Underpaid Employees Say Boo to Boohoo (2020)

 The Case

Boohoo until recently was one of the fastest growing online retailers in Britain known for their $6 bikinis and $15 mini dresses along with social media collaborations such as reality TV stars like the Kardashian sisters and “Love Island” personalities.

The company was started by Mahmud Kamani and Carol Kane in 2006 as a fast fashion company. This company offers cheap fashion products that are very popular amongst social media. The brand Boohoo includes other well known brands such as Nasty Gal, Pretty Little Thing, MissPap and BoohooMAN. Although Boohoo was growing popular from instagram and TikTok social media they have recently faced scrutiny. Back in 2017 accusations started to arise with claims that workers in a Boohoo factory were given “strikes” for things such as smiling or checking their mobile phones. There were also issues back in 2018 where Boohoo was shamed for producing $5 dresses which one expert warned would be of such low quality, charity shops would “snub” them.

Now in 2020 Boohoo is facing much more concerning accusations. A garment campaign group known as “Labor Behind the Label” stated that Boohoo suppliers were putting workers at risk of infection with little to no social distancing or personal protective equipment and low pay during a national lockdown. According to the New York Times It is believed that 75 to 80 percent of the garments made in Leicester factories are destined for Boohoo. On Sunday, July 5th, 2020, British newspaper The Sunday Times published an undercover investigation created by Vidhathri Matety where he obtained covert video footage of himself packing garments made in the factory under the label of Nasty Gal, which is owned by the fast-fashion brand Boohoo whose boss, Mahmud Kamani, is set to scoop a £50m bonus. Matety revealed unsafe practices at Leicester's garment factories. On Matety’s first full day of work on a factory floor at the heart of Leicester’s garment manufacturing district began on Thursday with vague promises “Depending on how you work” the boss informed Matety “we’ll decide your pay”.

On day two Matety had a rude awakening to the harsh realities of the sweatshop conditions endured by thousands of workers across the city, which last week became the first in England to be singled out for local coronavirus lockdown restrictions. When Matety got inside to work he found that the conditions inside were hot and cramped. While continuing to work throughout the day a coworker took Matety aside and stressed “You don’t need to drain yourself like this,” he advised Matety in Hindi. “These motherf***ers know how to exploit people like us. They make profits like hell and pay us in peanuts”. Matety learned that he should expect $3.50 to $4 an hour as a wage (The national minimum wage in Britain for ages 25 and above is $8.72 to $10.93).

There were several people at work within the factory but only a couple wore masks, most of the time the masks were pulled down below the chin. No worker wore gloves and there were no health warning signs, no handsanitizer and no evidence of social distancing measures.When hired a fellow worker warned Matety “You are not to tell anyone about working here,” he said. “You are working illegally, so do not discuss or say anything with other people. You have to be discreet. Don’t discuss this with anyone at all.” During a meeting later on in the day Matety sat down with the foreman of the factory and had a conversation discussing the lockdown rules that had recently been put in place for Leicester. The foreman stated “Even if it is implemented strictly, all that will happen will be a big fine. Nothing else to worry about.” Boohoo has already come under fire for allegedly risking the spread of coronavirus in Leicester after claims that factories supplying the online retailer told staff to come into work during lockdown despite being sick. Boohoo told The Sunday Times that it was investigating the claims and that the factory in the story was not a direct supplier.

            The company stated that they would be terminating its relationship with all suppliers that were found in breach of its code of conduct. Later on the company published a further statement on its website stating that they would begin an independent investigation into their supply chains and invest $12.5 million in eradicating malpractice in any supplier factories and step up its use of third party auditors. The impact of the accusations against Boohoo has been considerably larger than most fashion supply chain investigations due to the increase of Covid-19 cases within Leicester itself. The increase in infections and new information have prompted both a government response and unpredictable drops in the stock market.

            Priti Patel, Britains home secretary has asked Britains National Crime Agency to investigate “modern slavery” in Leicester’s clothing factories stating "Let this be a warning to those who are exploiting people in sweatshops like these for their own commercial gain. This is just the start. What you are doing is illegal, it will not be tolerated and we are coming after you". The development came after The Sunday Times, with the Conservative MP Andrew Bridgen, raised the alarm with the Home Office after being approached by whistleblowers about the illegal practices allegedly employed in some of the city’s clothing factories. The Modern Slavery Act was passed in 2015 after a campaign including a series of investigations by The Sunday Times. Boohoo’s market value plunged more than $1.89 billion, in two days making the company with a third less. Retailers including Next, Zalando, and Amazon say that they now plan to pull Boohoo clothing from their sites. 

