Implementation of Apparel Industry Codes of Conduct pg. 2 ( Chapter II)
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  Child Labor Report 2005

II. Codes of Conduct in the U.S. Apparel Industry

F. Implementation of Apparel Industry Codes of Conduct  (PAGE TWO)
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ii. Active Monitoring

Active monitoring may be done through regular site checks, formal audits or evaluations, or special visits by corporate staff. The frequency and intensity of visits vary greatly from company to company. In addition, some companies may use different systems of monitoring for different types of facilities. For example, they may focus their site visits on their larger or more publicized suppliers, or may only monitor those facilities from which they directly import or which manufacture their private-label merchandise.

Several respondents indicated that they are currently stepping up their monitoring of overseas and domestic production facilities. Some, such as Jones Apparel Group ('Jones') and Kellwood, indicated that they are in the process of expanding their extensive domestic monitoring systems to cover international activities.

Respondents had very different views on which type of monitoring is more desirable:

  • Some companies feel very strongly that they can do the best job of monitoring themselves, and have the greatest incentive to do so. They also believe that monitoring internally is the most efficient way, since problems are reported directly to management and can be dealt with more quickly.

  • Other companies expressed the view that independent, outside monitors may be able to get a more accurate picture of labor conditions or may be more credible than internal monitoring.

Internal monitoring, which employs companies' own staff to monitor for compliance, is the most widely utilized form of active monitoring among respondents.83 Internal monitoring is most commonly done by quality control, merchandising or internal auditing staff; country, regional or contract managers; or senior management. Monitoring of labor policies is usually combined with monitoring for quality and other standards. While the personnel conducting the visits are usually specifically trained to monitor for quality control, it is not always clear that they are trained to monitor compliance with labor policies.

Some respondents, particularly manufacturers, indicated that they have a strong in-country or regional presence in many of the countries where they manufacture, making it easier to conduct frequent inspections of contractors' production facilities:

  • Fruit of the Loom, for example, said that contract managers and field personnel visit foreign facilities on at least a weekly basis to check on a number of production issues. These personnel are also trained to look for code of conduct violations and have forms to red-flag problems for senior management, from which further scrutiny and a warning may follow. In-country personnel also make suggestions and recommendations to contractors on how to improve their operations.

  • Nike stated that it has extensive personnel located in the countries where it produces, and that each contractor has specific Nike "in-house" personnel assigned to it. They visit apparel contractors every two to three days and report back to headquarters with their findings.

  • The Gap reported that, once it places an order with a contractor, its in-country staff is constantly monitoring for quality and compliance with its code, sometimes three to four times a week. These visits are both announced and unannounced. The Gap also indicated that its senior field representatives also conduct formal compliance evaluations every 18 months.

  • Levi Strauss noted that it has a global infrastructure of people in the communities where it does business. It stressed that its employees have the authority - and the responsibility - to take any steps necessary to ensure compliance, and it has found that in many cases its employees can work with partners and address issues before they become a problem.

  • Sara Lee reported that most of its contractors are located in the same areas as the plants it owns and are constantly being monitored by Sara Lee personnel. Sara Lee noted that since its contracts are typically large enough to use entire plants (rather than partial runs), its personnel have freedom of access to contracting facilities and often make unannounced visits.

  • Liz Claiborne staff does scheduled and unscheduled spot inspections of facilities, and requires all country managers and Liz Claiborne representatives to complete an annual, 11-page human rights questionnaire for every supplier.

  • Tultex Corporation ('Tultex') reported that it charges regional managers with the responsibility of following up with vendors, and that these managers make frequent visits to their factories.

  • VF Corporation has its quality control people check on the manufacturing process weekly.

Some companies send U.S.-based corporate staff or special auditing staff to monitor production facilities for compliance with their policies. Again, in most cases it appears that monitoring is part of a larger process that includes elements such as quality control.

  • Levi Strauss has a team of 50 full-time auditors who are based in the regions where they work. These auditors and other in-country employees visit contractors on a regular basis to review quality, production processes and Terms of Engagement issues. Levi Strauss said that all contractors and subcontractors are audited at least once a year, unless problems are found, in which case they are done more frequently - sometimes three and four times a year. Audits often include interviews with employees, both at the factory and away from the factory.

