Probe fingers 1,800 American Apparel workers

By Alexandria Sage

SAN FRANCISCO (Reuters) - A U.S. federal probe has found that about a third of American Apparel's factory workers in the Los Angeles area had supplied suspect or invalid records and were not authorized to work in the United States.

The findings, from a January 2008 federal investigation, may deal a blow to the corporation's image as a proponent of immigration reform.

But the company said on Tuesday the potential loss of those 1,800 workers would have no significant impact on its results.

The U.S. Immigration and Customs Enforcement agency found that some 1,600 current employees at American Apparel's Los Angeles factories appeared to have gained employment due to "suspect and not valid" eligibility documentation, the company said in a filing.

The probe also found that the employment eligibility of an additional 200 workers could not be verified due to discrepancies, it said.

American Apparel said it could not accurately assess the impact on its operations from losing the employees, but said it did not believe any such loss would have a materially adverse impact on financial results.

"The company believes that its current surplus levels of inventory and manufacturing capacity would mitigate the adverse impact of any disruption to its manufacturing activities that may potentially result from the loss of these employees," American Apparel said in the filing.

"ICE's notification provided no indication that the company knowingly or intentionally hired unauthorized aliens and no criminal charges have been filed against the Company or any current employees," it added.

The company, known for its colorful T-shirts and other basics worn by urban hipsters, has made immigration reform a central theme of its corporate message.

Chief Executive Dov Charney has called for the legalization of foreign workers, and the company has used "Legalize LA" as a slogan on billboards and T-shirts.

American Apparel's Los Angeles operations, which employ some 4,500 workers, churn out some 230,000 garments per day in an environment in which workers are paid above minimum wage, enjoy subsidized health care and meals, and take part in free English classes.

In the past, the company has let go of workers whose papers were proven false. Company executives say American Apparel diligently complies with the law, but have pointed out that papers can easily be faked.

(Reporting by Alexandria Sage; Editing by Richard Chang)