By Mica Rosenberg, Kristina Cooke and Joshua Schneyer
NEW YORK (Reuters) -The U.S. Department of Labor on Thursday sued South Korean auto giant Hyundai Motor (OTC:HYMTF) Co, an auto parts plant and a labor recruiter over illegal use of child labor in Alabama.
The complaint, filed in U.S. District Court in Montgomery, Alabama, also sought an order requiring the companies to relinquish any profits related to the use of child labor.
Reuters reported in 2022 that children, some as young as 12, worked for a Hyundai subsidiary and in other parts suppliers for the company in the Southern state.
The Labor Department filing named three companies as defendants for employing a 13-year-old child: Hyundai Motor Manufacturing Alabama LLC; SMART Alabama LLC, an auto parts company; and Best Practice Service LLC, a staffing firm.
The Department's Wage and Hour Division found the child had worked up to 60 hours per week on a SMART assembly line operating machines that formed sheet metal into auto body parts.
The SMART plant supplies parts to Hyundai Motor Manufacturing Alabama which assembles popular cars such as the Hyundai Santa Fe, Tucson, and Santa Cruz.
According to the Labor Department complaint, SMART informed the staffing firm that "two additional employees were not welcome back at the facility due to their appearance and other physical characteristics, which suggested they were also underage."
"Companies cannot escape liability by blaming suppliers or staffing companies for child labor violations when they are in fact also employers themselves," Solicitor of Labor Seema Nanda said in a press release.
A Reuters investigation revealed the widespread and illegal employment of migrant children in Alabama factories supplying parts to both Hyundai and sister brand Kia.
Reuters learned of underage workers at Hyundai supplier SMART, in Luverne, Alabama, following the brief disappearance in February 2022 of a Guatemalan migrant child from her family's home in Alabama.
The 13-year-old girl and her two brothers, aged 12 and 15 at the time, all worked at the plant in 2022 and were not going to school, according to people familiar with their employment.
At the time, SMART was a Hyundai subsidiary.
The Labor Department said that at the time of the alleged violations, SMART's operations were "so integrated" with Hyundai's main manufacturing plant in Montgomery that "the two companies were a single employer for purposes of liability" under U.S. labor law. And that along with the staffing firm, the three companies "jointly employed" the minor.
Hyundai in an emailed statement said the company no longer has any ownership in SMART. The court filing said SMART changed its name to ITAC Alabama in 2023.
Hyundai spokesperson Michael Stewart said the company had "worked over many months to thoroughly investigate this issue and took immediate and extensive remedial measures" and had presented this information to the Department of Labor to try to resolve the issue. Hyundai also required its Alabama suppliers to conduct independent workforce audits, Stewart said.
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," Stewart said.
The parts supplier and the staffing firm did not immediately respond to requests for comment.
The Reuters reports in 2022 helped prompt the rescue of several children from one factory floor and spurred at least 10 state or federal investigations and was followed by other media examinations of the problem of child labor in the U.S.
The U.S. Labor Department says it has seen a surge in child labor violations and has investigated cases involving 5,792 children nationwide, including hundreds employed in hazardous occupations in the 2023 fiscal year.