  • Jones, for example, reported that its U.S.-based quality control staff, which visit overseas facilities, have been instructed to make sure Jones' policies are implemented. Jones also indicated that in 1997 its domestic in-house auditing staff will be sent to visit all of Jones' larger suppliers. Jones anticipated that while the visits are to be unannounced, Jones' buying agents will probably be advised of the auditing teams' presence in their country.

  • JCPenney Company ('JCPenney') reported that it has instructed its associates and buyers to watch for and report any legal violations or questionable conduct to management for follow-up and, when necessary, corrective action.

  • Fruit of the Loom reported that senior management and/or corporate counsel conduct on-site contractor audits to confirm compliance with the company's code and other agreements. These audits include a review of employment and labor practices, including an on-site confirmation that workers are of legal working age.

  • Kmart stated that it is increasing its regular and surprise on-site inspections of manufacturing facilities. Last year, Kmart conducted 45,000 visits worldwide through its Quality Assurance Department. Kmart investigators have a checklist of what to look for during inspections.

  • Land's End's quality assurance team and agents visit existing vendors to monitor standards and assure quality of products.

  • The Limited reported that its quality assurance and internal audit teams make regular and unannounced on-site inspections of facilities.

  • Liz Claiborne is requiring non-sourcing senior managers and employees who visit factories to evaluate working conditions and fill out a "report card."

  • In addition to auditing by quality control personnel, Phillips-Van Heusen recently organized an Employment Practices/Workers' Rights Task Force, made up of employees who are not directly involved with production sourcing. These employees, on a part-time basis, periodically visit contractors worldwide, inspect facilities, and compare their findings to evaluations done by sourcing personnel. According to PVH, the task force does not attempt to reach all factories, but tries to reach representative vendors in all regions. The task force does not reveal which vendors will be visited. Inspections include a review of facility documents, and contractors are asked to provide proof of age.

  • Warnaco indicated that its personnel occasionally make unannounced visits of foreign contractors to monitor for compliance with its Business Partner Terms of Engagement.

Some retailers indicated that they concentrate internal monitoring efforts on those facilities that produce private-label merchandise or brands sold exclusively at their stores:

  • Federated stated that it routinely inspects all facilities that produce private-label products for Federated for compliance with laws on child labor, as well as safety and health standards.

  • Nordstrom reported that it conducts random inspections of contractor facilities in cases where it contracts directly with a manufacturer for the production of private-label merchandise. These visits, both announced and unannounced, monitor for compliance with all applicable laws and confirm that no child or forced labor is used.

  • Wal-Mart indicated it is increasing its inspections of domestic and overseas factories, focusing on those factories that produce lines sold exclusively at Wal-Mart, such as the Kathie Lee line.

Implementation of child labor policies may differ, depending on whether goods are produced at wholly owned facilities or contractor facilities, or purchased through buying agents:

  • Oxford stated that it is quite confident of its own facilities' adherence to all laws, and made a distinction between implementation in wholly owned facilities versus contractor facilities. Oxford Industries utilizes its internal audit staff to periodically check compliance with applicable laws and Oxford policy in all of its wholly-owned facilities. For contractors, Oxford reports that it is the responsibility of the Oxford contract manager or employee who hires the contractor to take reasonable steps to ascertain that the contractor is in compliance and to document those steps. Oxford also indicated that quality-control staff and higher-level managers visit contractor facilities during production runs a couple of times a year. Oxford stated that while quality control staff is in plants more frequently, it does not have the same clout as managers to exact immediate change.

  • Sara Lee stated that through its direct control and management of its wholly-owned facilities, it is able to ensure that its Operating Principles are being implemented and followed at those facilities. When Sara Lee purchases apparel from a domestic supplier that has secured the products from a subcontractor, it expects the supplier to meet the requirements of those principles.

External monitoring, or monitoring of suppliers' production facilities by buying agents, is used by at least nineteen respondents.84 While some of these respondents rely on buying agents for most of their imports, others only use buying agents in certain cases.

  • Dillard Department Stores ('Dillard') charges its buying agents with the responsibility of periodically monitoring production, to ensure that quality goals and Dillard's policies are realized, including that on child labor. These inspections are done three to four times a year, and agents are required to return a form indicating their findings.

  • Dress Barn requires its buying agents to monitor production facilities during the manufacturing process for goods specifically ordered by Dress Barn. The agents are required to examine a range of labor and employment practices, and use an extensive audit form during the visit. This audit form includes questions specifically addressing child labor.