Stakeholders

    Boohoo has taken a $1.89 billion hit and will continue to plunge if the company does not make up to its stakeholders. Employees are just one group of stakeholders that have been affected by Boohoo's actions. Employees have been taken advantage of while doing backbreaking work within unsafe working conditions just so they can put food on the table or pay rent or bills. The salaries that Boohoo gets away with by paying employees far less than minimum wage makes it much harder for employees to reach those goals of  putting food on the table or paying bills. Customers are also stakeholders due to Boohoo deceiving people with product quality, and stealing information from their customers. According to Market Business Insider, stockholders and investors of Boohoo are also stakeholders since shares dropped 30% according to Business Insider, within two days of the Boohoo supply factory working conditions going public. Stockholders are now losing investments due to Boohoos consequential decisions.

Individualism

From an individualists perspective, Boohoo supplier factories ran their company unethically through payment under minimum wage and violations of government mandates that jeopardized employees health and safety. These actions defy both Milton Friedman’s and Tibor Machan’s individulist theories. Individualism states business actions should maximize profits for the owners of a business, but do so within the law. Boohoo supplier factories in Leicester broke multiple laws while trying to maximize their profits. Boohoo was in violation of the Modern Slavery Act of 2015 as mentioned before. The Modern Slavery Act is an act of the Parliament of the United Kingdom. This act is designed to combat modern slavery in the UK and consolidates previous offenses relating to trafficking and slavery. 

“The rules of the market and supply and demand economically regulate how much employees should make and what benefits the company needs to offer to be competitive. Of course, since businesses operate within the context of society, it is also necessary for a business to operate within the laws and rules of the state that it regulates it. Laws therefore restrict what a business is ethically allowed to do to profit” (Salazar 18). By Boohoo paying more than two times less than the set  minimum wage for the UK while making these employees work in a stressful, harmful environment is a violation of this act which is a violation of the law. Boohoo industries denied the government mandate of a lockdown that was implemented because of Covid-19 (54.8 million cases worldwide and 1.32 million deaths currently) that has resulted in a drastic increase of the spread of the virus within Leicester where the Boohoo supplier factory was located.

Utilitarianism  

A utilitarian would view this case unethical because the outcome only results in a few people being happy rather than the majority. Business actions should aim to maximize happiness in the long run for all conscious beings that are affected by the business action. The only people who have been able to benefit is the company Boohoo itself which has been able to maximize its profits extraordinarily and the creator of Boohoo, Mahmud Kamani who is set to gain a £50m bonus due to the growing profits and business of Boohoo. Everyone else such as employees and customers are dissatisfied and suffering.

            The quality of the items produced by Boohoo have had a reputation of deceiving customers and causing disappointment. As mentioned previously the quality of Boohoo’s products are of such low quality that “even charity shops

would not want them”. According to the Better Business Bureau Boohoo products and items received a 1.29 out of 5 stars followed by many angry customer reviews on low quality products and fraudulent charges, for example a customer wrote “I was told my CLEARLY defective item was not faulty, that I would need to pay for return shipping. False advertising and unethical practices. SCAM and reporting to PayPal and the FTC”.

            Attention must be on maximizing pleasure and minimizing pain with a complete stakeholder approach. It is a fundamental rule of Utilitarianism. By paying more attention to profit than to safety and satisfaction of stakeholders Boohoo violated this rule. In order to be ethically responsible in the eyes of a Utilitarian Boohoo should have taken it upon themselves to not only follow the minimum wage guidelines but also devise a better customer service system. Boohoo knows its products are cheaply made, with cheaply made products being sold it should have been common knowledge that there would be complaints. Instead of addressing complaints professionally Boohoo ignored, denied, and even scammed customers instead of providing help. 

