Every plaintiff wants to grab something from the world's deepest pockets. As the world's largest company, Wal-Mart Stores Inc. is an international target for lawsuits. In 2004 female employees of the retail chain filed the largest class action in the nation's history alleging sexual discrimination. A suit that went to court in September accuses Wal-Mart of denying employees meal breaks and overtime pay. As of this writing, a group of former employees in Quebec is awaiting the go-ahead to seek compensation for the closure of one of Wal-Mart's only unionized stores.
Now Wal-Mart has a new challenger, the International Labor Rights Fund (ILRF). The Washington D.C.-based advocacy group filed a class action in Los Angeles Superior Court in September on behalf of employees of Wal-Mart's overseas suppliers. The basis for the complaint is an alleged breach of contract. Specifically, ILRF argues Wal-Mart isn't holding its business partners to its "Standards for Suppliers." The document is a code of conduct Wal-Mart established for its overseas suppliers, which covers such things as wages, hours of labor and environmental conditions. The workers say they are subject to conditions that fall short of Wal-Mart's policies and claim that as third-party beneficiaries of the contract, they have a right to make Wal-Mart enforce its written standards. The workers are seeking monetary damages and better workplace conditions.
ILRF argued Unocal should be held liable because its foreign subsidiaries acted as its agents. Soon after a court granted a trial, Unocal decided to settle in December 2004. This case paved the way for the Wal-Mart litigation.
ILRF decided to try its tactics in California courts again. If it can convince the court that the standards are a contract and that Wal-Mart is obligated to enforce these standards, then Wal-Mart may bear responsibility for worker mistreatment by overseas suppliers.
Retooling the language of the codes is another route that companies can take. However, it is important not to water-down the language to a point where the codes are so general that they don't set any goals for the company.
"Language, if it is not already there, needs to be added to the codes to make it clear that they are standards and not promises or binding obligations," Fink says. "It is tricky because you don't want to put out a code of conduct that says we only want to comply with this when we feel like it or when we feel it is right."