Philip M. Berkowitz
05/03/2004
Not long ago, Nike and its much admired sportswear products were described in the New York Times as being “synonymous with slave wages, forced overtime and arbitrary abuse.” The speaker was not a labor activist or a politician hoping to grab headlines. Rather, it was Nike’s own chairman and chief executive, Philip H. Knight, who was forced to acknowledge that his company’s overseas labor problems were having a serious negative impact on its stock price and sales. Promising to end the use of child labor by Nike’s overseas manufacturers, Knight also said, “I truly believe that the American consumer does not want to buy products made in abusive conditions.”
Knight was right. In this era of instant media attention, companies doing business overseas must ensure that their labor practices—even those of their suppliers and contractors—are simply above reproach.
There are many sources of legal liability for our overseas labor practices. Trade agreements such as the North American Free Trade Agreement (NAFTA) seek to impose minimum international labor standards. Organized labor and human rights groups have used NAFTA’s labor side-agreement to target sweatshop conditions, as well as discriminatory employment practices, allegedly carried out in Mexico. Recently, federal laws against indentured servitude were invoked in a lawsuit filed against a number of textile companies for their employment practices in Saipan, a U.S. territory in the Northern Mariana Islands.
Whiter than White
How can a multinational company avoid becoming a target?
First, commit to carrying out employment practices that meet and exceed
internationally recognized guidelines. Numerous international
organizations have identified core labor standards. Chief among these are the
International Labour Organization (ILO), a United Nations affiliate, which has
adopted a Declaration of Principles. Other well-known statements of principle
include the Global Sullivan Principles of Social Responsibility, the
Organisation for Economic Co-operation and Development Guidelines for
Multinational Enterprises and the Global Compact, adopted in July 2000 by the
United Nations.
These codes of conduct all identify similar basic
principles, including: the right to bargain collectively; equal employment
opportunity and nondiscrimination; prohibitions against child labor and forced
labor; adherence to local safe workplace laws (or, if these do not suffice,
adopting best practices); consulting with workers’ groups about layoffs and
similar adverse actions; grievance or dispute resolution procedures; and use of
internal or external monitors to audit employment practices.
These statements
of principle are not binding on international companies. Rather, they are
guidelines. Nevertheless, companies ignore them at their own peril. Of course,
companies doing business overseas also need to familiarize themselves with the
binding labor laws of the countries in which they are doing business. Many
countries’ labor laws and labor tribunals recognize substantial employee rights
regarding unfair dismissal and other employment practices.
The following is a
blueprint for best practices:
• Adopt practices embracing core labor
standards. Multinationals are increasingly recognizing that these standards are
consistent with their corporate codes of conduct.
• Implement procedures to
reasonably ensure that policies are translated into fair employment practices.
These steps include developing labor audit procedures, including detailed
questionnaires for overseas partners.
• Make sure that your
partner is committed to your goals. Create a confidential communications channel
to handle complaints from your contractors’ employees. No facility is perfect;
there is never total compliance. But rather than walking away from difficult
situations, a responsible multinational will try to work with its local
contractor and help the workers. If the company leaves when it finds a problem,
the employees may be out of a job.
• Engage as many auditors as are
necessary to assure that quality standards are met. Issues such as the
facility’s prior history, reputation, housing for workers, size and location are
factors that independent monitoring companies usually consider. Pre-production
surprise audits are most effective.
Exporting labor overseas carries
substantial responsibility as well as risk. It also gives multinationals the
unique opportunity to showcase, on an international stage, their essential, core
values. Exporting socially responsible values is the key to success for the 21st
century multinational.
 | Philip M. Berkowitz practices labor and employment law on behalf of employers in New York City and is a frequent lecturer on employment law. |