Kantiansim

A Kantian thinker would view this case as extremely unethical due to the manipulation and exploitation of employees and consumers. Kantianism does not look at the consequences and instead looks at the will of the person behind the action. Boohoo had no good will in how they ran their supplying business. They miss treated their employees and deceived their customers by selling them low quality items along with stealing their information. One customer addressed fraud by Boohoo stating “My debit card was used for fraudulent purchases through this company. They refuse to look into the fraud. They also have no phone number with this scam of a company I have never even heard of this company before”. Boohoo uses its employees and customers only to make a profit, they do not care about the actual people. Boohoo does not pass the Categorical Imperative test which means the act “is impermissible and therefore wrong to do. The most intuitive version of the Categorical Imperative is called “the formulation of humanity,” which states that it is wrong to use people as a mere means to get what you want” (Salazar 22). In this case it is clear that Boohoo uses its customers and employees as a mere means to make a profit.

Boohoo exploits its employees within the supplying industry by paying them far less than minimum wage and forcing them to work in unhealthy conditions illegally during a global pandemic. An employee described feeling exploited in the statement “These motherf***ers know how to exploit people like us. They make profits like hell and pay us in peanuts”. Boohoo has manipulated employees by not giving them full disclosure on how much they would be paid when employees first started working. Employees were then exploited for their labor while Boohoo cheated them out of their salary. Boohoo has also had a reputation for lying, cheating, and stealing from their customers making Boohoo overall an unethical company. 

Virtue Theory

The virtue theory bases ethics on an analysis of an individual's character rather than an individual's actions and outcomes. The cardinal four virtues that one must follow to be completely ethical within a business is courage, honesty, temperance, and justice. One can be seen as unethical within the virtue theory if their character is made up of vices instead of virtues. “peoples’ flourishing differs according to context. A few vices that have been severely detrimental to otherwise savvy and innovative business people are greed, dishonesty, and selfishness. Vicious traits like these can land people in jail due to fraudulent schemes and deceptive practices (Salazar 23)”.

In the Boohoo case the company and people running the supplying industries would be considered unethical to a virtue theorist. Boohoo crossed many lines with employees and customers. Within a business honesty is an agreement within hiring and treatment of employees, customers and other companies. Boohoo was very dishonest with employees and how they treated them. When working in the Boohoo supply industry employees were never told when first working how much they would be paid, and when the question was brought up the answer was never clear until they found out later on into working there that they would only be getting paid $3 to $4 an hour. The business also lacked temperance which can be described as  “reasonable expectations and desires”(Soloman 34). The action of making employees continue to come into the factory and work illegally during a national pandemic that has resulted in millions of deaths, while a mandatory lockdown was in effect is an unreasonable expectation for employees.

Justice and trust are two more of the many virtues that Boohoo lacks. Justice involves providing a quality product while conducting fair practices along with trust that a company will be reliable and carry through with corresponding actions. Not only has Boohoo violated its employees on all bases but all customers. Boohoo provides poor quality products to customers as seen previously from the Better Business Bureau while committing unfair practices such as missing orders with no refund, fraud, and theft. It will be difficult for Boohoo to come back as a company since the lack of good character virtues is lacking and has been made aware to the public. Not only the company but stockholders and investors will continue to suffer if virtues are not restored. 

Justified Ethics Evaluation

    Personally I believe Boohoo’s actions were extremely unprofessional and unethical. Boohoo has been a fashion company for over fourteen years using the benefits of social media to grow their business and attract young customers to purchase affordable in style fashion promoted by influencers and celebrities. The reality of the appealing price tags shown to customers is due to the harsh conditions employees of Boohoo endured to make these products.

Employees were paid little to nothing for back breaking work that was required to be done through a global pandemic without any health and safety precautions. 

            Not only were laws broken and the health of employees put on hold all in the means of profit but this also caused a spike in covid cases in the city of Leicester where the Boohoo supply factory was located. This was a carless decision made by the company that contributed to worsening conditions of the pandemic and employees health. 

            Boohoo denied allegations of this supply factory being a part of the company instead of announcing a formal apology and addressing changes that needed to be made. Boohoo’s claim to not being related to the supply factory was found untruthful based on an undercover investigation. Boohoo was entirely self interested and did not care for their employees, customers, or investors, and their actions proved this. 

Action Plan

Eliminating all practices of modern slavery would cost Boohoo more money to produce affordable clothing compared to paying their employees below minimum wage and requiring them to work through a mandated lockdown. Although these tactics save Boohoo a significant amount of money, Boohoo should be able to afford to pay their employees the set minimum wage given that they are multi billionaires that are not above the law.

