Core Elements of a Sweatfree Procurement Policy
Introduction
An institutional sweatfree procurement policy is a movement-building tool, supporting a solidarity strategy between organized consumers and organized workers. The higher the standards in the policy, and the stronger the enforcement mechanisms, the better the tool it is. Better policies can contribute to stronger movements, while stronger movements always make the policies more effective, ultimately creating better working conditions, higher wages, and more power for workers to influence workplace policies.
In order to win the best possible policies we need strong local campaigns nurtured through grassroots organizing, education, and coalition building. But we also need to be aware of other sweatfree campaigns, other policies, advances made in one place, challenges in another. If one campaign breaks new ground, we should try to hold that up as a model elsewhere while being aware of different local political realities and the need for local flexibility.
This outline of core elements in sweatfree procurement policies represents the latest local innovations and the best thinking to date on how to craft a policy that works for all parties involved, from factory workers to policy administrators.(1) Please treat it as a working document. If you are able to win higher standards or better enforcement tools, we want to know so that standards everywhere can spiral up.
Purpose
The “whereas clauses” that express a legislative body’s “findings” and purpose in the beginning of a sweatfree purchasing law are not without significance. They can become important in a court case when determining whether or not the implementation of the law has gone beyond its original purpose.
Claim the Public's Right to Know About Working Conditions
This is the basis for requiring public reporting and public disclosure of factory locations, key to policy enforcement. If it is established that the public has a right to know, it is difficult for companies to argue, as they often try, that this information is proprietary.
Act as a Market Participant
The procuring institution is acting as a regular consumer, a market participant, not as a regulator. State and local governments are not allowed to regulate in the area of labor relations and labor standards; this is an area preserved for the federal government and regulated through the National Labor Relations Act and the Fair Labor Standards Act. However, under the market participant exemption in the Interstate Commerce Clause, state and local governments have as wide discretion as private consumers in setting conditions for purchasing.
Claim Self-Interest
States and local governments also are not allowed to regulate commerce beyond their own borders, another area preserved for the federal government under the foreign commerce clause of the Constitution. If the standards established in a sweatfree purchasing policy are higher than those required by local law or treaty obligations (e.g. requiring compliance with non-poverty wages rather than the legal minimum wage), a court could rule that the law violates the foreign commerce clause. This was the ruling of the First Circuit Court of Appeals when it struck down a Massachusetts law that barred companies doing business in Burma from receiving state contracts. However, the court also recognized that states are allowed to impose limits on public purchasing if those limits serve a legitimate local interest and also act as a market participant.(2)
There are several ways of claiming that a sweatfree purchasing policy serves a legitimate local interest. For example, you can legitimately claim that avoiding sweatshop abusers helps to even the playing field for local law-abiding suppliers by creating conditions of fair competition, or that sweatfree purchasing reflects the expressed interests of local citizens who do not wish for their tax dollars to subsidize sweatshop and abusive child labor.
Scope
The policy should be comprehensive, applying to procurement of both products and services because everything an institution buys may originate in a sweatshop. Practically speaking, however, most politicians want to see evidence of problems before committing administrative and financial resources. Apparel, footwear, and laundry services are a good place to start, along with a commitment of gradual expansion based on research and evidence gathered by the responsible administrator. The sweatfree procurement laws of Los Angeles and San Francisco are good examples of policies with comprehensive scope that will be implemented incrementally.
In order to avoid federal preemption issues (see above), you may want to set procurement conditions exclusively for facilities and workers that manufacture products or provide services procured by your institution. Some courts, though not all, have held that procurement conditions must be related to the supplier's performance of its contractual obligations to the procuring entity. If you want to target the supplier as a whole – all of its operations and all of its workers – you might argue that the procuring entity (state, city, or school for example) and its tax payers have a valid moral and public interest in not dealing with sweatshop suppliers, whether or not the sweatshop conditions affect the supplier’s contractual obligations to the procuring institution.
Standards – Code of Conduct
The following standards are very basic. Perfect enforcement would make no worker rich, but it would ensure a measure of dignity and respect at the workplace, and enable workers and their families to escape the most abject poverty. If you think you can win higher standards we encourage you to campaign for them. The institution should encourage suppliers to exceed these standards.
Fundamental International Labor Organization Standards
The United Nation's International Labor Organization (ILO) has identified eight conventions as fundamental to the rights of human beings at work, irrespective of countries' levels of development. The conventions cover the areas of:
• Freedom of association and the right to collective bargaining;
• The elimination of forced and compulsory labor;
• The abolition of child labor, and;
• The elimination of discrimination in the workplace.