  • Mercantile Stores Company ('Mercantile') reported that its buying agent is responsible for implementation of its child labor policy and is instructed to be vigilant regarding child labor. Mercantile believes that its vendors are aware of its child labor policy because they are required to sign it.

  • Stage Stores, which currently uses AMC's code (but is developing its own code), did not specify its monitoring system. However, AMC - a buyer's cooperative which orders imported merchandise on behalf of its retail shareholders - indicated that AMC vendors are "aware" of its code, which contains provisions prohibiting child labor. Vendors go through an annual certification process, which includes a variety of quality assurance issues and meeting AMC's code. AMC said that it has employees in most countries from which it orders apparel.85 In a few countries where AMC orders are small it relies on "commissionaires," who act as buyer agents.

  • Venture Stores ('Venture') purchases essentially all imported apparel through a buying agent. The agent is aware of Venture's policy not to purchase merchandise from foreign vendors who use child labor and is required to comply with this policy. While Venture requires its buying agent to certify that child labor was not used in the manufacture of any merchandise, it does not indicate how it ensures compliance, other than through visits by Venture personnel when feasible.

  • VF Corporation and Sara Lee, when using buying agents, have them inspect production facilities. VF Corporation's buying agents go to plants two to three times during the course of production - for an initial audit, a final audit, and often one in-between.

Kellwood, Nike, Price/Costco, Inc. and Wal-Mart all indicated that they currently use or have in the past hired outside auditing, accounting or consulting firms to monitor compliance with their codes of conduct:

  • Nike stated that every Nike contractor is subject to unannounced spot checks by the consulting firm Ernst & Young. Nike reported that Ernst & Young has been doing audits for several years, and indicated that while all of its footwear facilities have been audited by Ernst & Young, not all apparel contractors, particularly those where Nike has very little production, have been audited. Ernst & Young reviews the contractors' books and interviews employees, according to Nike. On child labor, the auditors look at birth certificates or other evidence, if available. Nike says the auditors conduct interviews with employees away from their managers. When violations are found, Nike asks the factory manager to set up a timetable for remedying the problem.

  • Kellwood said that it recently began using Ernst & Young and Contractor Services Compliance Corporation to conduct outside monitoring overseas.86 Kellwood indicated that the initial visits are scheduled, but once the system is in place the outside monitors will also do unannounced visits on a regular basis. The monitors do a random sampling of interviews with workers, according to Kellwood. Kellwood stated that it deals with the finest retailers, and wants them to feel confident that they are getting a product of value, made in accordance with national laws and moral and ethical standardsIt believes outside monitoring is part of the "cost of doing business."

  • Price / Costco, Inc. ('Price/Costco') reported that as part of its quality-assurance program, which has been in place since 1995, it uses an outside auditor to inspect vendors' facilities. These outside audits are only done where Price/Costco buys through a U.S. wholesaler - not where Price/Costco is the importer of record, in which case it does its own monitoring. The outside auditors look at labor conditions and labor force make-up, in addition to a variety of quality-assurance issues. Price/Costco indicated that the outside audits are paid for by the vendors.

  • Wal-Mart hires a third-party agency to conduct routine visits of overseas factories with which Wal-Mart contracts directly.

The Gap and Liz Claiborne are currently experimenting with NGO monitoring at some of the contractor facilities from which they import:

  • The Gap, in cooperation with a number of NGOs, has worked to develop an NGO monitoring mechanism at Mandarin International, an independent contractor in El Salvador.

  • The developments that led up to this third-party monitoring pilot began with alleged violations at Mandarin, including the use of child labor, forced overtime, unsafe working conditions, intimidation of workers to prevent union organizing and firing of union leaders.87

  • When The Gap's own investigation of the allegations regarding Mandarin did not come up with any evidence to corroborate the complaints, NGOs and human rights groups called for the use of "independent" monitors. After considering canceling its contracts with Mandarin and pulling out of El Salvador, The Gap instead signed an agreement in which it consented to explore the viability of an independent monitoring program in El Salvador and agreed to re-approve the Mandarin plant as a Gap contractor once it felt confident that the plant could effectively implement its code.88

  • In January 1996, The Gap and some NGOs formed an Independent Monitoring Working Group (IMWG). Members of the IMWG traveled to El Salvador to visit the Mandarin plant, met with various parties, and solicited input from more than 75 U.S. and international human rights, labor, religious, academic and business groups to develop a working model for independent monitoring.

