May 1, 2002

Recently the FLA has been makeing changes in it's monitoring program. These changes are described in the FLA press release which can be found at http://www.fairlabor.org/html/FLA_PR_April_2002.html and in the latest Maquila Solidarity Network Codes update (see below).

A. BIG CHANGES AT THE FLA

On April 9, the Fair Labor Association (FLA) Board of Directors approved significant changes in its code of conduct monitoring program that could shiftmuch of the control over external monitoring from individual corporate members to the association itself. The changes would appear to bring the FLA external monitoring program more in line with the European foundation model.

The FLA is a US-based multi-stakeholder code initiative that includes majorapparel and sports shoe brand merchandisers, including Nike, Reebok, adidas- Salomon, Levi Strauss, Liz Claiborne, Phillips-Van Heusen, Polo Ralph Lauren, GEAR for Sports, and Patagonia, as well as over 170 universities. It emerged from the Apparel Industry Partnership (AIP), a Clinton Administration-initiated forum to address sweatshop abuses in the apparel industry.

In November 1998, US unions and faith organizations walked out of the AIP,charging that NGOs and companies had reached a separate agreement on a code and monitoring principles that included weak provisions on wages and hours of work, and left control of monitoring in the hands of companies.

Current non-corporate members of the FLA Board include representatives of the National Council of Churches, the National Consumers League, and the Lawyers Committee on Human Rights. Pharis Harvey, the former Executive Director of the International Labor Rights Fund (ILRF), sits on the Board as an individual.

Monitoring Goes In-House

Possibly the most far-reaching change in the FLA¡¦s revised code monitoring program is that the Association itself will now select the factories to be audited, and choose and directly contract the accredited compliance verification organizations to carry out those audits. All verification audits will reportedly be unannounced.

Under the previous system, companies would develop a list of factories to be audited, which the FLA would then approve or modify. The companies would directly contract the accredited compliance verification organizations to audit those factories.

According to Shawn MacDonald, the FLA will determine how many of each company's facilities will be subject to FLA external monitoring by conducting a statistical analysis to arrive at a randomly generated sample that is capable of authenticating the monitoring programs of the companies. According to MacDonald, the FLA is working with statisticians from FLA-affiliated universities to determine "how to organize the sampling in order to be accurate and efficient." It is not yet clear whether this will result in an increased or decreased number of facilities audited.

Under the new system, the FLA will also review each corporate member's performance by conducting its own annual audit of the company's compliance records and programs. It will also conduct field visits to observe the work of the companies' local compliance staff and assess factory conditions.

Under the new system, member companies will still be expected to carry out internal monitoring of all supply facilities conducted by company personnel.

The FLA will also require external monitors to complete a training program, conduct a trial audit with FLA observers, and pass an annual evaluation (or more frequently if needed), which will reportedly take place at the FLA head office and in the field.

Increased Transparency

The April 9 Board meeting also approved changes in reporting requirements that
should make the monitoring process more transparent. It adopted a proposal, reportedly developed by the Lawyers Committee for Human Rights, under which the FLA website will publicly disclose the following information:

As under the previous system, the FLA website will not include the name or address of the facility being audited.

The FLA¡¦s first annual public reports will appear this fall after the companies that were the original members of the FLA complete the first year of their monitoring programs.

According to Bama Athreya of the International Labor Rights Fund, the decision to release information on auditors' reports is a significant step forward. "The lack of transparency and the right of companies to choose and hire auditors were two of our major criticisms of the FLA", says Athreya. "We are very encouraged by these changes." The ILRF no longer formally sits on the FLA Board, but continues to be a member of the Advisory Committee.

Pilot Project Initiated

Another indication of the FLA's intention to bring code compliance verification in house is its decision to develop, on a pilot project basis, a "network of field specialists" in selected countries. According to MacDonald, field specialists would likely have expertise on areas such as health and safety, freedom of association, and discrimination and harassment. Their role would be to provide advice on remediation programs, and, in some cases, verify whether compliance problems identified in third party audits have been successfully remediated.

New FLA Players

The FLA Board also approved two new categories for company participation "Participating Agents" and "Participating Suppliers." According to MacDonald, this means that other companies in the supply chain, "from small factory to sourcing agent to retailer", can also become directly involved in the FLA. Whether participation of manufacturers in the FLA will lead to the certification of individual factories is still unclear. (Currently, the FLA certifies brands, not factories.)

Relationship to Other Certification Systems

The FLA and other US multi-stakeholder initiatives, such as SA8000, the Worker Rights Consortium (WRC), and the Worldwide Responsible Apparel Production Certification Program (WRAP), have recently been under pressurefrom US federal government officials and others to find ways of integrating, or at least mutually recognizing, their respective systems of code compliance verification. At its April 9 meeting, the FLA Board set up a task force to "meet with other certification systems to compare and possibly align monitoring protocols."

Staff Changes at the FLA

In December 2001, the Fair Labor Association (FLA) appointed Auret van Heerden as interim FLA executive director, replacing Sam Brown. A former anti-apartheid activist in South Africa, van Heerden was recently the coordinator of Action Program on Social and Labour Issues in Export Processing Zones for the International Labour Organization (ILO).

In April, the FLA appointed Louis Vanegas, former district director of the USfederal Wage and Hour Division in New York, as its Director of Monitoring.Vanegas has more than 14 years experience as an investigator of working conditions in garment factories in New York, Los Angeles, and San Francisco.

FLA Releases BJ&B Report

On April 19, 2002 the Fair Labor Association (FLA) released a public report on its investigation into a third-party complaint on alleged violations of freedom of association at the BJ&B cap factory in the Dominican Republic.

Curiously enough, the complaint was filed by Nike, and joined by Reebok and adidas-Salomon. All three companies source from the factory. BJ&B also produces Nike baseball caps bearing the names and logos of a number of US universities, many of which have No-Sweat licensing policies and are members of the FLA and/or the Worker Rights Consortium (WRC).

In response to the complaint, on March 6-20, an FLA delegation conducted an onsite investigation. The delegation included Auret van Heerden, the new Executive Director of the FLA, and Louis Vanegas, the new Director of Monitoring. Scott Nova of the WRC accompanied the delegation as an observer.

The investigation focused on the company¡¦s refusal to reinstate union supporters allegedly fired for their union sympathies, and on other forms of discrimination against union members. The delegation also investigated other company practices, including the use of weekly bonuses to compel workers to work overtime, the termination of employment contracts at the end of the year, and disciplinary procedures.

The report notes that on January 28, 2001, an agreement was signed to reinstate 13 of 20 workers who had either been terminated or pressured to resign after they filed a petition with the Department of Labour to form a union. The workers have since been reinstated.

Key recommendations listed in the FLA report include:

According to the report, the FLA member companies have since provided training to management personnel on code provisions, provided draft procedures on discipline and dismissals, and maintained regular contact with workers in the plant and with union members. Details of the remediation plans of the FLA member companies will apparently be released in a separate public report.

The BJ&B report will soon be available on the FLA website, in English and Spanish, at: www.fairlabor.org.