According to the ILO, these measures “set the basis for social justice in the workplace and provide a framework to ensure that people fairly share in the wealth that they have helped generate.”
Applicable Local Laws
These are the laws of the country where the manufacturing of the product takes place. The laws cover wages and non-wage benefits; working hour limitations and overtime rules; health, labor, and environmental conditions; legal guarantees of freedom of association; child labor restrictions; regulations on home-based work; building and fire codes; and discrimination in hiring, promotion or compensation on the basis of race, disability, national origin, gender, sexual orientation or affiliation with any political, nongovernmental or civic group.
Non-Poverty Wage
In most countries, the legal minimum wage is a poverty wage that does not provide workers with enough income to pay for the cost of food, shelter, clothing, medicine, and other basic needs for their families. Our public institutions should not be complicit with the impoverishment of the workers that make the products they buy, but should require companies pay a more dignified wage. Because wages amount to such a small fraction of the total retail price of products, even doubling workers’ wages would result in very small price increases. According to research conducted by the Worker Rights Consortium for the City of Los Angeles, a non-poverty wage requirement could increase procurement costs by 0.8% to 2.2%.
We recommend the following formula for a “non-poverty wage” in the U.S.: the level of wages required for a full-time worker to produce an annual income equal to or greater than the United States Department of Health and Human Services’ most recent poverty guideline for a family of three plus an additional 20% of the wage level paid either as hourly wages or health benefits. Outside the United States, a non-poverty wage is a comparable nationwide wage and benefit level, adjusted to reflect that country's level of economic development using a factor such as the relative national standard of living index in order to raise a family of three out of poverty.
You can download a table of non-poverty wages in garment producing countries worldwide here: www.sweatfree.org/nonpovertywages. Please note that the table of wages is not meant as a definitive statement on non-poverty or appropriate wages for workers around the world. Rather, it is a tool to help sweatfree activists hold companies accountable and for workers to drive a tougher bargain for higher wages.
You can also calculate a higher U.S. living wage level using the Universal Living Wage formula (see: www.universallivingwage.org), which is based on fair market rent guidelines developed by the Department of Housing and Urban Development (www.hud.gov). To calculate living wages for other countries, see www.dol.gov/ilab/media/reports/oiea/wagestudy.
The Cities of Milwaukee, Los Angeles, San Francisco, and Madison, the Los Angeles Unified School District, and the states of California, Illinois, New Jersey, and Pennsylvania have adopted the non-poverty wage standard.
Right to Organize and Collective Bargaining
Workers’ right to freely form and join unions for the promotion and defense of their workplace interests is a basic human right. It is a basis of democratic representation and governance. Workers need to be able to influence workplace policies that impact their lives. An independent worker organization offers workers the best chance that they will have an effective voice in determining their wages and working conditions.
Furthermore, organized workers play a vital monitoring role, letting us know if employers are shifting back toward sweatshop strategies. Consumers and anti-sweatshop organizations can then bring pressure to bear on those employers to get them back on the sweatfree track.
Finally, organized workers are a vital force for expanding the share of total production that is sweatfree. They do this in two basic ways: first, by organizing more unions in their sector and helping more workers to increase their economic power; and second, by providing a critical part of the political base that will encourage their governments to pursue more worker-friendly economic and social policies.
No Termination Without Just Cause
When workers try to organize a union to gain protection and power to improve working conditions, the sweatshop employer’s most common anti-union tactic is firing union supporters. This sends a chilling message to coworkers: keep quiet or you will lose your job. Employers may also threaten to close a factory and shift production to some other country if workers organize a union, a tactic called “cut-and-run.” By including “no termination without just cause” provisions in the sweatfree purchasing policy an institution signals that it will not do business with companies that suppress workers’ right to organize by terminating union supporters.
Based on model policy developed by the UNITE HERE union and adopted by States of New Jersey and Illinois, and City of Milwaukee.
Additional Union-Friendly Procurement Provisions
The following provisions have not yet been included in sweatfree purchasing laws. Courts may invalidate the provisions if they think local or state governments are trying to regulate labor relations. This is an area of law reserved for the federal government and preempted by the federal National Labor Relations Act. However, federal preemption law is unsettled. You may want to assess your strength and the local political environment to determine if you want to include these provisions in your sweatfree purchasing policy. Because of the legal uncertainties we have not included the provisions in the SweatFree Communities model procurement policy.