  • The IMWG developed the following definition of independent monitoring: "An effective process of direct observation and information-gathering by credible and respected institutions and individuals to ensure compliance with corporate codes of conduct and applicable laws to prevent violations, process grievances, and promote humane, harmonious, and productive workplace conditions."89

  • In March 1996, Mandarin managers, workers, and current and former union leaders signed a resolution that included, among other elements, the formation of an independent monitoring team in El Salvador - the Independent Monitoring Group of El Salvador (IMGES). With these developments, The Gap re-approved Mandarin for the production of its goods. The team of monitors, made up of volunteers of local human rights organizations, is based near the plant, has regular access to it, and can receive and investigate complaints from workers without fear of reprisal.90
     

  • Liz Claiborne is currently developing its own NGO monitoring pilot program with the expectation that such a monitoring capacity will improve reporting on compliance with its Standards of Engagement.

  • Liz Claiborne reported that monitors will listen to the concerns of workers and management, review compliance with local laws, compare factory practices with its standards, and create mechanisms for workers to report grievances in privacy, including telephone numbers to call or locked drop-off boxes for written complaints.

  • According to Liz Claiborne's survey response, "key elements for the program will be independence and an understanding of local issues." Liz Claiborne also noted that it expects to adapt and improve the program based on data and input from the pilot effort, the monitors, and involved NGOs and governments.

iii. Contractual Monitoring

Many respondents require their suppliers, buying agents or contractors to abide by their policy on child labor through contractual agreements or some form of certification process. These contractual obligations are an expression by manufacturers and retailers of their expectation that the contractors' or suppliers' business relationship with them is based on full compliance with their policy or code. The incorporation of child labor policies into contractual obligations in many cases shifts at least part of the burden of responsibility for ensuring compliance onto the contractor, supplier or buying agent. In addition, such contractual obligations provide a legal avenue for terminating agreements on the basis of violations.

Some companies, particularly retailers, may have general language in their purchase order or vendor contracts requiring vendors to comply with applicable laws but have no mechanisms for monitoring compliance. In certain cases, respondents indicated that they have no knowledge of how or where imported goods they purchase are produced.

  • A number of respondents indicated that compliance with their corporate code of conduct or policy is part of their purchase orders or other contracts.

  • Other respondents (Dollar General, Venture and Woolworth Corporation) also indicated that their letters of credit contain provisions on child labor.

  • Woolworth Corporation ('Woolworth') reported that its manufacturers must complete a Certificate of Product Manufacture and Inspection - certifying that a said factory was truly used to produce the garments and that no child labor was used in their production - before letters of credit can be drawn down.

  • Price/Costco's Import Vendor Agreement states that the vendor must secure a written and signed confirmation from the owner of the "prime factory" that the factory and all subcontractor facilities used are in compliance with its child labor policy.

Several companies require written acknowledgment by their contractors, suppliers or buying agents that they have read and understood their policies on child labor. This is usually done through requiring contractors to review and sign a code of conduct or a special certification form.

  • Federated indicated that it requires its "core vendors" to acknowledge annually in writing their understanding of Federated's policies requiring full compliance with applicable laws, including those relating to child labor. It reported that relationships are immediately terminated with manufacturers and suppliers who fail to do so.

  • The Limited also requires every supplier to periodically certify their compliance and that of their subcontractors with its' policy, which includes provisions on child labor.

  • Mercantile indicated that it decided to put its child labor policy in a stand-alone certification form that suppliers must sign because it did not want that policy to be lost within a larger contract.

  • Oxford reported that it is implementing a computerized tracking system to ensure that each contractor has read and understood Oxford's sourcing policy and acknowledged that it will be terminated in the case of violations of that policy, which includes provisions on child labor.

  • Talbots, as part of a new program (effective September 1996), requires all of its international suppliers to furnish a signed, notarized statement confirming adherence to its policies on child labor and other standards. Talbots stated that it will require suppliers to re-certify their adherence annually and will not place new orders with any companies that fail to complete the certification.

Some respondents require certification on shipping documents:

  • JCPenney, requires that foreign and U.S. suppliers of imported merchandise obtain a manufacturer's certificate for each shipment certifying that the merchandise was manufactured at a specific factory (identified by name, country and location) and that no illegal child labor was employed in its manufacture.

  • Talbots requires all international manufacturers to include a statement on their shipping documents accompanying imported merchandise confirming their adherence to the company's policy.

