CBS recently reached out to LRI President Phil Wilson for insight on how U.S. labor law impacts the relationship that U.S. companies have with foreign companies to which they have outsourced work. . A few years ago Nike was in the cross hairs of when activist groups were decrying pacific rim sweatshops, but now that high-tech is in the spotlight, Apple is the new high-profile target of groups looking for scapegoats. According to Wilson, U.S. labor law contributes to the difficulty that U.S. companies have in holding foreign subcontractors accountable:
Our labor laws actually discourage companies from monitoring contractors too closely. Ironically employers must be careful not to monitor contractors too closely, or else they are found to be “joint employers” with the contracting company, which increases their risk exposure dramatically. Because of this problem, many employers take a “hands-off” approach to contractor employment practices, and are advised to do this by their labor and employment counsel. Agencies and activists like the joint-employer concept for this reason, but if they were serious about wanting employers to monitor these practices, they would not find joint-employer status in cases where a company carefully audits the employment practices of contractor firms.
Wilson adds that it is not just a difficulty with foreign subcontractors:
Many U.S. employers have been burned by alleged problems with practices of subcontractors here in America. Pretty much any company that contracts with outside companies (especially where those companies also hire temporary or contract employees to do some of the work) creates multiple risk factors.