Union-Made
The best way to support workers’ right to organize and join unions is to direct the public’s purchasing power toward suppliers where workers have acted on this right and won a legitimate democratic union. Buying from union suppliers expands the market for union made goods and creates incentives for non-union companies to not oppose union organizing attempts by their workers. If you include a requirement that all purchased goods must be union-made (and have the union label), it is also important to develop implementation mechanisms that can distinguish between genuinely democratic unions that represent workers and unions that are controlled by the company or the state. Initially the union-made requirement may shift purchasing dollars to North American companies since democratic unions are rare in the developing world. However, over time it may also create an incentive for companies to source production from unionized workplaces outside North America.
Union Neutrality and Card Check
These are two concepts that are slightly different but work together. “Union neutrality” means that the employer formally agrees to remain neutral in a union organizing drive, to advocate neither for nor against the union. The employer cannot hold captive audience meetings, fire anyone for union activity, or threaten that the plant will close if the workers unionize. Neutrality could also include additional provisions that make it easier for unions to organize, such as providing union organizers with access to the facility to speak with workers or a worker contact list so that they can visit workers away from work to discuss the union.
“Card check” is a procedure for union recognition where the employer formally agrees to recognize the union when a majority of the workers sign union authorization cards, either during a set or an open-ended period of time. By contrast, if workers are required to use an election to decide whether or not to recognize a union, employers often take advantage of the election period to harass and intimidate workers. Therefore, workers have much greater organizing success with the card check method combined with a union neutrality agreement than they do with an election.
Labor Peace Agreements
Typically done on construction projects, a labor peace agreement commits the employer and union to have "labor peace:" the union agrees not to picket or interfere with construction, and the employer generally agrees to neutrality and card check recognition. Courts have upheld these types of agreements in case-by-case circumstances to avoid labor disruption on a particular construction project where the government has a proprietary interest (e.g., the government owns the land or has lent funds for the project). This provision would be new for apparel procurement laws. As a purchaser of apparel goods, the government clearly has a proprietary interest. Since all procurement should be eligible for labor peace, this would be the most comprehensive approach. A more limited approach would be to single out specific cases where the government has a vital interest in getting its products without labor disruption (e.g., fire turnout gear for firefighters).
Alternatively, labor peace could cover apparel procurement services only, such as laundry services, where there is a danger of labor disruption to an ongoing service. The extent of labor peace coverage should be determined in part by the specific political situation in the jurisdiction. In any case, to preserve the proprietary (non-regulatory) nature of this provision, it may be important to give the procurement agency the ability to decide on a case by case basis which products should be governed by labor peace.
Organic and Fair Trade Preference
Most consumers concerned with sweatshop labor practices in the garment industry also care about cotton farm workers and would support purchasing policies that minimize cotton workers’ exposure to dangerous pesticides. Conventionally grown cotton is one of the most intensely sprayed crops in the world, accounting for more than 10% of pesticides and almost 25% of insecticides used worldwide. These synthetic materials may poison farm workers, drift into neighboring communities, contaminate ground and surface water, and kill beneficial insects and microorganisms. The Environmental Protection Agency considers seven of the top 15 pesticides used on cotton in 2000 in the United States to be “possible,” “likely,” “probable,” or “known” human carcinogens.
Organic cotton, on the other hand, is grown with methods and materials that have a low impact on the environment, such as beneficial insects, crop rotation, and precision tillage. Organic production reduces the use of toxic pesticides, insecticides, and fertilizers. When a company is “certified organic” it means that an independent organization has verified that the company meets or exceeds defined organic standards. Organic cotton is grown in 12 countries, but represents less than 0.1% of global cotton production.
At the time of writing, some forward-looking sweatfree campaigns are combining sweatfree and organic purchasing provisions; the Cities of Vancouver and San Francisco are the first in North America to adopt both concepts.
Consider a provision such as: "This body shall procure certified organic food and apparel when available and feasible.” Organic is defined in Title XXI of the Food, Agriculture, Conservation, and Trade Act of 1990. The Act was amended 2004. For more information, contact the Organic Consumers Association: www.organicconsumers.org.
You may also consider a fair trade preference for agricultural products that are fair trade certified (currently coffee, tea, cocoa, chocolate, rice and fresh fruit). Fair trade certification guarantees fair prices for family farmers and fair wages for farm workers, environmentally friendly production practices, and International Labor Organization standards regarding child and forced labor, freedom of association, collective bargaining, and anti-discrimination. For more information about fair trade certification, contact TransFair USA: www.transfair.org. The standards for all fair trade certified products can be found at the Fairtrade Labelling Organization website: www.fairtrade.net.
Compliance Tools
Contractor and Subcontractor Responsibility
Bidders should be required to sign an affidavit affirming that they and their subcontractors will comply with the standards established in the Code of Conduct.