Some respondents require contractors to take on certain responsibilities or actions themselves to ensure that the policy is not violated:

  • Fruit of the Loom indicated that in signing its code of conduct, contractors agree to require all their employees who are responsible for implementing the code to review and familiarize themselves with it.

  • JCPenney's purchase contracts require suppliers to impose the same standards on their contractors as the company places on them (including certification that no forced, indentured or illegal child labor was employed in the manufacture of the merchandise).

  • Kmart's purchase order requires suppliers to contractually agree that they have "ascertained and financially warranted" that no child labor was utilized in the manufacture of merchandise, and obligates them to be responsible for and inspect their subcontractors. Vendors also must sign Kmart's Certificate of Compliance (introduced in June 1996), certifying that they will increase their factory inspections and take vigilant action to prevent problems. Vendors' signature of this Certificate also binds them to make a payment, equivalent of 50 percent of Kmart's order, to a local human rights or children's organization in case of failure to comply.

  • Talbots requires its vendors to certify in their shipping documents that they have a program in effect for monitoring their contractors.

Some respondents who utilize buying agents contractually obligate these agents to implement their policies on child labor:

  • Dollar General requires buying agents to warrant that merchandised purchased for the company is not manufactured in violation of any human rights resolutions.

  • Spiegel requires its buying agents to implement its code.

Some companies require documentary proof of compliance or reserve the right to carry out on-site inspections:

  • Phillips-Van Heusen's contracts require facilities to have on-site such documents as proof of age or wages paid.

  • Fruit of the Loom requires contractors to provide proof of compliance, including proof that all employees meet the minimum age.

  • For some companies (e.g., Fruit of the Loom and Jones), endorsement of a code or policy is also an authorization to allow the contracting company free access to contractors' facilities and any information requested in order to monitor for compliance.91

  • Vendors who sign Russell Corporation's ('Russell') Vendor Policy give Russell the right to conduct on-site inspections.

Some companies, although they have specific language prohibiting child labor or general contract language requiring adherence to applicable laws, do not appear to have any mechanism for compliance. The contractual language, in these cases, is the only visible means by which these companies implement their policies with regard to imported apparel.

  • Ames' purchase order requires vendors to comply with all applicable labor laws and states that failure to comply would result in cancellation. Ames' buyers are instructed to stay alert to any indication that goods are being made under unacceptable conditions, and states that if any such problems exist, it would take action. However, Ames said that it uses agents for the purchase of its imports and it generally has no knowledge or control over where the goods are manufactured.

  • BJ's Wholesale Club, a division of Waban, indicated that any imported apparel it sells is purchased domestically, and it has no control over which countries or facilities that apparel comes from. Furthermore, it stated that it has no knowledge of the workforce in those facilities.

  • In its purchase order, Burlington Coat Factory requires that vendors comply with all applicable laws, but no further compliance action is taken.

  • Family Dollar indicated that its purchase orders have always required vendors to comply with all applicable labor laws. However, Family Dollar gave no indication of any compliance process.

  • Home Shopping Network includes specific language prohibiting the use of child labor in its purchase order terms and conditions as well as a vendor-practices agreement. However, it gave no indication of how it implements those provisions.

  • Ross Stores' purchase order requires its vendors to comply with all applicable laws and regulations. The company stated that it would not knowingly purchase goods that are made by children or exploited workers, but does not visit any manufacturing sites or have any other system for monitoring compliance. However, Ross Stores indicated that it is reviewing its purchasing process regarding foreign suppliers.

b. Evaluation of Prospective Contractors

While technically not a monitoring activity, evaluation of prospective contractors with regard to labor standards is becoming an important aspect of code implementation. At least seventeen of the companies that responded to the survey stated that they have a process in place to evaluate overseas facilities before they establish a business relationship with them.92 Such on-site evaluations or inspections have long been made primarily to verify whether the facilities have the physical capacity to meet quality and quantity specifications. Increasingly, the working conditions and employment practices of prospective contractors are also being evaluated, screening out companies that are violators or have the potential for being so in the future.

  • Several of the companies that conduct such evaluations indicated that compliance with their policies on working conditions is an important factor in the decision to place a production program with a contractor. These evaluations, according to many, enable them to screen out contractors who do not comply with applicable legal standards or who do not meet a company's own standards.

  • A few respondents indicated that such pre-contract inspections had enabled them to avoid doing business with a facility that appeared to employ under-age children, but most reported that when facilities are rejected, it is usually for other reasons.

