In the midst of the Honduras scandal, Nike is losing a big contract after reports surfaced about the treatment of the workers in Honduras.

According to published reports, the University of Wisconsin has canceled its licensing agreement with Nike Inc. stating that the corporation’s failure to help workers collect severance payments they are owed at two factories that abruptly closed last year, played a major role in the university’s decision.

The contract loss results in an almost $49,000 loss in royalty income for the university.

“Nike has not developed, and does not intend to develop, meaningful ways of addressing the plight of displaced workers and their families in Honduras,” University Chancellor Biddy Martin said. “It has not presented clear long-range plans to prevent or respond to similar problems in the future. For this combination of reasons, we have decided to end our relationship for now.”

Its contract with Nike generated $49,000 in royalty income for the university last year.

Although not fully accepting responsibility, Nike released a statement noting the factories were operated by subcontractors and detailing that under Nike policy, subcontractors are responsible for compensation of their employees.

In addition, Nike states that no Wisconsin-branded products were made at the two Honduras factories.

“We have been engaged with the University of Wisconsin-Madison over the past few months,” Nike said in a statement, “While working with stakeholders in Honduras to better understand the particular issues facing the former workers.”

Anti-sweatshop activists said they hoped Wisconsin’s decision would resonate at several other universities across the country where students are pushing for similar actions and put pressure on Nike to fix the Honduras situation.

According to Wisconsin’s code of conduct, the 500 companies that make products bearing its name or logos are responsible for the subcontractors’ actions.

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