settle allegations that it forced its sales clerks in California to buy and wear the company's clothes on the job.

The deal with state labor regulators is the latest spotlight put on Abercrombie's business practices. A lawsuit filed last week in San Francisco accuses the New Albany, Ohio-based retailer of discriminating against minorities in hiring procedures, a claim the company denies.

The agreement over its dress code policy applies to about 11,600 past and current employees who worked at Abercrombie & Fitch, abercrombie and Hollister stores in California from Jan. 1, 1999, to Feb. 15, 2002.

Under the terms announced Tuesday, employees will receive reimbursements ranging from about $180 to $490, depending on job status and how much was spent on clothes.

After receiving complaints from some employees, the state Department of Industrial Relations in July 2000 initiated an investigation of Abercrombie's "Appearance/Look Policy."

Investigators found that the policy was being enforced in a way that required sales clerks to buy and wear Abercrombie clothes, said Miles Locker, an attorney for the state labor commissioner's office.

"What we found in our investigation was the store managers routinely telling employees that they were required to wear particular items of clothing that were on display," Locker said. "At worse, it implied that you had to wear their clothing. At best, it was confusing."

The state found that the company violated California's work uniform law, which mandates that employers must supply the clothing when they require workers to wear specific apparel.

In agreeing to settle, Abercrombie admitted no wrongdoing.

The company denied in a statement Tuesday that its policy violated California law and said it modified its policy in February 2002 in an effort to resolve the dispute with the state.

"Both before and after implementing its revised policy, Abercrombie has offered discounts to its associates to encourage but not require them to purchase and wear Abercrombie clothes," spokesman Thomas D. Lennox said.

The revised policy states, "We do not require that associates buy or wear clothing, accessories or other items from our stores. Associates are prohibited, however, from wearing apparel that is clearly that of a competitor."

The practice of requiring workers to wear specific styles or colors is not uncommon in the apparel industry, where retailers want their representatives to showcase their brand image.

It's also not uncommon for young job candidates to seek out work at apparel stores in order to get merchandise discounts.

Numerous dress-code lawsuits have been filed in California against retailers, including Gap Inc., Chico's and Polo Ralph Lauren.

Abercrombie still faces two pending civil lawsuits -- one in Los Angeles County and another in San Francisco County -- over dress-code policies in California.

With a reputation among teens and college students for being not only trendy but edgy in its fashions and marketing, the company has routinely used provocative advertising campaigns that have included scantily clad models and tips about sex.

Last year, the retailer was forced to pull a line of T-shirts that depicted Asian caricatures and was criticized for offering a line of thong underwear for little girls.

The San Francisco lawsuit accuses Abercrombie of discriminating against minorities who do not match the virtually all-white "A&F look."

Wall Street hasn't focused much on the company's controversies. The company, with more than 600 stores and about 22,000 employees, posted sales of $1.6 billion in 2002.

On Tuesday, its stock rose 79 cents to $26.93 on the New York Stock Exchange. Shares have gained 33% in the last year.

Although the dress-code issue is widespread in the apparel industry, analysts say that the allegations of racial discrimination pose a different challenge for Abercrombie.

"Those types of allegations are more serious because they could become larger issues, longer term," said Adrienne Tennant, a retail analyst with Wedbush Morgan Securities. "They need to handle those issues more delicately."

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