The evaluations typically involve an inspection of the physical plant and include other elements such as reviewing company records (including employment records), evaluating the workforce, and explaining company policies and expectations.

  • Some companies use a standard checklist or questionnaire that includes specific questions or criteria related to working conditions and employment practices, including questions on the age of workers.

  • Other companies, such as Land's End, indicated that they have an intricate process to qualify vendors, but did not disclose what the process entails.

  • Levi Strauss' initial evaluation of potential business partners is done by a team of employees representing different divisions of the company and includes one of its 50 specially trained auditors.93 Levi Strauss indicated that the evaluations take at least two full days to complete, and auditors use a 20-page form to evaluate the policies, practices, and conditions of the contractors. They also review payroll, personnel and other records and check health and safety conditions. To get a "full picture of a potential contractor's adherence to the Terms of Engagement standards," the team also relies on unannounced visits, advice from outside organizations and community leaders, and interviews with workers both on-site and away from the facility.

  • Fruit of the Loom reviews potential contractors' management experience and financial condition to ascertain whether they can deliver quality products in compliance with Fruit of the Loom's standards and all applicable laws.

  • Salant reported that it looks for workers who appear underage or malnourished during evaluations, and utilizes a checklist that includes a question on whether contractors keep age records of all employees.

Two of the retailers who conduct pre-contract inspections of potential contractors use an external organization to do them:

  • When Wal-Mart contracts directly with an overseas manufacturer to produce goods, it hires an outside agency to inspect factory conditions before work begins. Wal-Mart indicated that this process has identified more than 105 factories that failed to comply with Wal-Mart's standards - and therefore are not eligible for contracts with Wal-Mart.

  • Price/Costco has an outside audit done of every new foreign facility in cases where it uses a U.S. wholesaler who sells imported goods. These audits include a site visit and evaluation of quality and volume capabilities, as well as working conditions and labor force composition. Price/Costco indicated that the vendor pays for the audits.

Some companies, such as VF Corporation, re-inspect facilities that they have not used for few a seasons to ensure that they still comply with its standards.

  • Federated maintains a database that includes all approved suppliers as well as a "red-flagged list" of vendors that have been rejected.

4. Enforcement

Enforcement of corporate codes of conduct refers to how U.S. companies respond to violations of their codes. Enforcement is essential to the success of a corporate code. As a report on codes of conduct has stated, "without adequate enforcement, codes can be mere public-relations ploys, misleading consumers that workers' rights are actually respected in production."94

Information from those respondents who outlined their policies on enforcement indicates that there are various levels of response to violations of child labor policies. Most companies stated that they would first investigate all allegations to confirm the use of child labor.95 Most also indicated that they use graduated responses to confirmed violations, which include: a) monetary fines or penalties; b) probationary status; c) demand of corrective action; d) support of educational projects (particularly where child labor violations are involved); e) cancellation of an individual contract; and f) severance of the relationship. Positive reinforcement includes: a) retention of current contracts; and b) awarding of additional contracts.

While termination of a contractual relationship may send the strongest signal regarding intolerance of child labor, a zero-tolerance policy has immediate effects for the factory management and for the workers who would lose their jobs when factory orders are canceled.

Resolution of the problem of child labor means different things for different companies. In most cases, it simply means dismissal of the child workers. For others, resolution occurs when the supplier puts satisfactory monitoring systems in place. To a very few companies, such as Levi Strauss, resolving the problem might mean contributing resources, if necessary, to achieve sustained change. Some companies indicated that they believe their ability to modify contractors' behavior depends greatly on the amount of leverage they can exercise on those contractors. Companies have far less leverage with contractors where they only have small production runs.

The vast majority of companies that responded to the survey reported that they have never found any violations of the child labor provisions of their code or policy. Some companies attributed this to their efforts to evaluate and carefully select suppliers before entering into contracts with them. Others indicated that child labor violations of their codes are less common than other types of violations, such as health and safety.

Of the companies that responded to the survey, only four - The Gap, Levi Strauss, Phillips-Van Heusen, and Sears - have confirmed instances of child labor in overseas production facilities that were producing garments for their account.96 In all of these instances, the plant employing underage workers was an independent contractor.

  • The Gap reported that, when it has discovered child labor in a facility producing its merchandise, it took immediate action to either correct the problem or terminate the business relationship with the facility.

