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Why American Apparel is Still Ethical Even if the CEO Disappoints

Award-winning journalist Fran Hawthorne has been a writer or editor at Fortune, BusinessWeek, Institutional Investor, and other publications. She is the author of several books including Ethical Chic: The Inside Story of the Companies We Think We Love and The Overloaded Liberal: Shopping, Investing, Parenting,and Other Daily Dilemmas in an Age of Political Activism.

Bigstock-Blank-T-Shirts--2725687Dov Charney has his good points. Really.

Sure, employees have filed at least 10 lawsuits against the founder and chief executive of sexy-clothing-maker American Apparel, alleging sexual harassment, bullying, violence, and illegal use of corporate money. His firm went bankrupt once and has skirted the financial edge two more times.

The newest lawsuit—brought by the male manager of an American Apparel outlet in uber-cool Malibu, California—claims, among other things, that Charney spewed obscenities at him for poor sales, called him “a fag” and “a f***ing Jew,” tried to squeeze and choke him, and then tried to rub dirt in his face.

Actually, this is an improvement over some of the earlier legal actions, in which Charney was accused of grabbing his penis in front of one female worker and using company funds to buy sex videos for himself. At least this time, he apparently is concerned about store sales.

Yet, the case against Charney is not that simple.

The same bravado and willingness to buck conventional wisdom that allegedly produce the sexual filth, also propel Charney to open his big mouth for unpopular causes of social justice.

While other U.S. companies hire undocumented foreign-born workers mainly to cheat them out of wages and overtime, knowing that they don’t dare complain, Charney champions their rights. He marches in Los Angeles’s biggest Latino parade, donates money to immigrant rights’ groups, ran ads supporting citizenship, and designed two special lines of T-shirts as fund-raisers.

While other U.S. clothing-makers ship their production out to sweatshops in places like Bangladesh, Vietnam, Honduras, and China, seeking the lowest wages possible, regardless of safety or health, Charney makes everything in the U.S. At American Apparel’s airy, light-filled main factory, workers can get subsidized health care, subsidized meals, free loaner bikes, free massages, free English lessons, discount bus passes, and free international calls back home (to all those countries they may have illegally come from). 

0094Charney also vigorously opposed California’s Proposition 8, which banned same-sex marriage.

In short, if you’re concerned about corporate ethics, those two sides of Dov Charney can drive you crazy. Hate him or love him?

But there is a simple solution: Hate the man, love the company.

While Charney may be the drum major of the parade, the qualities that make American Apparel an ethical business should be pretty well entrenched throughout that factory by now. After 15 years, it would be hard to tear out the sunny windows or yank away the health care and English lessons. Company officials claim their  “vertically integrated” manufacturing platform has proved that making clothing in America is cost-effective.

Thus, the good parts should keep running even if Charney disappeared.

By the same token, the harassment and abuse lawsuits are only against Charney, personally, No other American Apparel executive has been accused of talking and acting dirty. Get rid of Charney, and the harassment and bullying should stop.

Charney probably owns too much of the company to be fired outright, and anyway, it’s often his creative vision behind the popular designs.

Instead, American Apparel should keep him locked up in a tower with lots of porn videos, Hungry Man frozen dinners, consenting (and over 18) young women—and a laptop with a good graphics program. Every now and then, a few upper-tier managers could come by to talk about plans for new hoodies or dresses. But never, ever, ever let Dov Charney out. 

T-Shirts image from Bigstock.