Some new action plans that Boohoo could benefit from using ethically would be to first take responsibility for their own supply chains and manufacturers. Boohoo should put in place a new salary that meets minimum wage standards and includes benefits. Boohoo should also consider providing health insurance as a benefit to its employees especially during the time of a pandemic and as an apology for the pressure that was put on employees to work during a pandemic lockdown.

Boohoo also has the opportunity to implement bonuses and raises as an incentive for employees to work hard and a reward for a job well done. Not only should Boohoo implement actions for wage requirements but also for health and safety regulations. A third party such as a supervisor should be hired to oversee the conditions of each supply factory Boohoo owns that employees work in. Boohoo should be required to pass a health and safety regulation test every “set” amount of months to ensure the employees best interest of health.   

Lastly Boohoo should invest in employee training focused on customer service such as answering phone calls, answering emails, and being available to help customers with shipping and payment issues to allow for a good customer experience that will promise future prosperity of the company. Boohoo has already taken steps forward to bettering the ethics of their company by recently releasing there own vague action plan on their company website: 

“We will achieve our ambition by taking a very simple approach:

• Map: map out our supply chain and identify where the biggest impacts are

• Measure: put in place tools to measure the scale of the impacts and possible solutions

• Modify: make changes to improve our environmental and social footprint 

We have lots to learn and are believe that pan-industry initiatives and partnerships are a great way to move forward” 

            Along with the statement “boohoo group plc has a number of existing initiatives underway, borne from our commitment to sustainability, ranging from clear policies on modern slavery and ethical supplier conduct, through to zero waste to landfill at all our UK sites. In the context of growing global inequality and increasing climate change impacts, we recognize that we can – and must – do more….We have been working to develop a better understanding of our impacts, and a plan to improve our performance.” This seems to be Boohoo’s first steps in the right direction of becoming a more ethical company.

            Linnea Halter

References

Busby, A. (2020, July 06). With Allegations Of Slavery And Unsafe Working Conditions, Is Boohoo The Unacceptable Face Of Fast Fashion? Retrieved November 30, 2020, from https://www.forbes.com/sites/andrewbusby/2020/07/05/with-allegations-of-slavery-and-unsafe-working-conditions-is-boohoo-the-unacceptable-face-of-fast-fashion/?sh=464e861016e9

How Ethical Is Boohoo? (2020, October 19). Retrieved November 30, 2020, from https://goodonyou.eco/how-ethical-is-boohoo/ 

Laville, S. (2019, June 22). The story of a £4 Boohoo dress: Cheap clothes at a high cost. Retrieved November 30, 2020, from https://www.theguardian.com/business/2019/jun/22/cost-cheap-fast-fashion-workers-planet 

Bloomberg. (2020, July 07). Retailers Pulls Boohoo Clothing Over Labor Abuse Concerns. Retrieved November 30, 2020, from https://www.businessoffashion.com/articles/retail/retailers-pulls-boohoo-clothing-over-labor-abuse-concerns 

Matety, V. (2020, July 09). Boohoo's sweatshop suppliers: 'They only exploit us. They make huge profits and pay us peanuts'. Retrieved November 30, 2020, from https://www.thetimes.co.uk/article/boohoos-sweatshop-suppliers-they-only-exploit-us-they-make-huge-profits-and-pay-us-peanuts-lwj7d8fg2 

Matety, V. (2020, July 09). Boohoo's sweatshop suppliers: 'They only exploit us. They make huge profits and pay us peanuts'. Retrieved November 30, 2020, from https://www.thetimes.co.uk/article/boohoos-sweatshop-suppliers-they-only-exploit-us-they-make-huge-profits-and-pay-us-peanuts-lwj7d8fg2 

Paton, E. (2020, July 08). Why You Should Care That Boohoo Is Making Headlines This Week. Retrieved November 30, 2020, from https://www.nytimes.com/2020/07/08/fashion/boohoo-labor-influencer-crisis.html 

Boohoo stock tumbles 30%, wiping $1.25 billion off its market value, after an explosive report into working conditions at one of its factories. (n.d.). Retrieved November 30, 2020, from https://markets.businessinsider.com/news/stocks/boohoo-stock-price-reaction-criticism-over-low-factory-worker-wages-2020-7-1029371727 

Sustainability. (n.d.). Retrieved November 30, 2020, from https://www.boohooplc.com/sustainability