  • Levi Strauss reported that when it first began implementing its Terms of Engagement, about five percent of its contractors were terminated due to a variety of conditions, including the use of child labor. However, during initial Terms of Engagement evaluations in Bangladesh, it found several underage girls working in two contractor facilities. Levi Strauss stated that, rather than having the underage workers discharged, it persuaded the contractors to stop employing underage children, but to continue paying the girls even though they no longer worked. Levi Strauss paid for the former underage workers' tuition, books and uniforms to attend school, and the contractors agreed to employ the girls once they had finished school.

  • Phillips-Van Heusen reported that it has found child labor in several off-shore facilities.97 The company said that in such instances, it has discussed the problem with the contractor and allowed 30 to 90 days to discharge the underage workers. In three instances, the contractors complied. In the one instance that the contractor did not comply, Phillips-Van Heusen discontinued its relationship with the contractor. In one case, where it had a large concentration of production with multiple contractors and sewing shops in one area, Phillips-Van Heusen observed children in manufacturing areas who were not in school. The company determined that educational opportunities were lacking, and made a commitment to a multi-year project to improve the educational system. Phillips-Van Heusen has built classrooms, provided for a well, electricity and additional teachers, and purchased desks and supplies.

  • Sears reported that in late 1994, the BBC brought to its attention that it had found children working in a manufacturing facility in India that produced garments for Sears. Sears subsequently contacted the U.S. importer that was procuring the garments, and that importer denied that child labor was being used. Sears demanded that child labor not be used, and asked that documentation of age be required. The importer provided Sears with such documentation, which contained a Government of India certification stamp. When Sears received a videotape of a BBC broadcast, which clearly showed children working at the facility, Sears demanded that its garments no longer be made there. Sears later terminated the importer when it was found to still be using the facility (although Sears pointed out that no goods from the facility were supplied to Sears).

Other companies have received allegations of violations of their policies on child labor:

  • JCPenney stated that it had received allegations of underage workers by its associates but determined after its own investigation that there had been no violation.

  • Liz Claiborne reported that after recently uncovering an alleged breach in a Middle Eastern country, it is investigating the allegation in cooperation with a U.S.-based human-rights organization.

Only a few companies - Kmart, Montgomery Ward, Salant and Venture - reported that they would respond to violations of their child labor policy with immediate terminations of the business relationship. Many others, including Fruit of the Loom, The Limited, Nordstrom, Oxford and Ross Stores, indicated that violations could be punished with terminations, but not unconditionally or before other approaches were tried. Most companies outlined an incremental response to violators.

Following are some examples of stated enforcement policies:

  • Federated stated that if it is notified by a governmental authority or determines on its own a serious violation of its policy, it will immediately suspend all shipments from the subject factory and discontinue further business until that factory institutes the monitoring programs necessary to ensure compliance. If notified of a violation by another party, Federated will immediately suspend further shipments, pending the supplier's explanation and commitment to take satisfactory remedial action. Federated stated that it may also take legal action.

  • JCPenney reported that if, after full investigation, it determines that misconduct has occurred, it would take appropriate corrective actions, which could include canceling the affected order, prohibiting the supplier's future use of the factory where the violation took place, or terminating JCPenney's relationship with the supplier. If informed by a government of violation of labor laws, it will immediately suspend shipments from the factory, with any resumed shipments conditioned on verification that the supplier has put the monitoring programs in place to ensure compliance.

  • Jones indicated that it will generally first try to get remediation of the problem before withdrawing. But it will take appropriate actions as warranted, ranging from canceling the affected purchase contract or terminating its relationship with the supplier.

  • Kmart stated that if a supplier is found to be in violation, it will cancel the order, with the supplier bearing the burden of any loss and responsible for other damages. Furthermore, Kmart stated that it will sever its relationship with the vendor, who will be assessed a payment, worth 50 percent of the contract, to be donated to a human rights or children's organization in the community where a violation occurred.98

  • Liz Claiborne stated that it will first investigate reported violations to find out the scope and nature of the problem, and the status of the workers involved. It requests contractors to address the situation in a humane manner, while ensuring that the facility be brought up to standards.

  • Nike indicated that when a problem on an issue other than child labor has been found, Nike has asked the factory manager to set up a timetable for remedying the problem.

  • VF Corporation reported that it would first do its own investigation of allegations. If a violation were confirmed, it would try to first work with contractors to correct deficiencies. If that does not work, VF Corporation stated that it would terminate the relationship.

 

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