Public Disclosure of Factory Locations and Wage Rates
Bidders should also be required to publicly disclose the names and addresses of factories where the products they propose to sell to the institution are made, and the wages paid to the workers making those products.
Most corporations hide their factories behind walls of secrecy. Tearing down those walls by requiring government suppliers to report the names and locations of factories where the products they sell to the institution are made should be the first requirement of a sweatfree purchasing policy. Without public disclosure independent groups cannot verify factory conditions, and workers rights violations will not come to the attention of the institution. In short, without disclosure the policy is unenforceable. On the other hand, when companies do make factory names and locations publicly available, workers can register complaints and independent human rights organizations can investigate conditions, report problems, and help to correct violations. Similarly, public disclosure of wage rates ensures transparency and is an important step towards holding companies accountable for the wages they pay and making sure that those wages are at least non-poverty wages.
Companies may complain that names and addresses of factories is “proprietary information” and that disclosure would put them at a disadvantage by exposing “trade secrets” to their competition. They may offer to provide such information to the institution on a confidential basis only. However, the larger companies often source from the same factories as their competition; they already know where their competitors produce. After many years of publicly disclosing factory locations to the Worker Rights Consortium (WRC) in order to comply with college and university licensee codes of conduct, companies have not yet alleged any deleterious impact on their competitive ability.
Regular Public Reports from the Contractor
By requiring suppliers to provide annual reports on their progress in achieving and maintaining compliance with the sweatfree purchasing policy, the institution signals that code compliance is always a process, and that working conditions can and should always improve. A public reporting requirement promotes manufacturer responsibility and transparency.
Reports should include information on internal monitoring programs and their results, external audits if available, problems discovered, and corrective action plans.
Based on model policy developed by the Maquila Solidarity Network.
Certified Payroll
Companies are responsible for complying with wage standards, and for providing verifiable wage reports. By requiring a certified payroll, institutions can make sure that the employer maintains verifiable records for each worker documenting the number of hours worked in a pay period, the pay rate, the deductions, and the actual pay. By requiring workers to receive an itemized wage statement, institutions help empower workers themselves to report violations of wage standards.
Based on recommendation by the Pittsburgh Anti-Sweatshop Community Alliance.
Sweatfree Advisory Group Consisting of Administrators, Activist Groups, and Labor Organizations
This group supports the administrators responsible for implementation and enforcement by monitoring contracts, educating administrators, networking with other local and national anti-sweatshop efforts, and receiving and assessing evidence of supplier non-compliance from workers, labor unions, governments, non-governmental organizations, or human rights organizations. Given the experimental nature of sweatfree procurement, it is difficult to anticipate all situations that will arise. An advisory working group provides expertise and resources to resolve unforeseen issues of implementation and enforcement. The State of New Jersey, for example, has established an “Apparel Procurement Board” to receive complaints and recommend investigations. The Board includes representatives of uniformed unions of employees of the State and state agencies that employ uniformed personnel.
The sweatfree advisory group can also research and recommend additional products and services to include in the sweatfree procurement policy. In addition, this group can play an important role establishing relationships with other institutions that have adopted sweatfree purchasing policies in order to share information about suppliers, develop best practices guidelines, and cooperate in the enforcement of sweatfree procurement policies.
Based on Los Angeles, San Francisco, Madison and New Jersey policies, and the experience of the Milwaukee Clean Clothes Campaign and the Bangor Clean Clothes Campaign.
Enforcement Mechanisms
These mechanisms enable you to have a direct impact on particular factories. Without enforcement a policy becomes a feel-good measure, undesirable to advocates and most legislators alike.
Independent Monitoring of Factories and Investigations of Worker Rights Complaints
Sweatfree procurement policies are based on institutional leverage with suppliers to compel corrective action when an independent monitoring organization substantiates allegations of worker rights violations at supplier factories. Complaints are integral to the success of the sweatfree policies, because it is through the process of complaints – investigations – corrective action that working conditions improve. In order to enforce complaints-driven policies, public institutions need an affordable and effective system of independent monitoring to investigate allegations of sweatshop abuses, and develop and monitor a program of corrective action that brings factories into compliance with institutional requirements. Given overlap in supply chains, cities, states, counties, and school districts can pool resources for monitoring, investigation, and compliance services in order to minimize the cost for each entity and maximize leverage with companies.
In response to inquiries from youth anti-sweatshop organizations for help with enforcement of their schools’ sweatfree purchasing policies, the Worker Rights Organization (WRC), a non-profit independent monitoring organization that helps universities enforce licensee codes of conduct, created an affiliation category for individual secondary schools in 2004. The WRC has also resolved to work with individual states, cities, and school districts on a temporary and experimental basis to conduct independent monitoring pilot projects and to advise these institutions on the creation of a consortium of public institutions that pool resources for code compliance services.1 In the independent monitoring pilot projects, public institutions and the WRC will work in partnership to enforce codes of conduct based on a shared commitment to certain principles and methodology, including:
• Public disclosure of factory locations.
