Companies involved in outsourcing have long recognised the importance of dealing properly with labor law and employment issues as part of any outsourcing project.  Traditionally, the key times to deal with such issues are either at the point of initial transfer of services and employment into an outsourcing arrangement, or at the point of exit and re-transfer.  Now, however, a recent case suggests that – in the United States at least – companies involved in outsourcing need to pay extra attention to on-going employment practices of their suppliers during the life of their outsourcing arrangements. 
 
Attached below is a link to the Employment Law Commentary produced by Morrison & Foerster’s Labor Group.  The article focuses on a recent settlement between Wal-Mart and the Department of Homeland Security.  The case highlights the fact that US-based companies need to insulate themselves from potential labor and immigration law violations of their outsourcing contractors.
 
As the Commentary points out, organisations cannot now assume that they have no responsibility for the employment practices of their outsourcing contractors.  In some circumstances, companies involved in outsourcing could be held liable for employment and immigration violations committed by their outsourcing contractors.  This has implications for any outsourcing arrangement involving the provision of services in the United States.  The article makes suggestions for additional provisions that ought to be included in outsourcing contracts touching on the United States. 

Employment Law Commentary - July 2005