Labor Department sues Hyundai to block use of illegal child labor in Alabama

A company named Best Practice Service sent the child to SMART Alabama, which provided component parts to Hyundai Motor Manufacturing Alabama, according to the complaint, which accused all three companies of jointly employing the child.

The case is significant because it’s the first time the agency has sued a major company over alleged child labor violations at a subcontractor.

“Companies cannot escape liability by blaming suppliers or staffing companies for child labor violations when they are in fact also employers themselves,” Seema Nanda, solicitor of the Labor Department, said in a statement Thursday.

Michael Stewart, a spokesperson for Hyundai, said in a statement that “the use of child labor, and breach of any labor law, is not consistent with the standards and values we hold ourselves to as a company” adding that the company had “worked over many months to thoroughly investigate this issue and took immediate and extensive remedial measures,” including requesting that suppliers end “their relationships with the third-party staffing agencies.”

Stewart also said that the Labor Department is “seeking to apply an unprecedented legal theory that would unfairly hold Hyundai accountable for the actions of its suppliers and set a concerning precedent for other automotive companies and manufacturers.”

The lawsuit stems from a Labor Department investigation and a separate Reuters report in 2022 that revealed extensive, illegal use of migrant children laborers at suppliers of Hyundai in Alabama in 2021 and 2022.

Hyundai’s facility in Montgomery, Ala., manufactures some of the auto giant’s best-selling models, including the Tucson and Santa Fe.

SMART Alabama did not immediately respond to a request for comment. Best Practice Service could not be reached for comment.

The lawsuit marks the first time that President Biden’s Labor Department has held a major company accountable for child labor in its supply chain — a step that the agency promised to take last year amid revelations that child labor violations were surging across the United States. During the fiscal year that ended Sept. 30, the federal government recorded 5,792 minors working in violation of child labor laws.

The Labor Department also requested in its court filing that the three companies surrender any profits made off illegal child labor in Alabama.

In March, the federal agency filed a lawsuit that resulted in an outdoor power-equipment component manufacturer in Tennessee setting aside $1.5 million in profits for 10 children it illegally employed, in addition to $300,000 in fines.

The soaring number of child labor violations in the United States are being driven in part by a historically tight labor market that has led to worker shortages across many industries and a surge in immigration from Central America that has brought hundreds of thousands of unaccompanied minors to the United States in search of work.

Since the pandemic, children have been found working in hazardous industries where they are forbidden, such as meatpacking, construction and heavy manufacturing. Some of the minors have sustained serious injuries working in these industries, the Labor Department found.