The back pay follows a WRC investigation into unpaid wages and severance at the now-closed KOA Modas factory. WRC says workers were owed substantial sums after the facility, which supplied apparel to Target, ceased operations in February 2025.
KOA Modas staff lost more than $5m in severance and approximately $460,000 in unpaid wages when the factory’s owner, Sabrina Chang, shut down the site.
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According to WRC, initial efforts secured an employer promise to address wage arrears, but that commitment was not honoured.
WRC subsequently engaged Seoul-based apparel producer SAE-A Global Trading, which supplied Target from KOA Modas, to assume responsibility for the outstanding payments after the closure became public.
Following protracted discussions involving factory unions and SAE-A agreed to cover 95% of the total owed to the workers.
“SAE-A has joined other leading apparel companies like American Eagle Outfitters, Gildan, and PVH, that have responded to violations documented by the WRC in their supply chains by using their own resources to pay workers money they were legally owed,” WRC says.
The remaining 5% may be recovered through the sale of KOA Modas’s remaining inventory and equipment.
The WRC described SAE-A’s action as the largest single-factory back pay settlement for garment workers ever recorded in Central America.
KOA Modas had produced Target private label clothing as early as 2015, most recently through SAE-A acting as the US retailer’s direct supplier. Target continued to source apparel from the factory up until the closure.
While the compensation addresses immediate wage and severance violations, concerns persist over social security contributions unlawfully withheld from employees’ pay, which the WRC said could jeopardise pensions for many now-retired staff.
WRC added: “Sabrina Chang, the owner of KOA Modas, had a track record that long preceded the factory’s closure of stealing not only its workers’ wages, but also the social security contributions it deducted from their paychecks.”