• Public disclosure of results of factory investigations.
• Emphasis on continuous improvement with the understanding that improving conditions is not a one-time action.
• An understanding that codes are only effective if they are used to press for improved conditions.
• Contracts with vendors and factories should not be severed except as a last resort.
The City of Los Angeles is the first public institution to pilot an independent monitoring project with the Worker Rights Consortium.
By participating in joint WRC pilot projects with other public institutions that have adopted, or agreed to adopt, codes of conduct for suppliers of goods and services schools, cities and states can significantly increase market demand for fair labor conditions, while reducing the cost of monitoring and investigation to each entity. For a combined $50,000 the WRC will consult with Purchasing Agents to review state disclosure information; study the vendor supply chains in order to determine potential areas of concern; monitor factories in order to identify potential violations of the Code of Conduct; and conduct two investigations of allegations of worker rights violations. In addition, the WRC will consult with public institutions on creating a consortium to enforce sweatfree procurement policies.
This consortium can also consider collective purchasing in order to consolidate purchasing power with a limited number of suppliers and factories. By concentrating purchasing power, sweatfree schools, cities and states can ensure that their purchasing practices are fair, and that factories receive sufficient orders from sweatfree purchasers that agree to terms of payment and delivery schedules that ensure factories can lift standards for workers.
Remediation
The first goal of a sweatfree purchasing policy should always be achieving and maintaining compliance with the Code of Conduct, ensuring that working conditions improve and workers maintain good jobs. When receiving a credible allegation of a violation of the Code of Conduct, the institution and supplier should consult for the purpose of agreeing to a remediation plan and correct the violation. Termination of the relationship should be a last-resort if the supplier or its subcontractor is unwilling or unable to remedy the situation.
The steps of remediation should include:
• A violation notice from the institution to the supplier, describing the violation and the requirements for responding to the notice.
Information from the supplier with evidence that the violation did not occur, or a detailed plan for corrective action. Corrective action includes all steps necessary to correct violations, including, but not limited to, paying back wages to workers who made products supplied to the institution, reinstating any worker who has been unlawfully dismissed, and worker rights education for managers and workers.
An independent investigation, followed by a public report, verifying that the violation did or did not occur, and, if it did, that corrective action has or has not been effective.
Based on model policy developed by the Maquila Solidarity Network and State of Maine practices.
Sanctions
If a supplier knew or should have known about Code of Conduct violations, fails to respond in a timely fashion to notices of violations, refuses or fails to cooperate with an independent investigation, or refuses or fails to take corrective action in a timely manner, an institution should be able to impose any of the following sanctions:
• Terminate the contract without notice and without liability for unpaid amounts that would otherwise have been payable.
• Assess a penalty.
• Bar the supplier from the bidder’s list for a specified period of time.
Based on model policy developed by Maquila Solidarity Network
Notes:
(1) We would like to acknowledge the innovations and contributions from the following organizations (listed alphabetically): the Bangor Clean Clothes Campaign, Global Exchange, the Maquila Solidarity Network, the Milwaukee Clean Clothes Campaign, No More Sweatshops, Pittsburgh Anti-Sweatshop Community Alliance (PASCA), the Sweatfree Madison Campaign, United Students Against Sweatshops, and the UNITE HERE union.
(2) While the Supreme Court upheld the First Circuit ruling against Massachusetts’ Burma law, it did so on very narrow grounds. According to analysts David Naftzger: "Clearly, the Supreme Court could have issued a sweeping opinion against Massachusetts based on broad preemption doctrine that would have prevented states from imposing sanctions on firms doing business in certain rogue nations. Rather, the Court ruled, in a narrow ruling based on the Constitution's Supremacy clause, that Congress had preempted the Massachusetts statute when it adopted federal sanctions on Burma. … Because the Court’s decision rests on a single preemptive act of Congress rather than broader constitutional grounds, state sanctions were not ruled to be unconstitutional per se” (“A Future for State Legislatures in ‘Foreign Affairs?’ Supreme Court Leaves More Questions than Answers with Ruling Against ‘Massachusetts Burma Law,’” National Conference of State Legislatures, September, 2000). Certainly the Supreme Court decision should have no negative impact on sweatfree procurement legislation that do not target any particular countries, but requires fair labor standards on a non-discriminatory basis.
