Report: Does Nike Exploit Workers in Its Supply Chain?

Overview

This report examines whether Nike exploits workers in its supply chain today, looking at both historic sweatshop scandals and more recent evidence. It contrasts Nike’s public commitments and monitoring systems with independent investigations, worker testimonies, and investor pressure.

Overall, the picture is mixed and uncomfortable:

• Historically, Nike was deeply implicated in sweatshop-style labor in Asia, with low wages, forced overtime, and child labor documented in the 1990s and early 2000s.¹
• Nike has since built one of the most elaborate compliance and monitoring systems in the apparel industry, helped found the Fair Labor Association (FLA), and publishes extensive codes and reports on labor standards.²³
• Yet credible recent reports still document wage theft, forced unpaid leave, heat exhaustion, harassment, and other abuses at Nike supplier factories, and critics argue Nike’s reforms remain insufficient, reactive, and often more about optics than real power-sharing with workers.⁴[^hong-seng]⁵

In practical terms: Nike has moved away from the worst forms of 1990s-style sweatshops, but serious exploitation risks and documented abuses remain in parts of its supply chain, especially where brands push for low prices and rely on voluntary audits rather than binding agreements.

Does Nike still use sweatshops in Asia today? · How strong are Nike’s Fair Labor Association commitments? · Can audit-based systems ever stop sweatshop abuse?

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1. Historical Context: From Sweatshop Icon to CSR Pioneer

1.1 1990s–early 2000s: Nike as a symbol of sweatshops

Academic and activist investigations in the 1990s showed that Nike’s model relied on very low-wage labor in developing countries (Indonesia, Vietnam, China, Cambodia, Pakistan, etc.) with reports of child labor, forced overtime, and abusive treatment.⁶¹

• A widely cited Stanford analysis describes Nike as having “single-handedly lowered the human rights standards for the sole purpose of maximizing profits.”⁶
• Media and NGO reports documented minors stitching soccer balls and other products up to 16 hours a day, 7 days a week, in countries like Cambodia and Pakistan.⁷
• Nike’s own later reporting admitted “widespread problems” in Asian factories, including physical and verbal abuse in more than a quarter of South Asian plants audited in 2003–2004.⁸

By the late 1990s, Nike’s brand became synonymous with “slave wages, forced overtime and arbitrary abuse,” in the words of co-founder Phil Knight himself.⁹

How bad were Nike’s 1990s sweatshops compared to rivals?

1.2 Nike’s public reforms and partnerships

Facing intense global criticism, Nike began a program of compliance and transparency reforms:

• Code of Conduct & minimum age: Nike adopted and expanded a Code of Conduct that forbids child labor and requires workers to be at least 16 or above the national minimum working age, whichever is higher.²
• Labor practices department: Nike created a dedicated labor practices/compliance department and rolled out more systematic factory monitoring and risk management.¹⁰
• Audit expansion: From 2002 onward, Nike audited hundreds of factories for health, safety, and labor conditions, documenting abuses and reporting some of them publicly.¹
• Fair Labor Association (FLA): Nike was instrumental in founding the FLA and became one of the first major brands to have its compliance program accredited (2005) and then reaccredited multiple times, with the FLA praising Nike’s “steadfast commitment” to improving labor practices.¹¹¹²
• Supplier transparency: Nike became the first major apparel brand to disclose names and locations of its suppliers, an important step for external scrutiny.¹³

These moves made Nike an oft-cited case study in corporate social responsibility (CSR) and “sustainability” transformations.¹⁴

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2. Nike’s Official Position on Worker Treatment

Nike’s own materials present a picture of strong policies and continuous improvement:

2.1 Policies and codes

Nike’s Code of Conduct and Code Leadership Standards:

• Explicitly forbid child labor, forced labor, and human trafficking.²
• Require suppliers to provide safe, healthy workplaces, respect freedom of association, pay at least legal minimum wages, and manage working hours responsibly.²¹⁵
• State that Nike works only with suppliers who “share our commitment to the welfare of workers” and to environmental responsibility.¹⁶

Nike describes its approach as building a “world-class supply chain” with tailored programs to help suppliers meet labor, health, safety, and environmental standards.¹⁷

2.2 Monitoring and partnerships

Key elements Nike highlights:

• Audits and assessments: Regular internal and external audits, announced and unannounced, in many factories.¹⁸⁸
• Capacity-building programs: Worker engagement and “culture of safety” programs, capability-building with suppliers, and health & safety management systems.¹⁹²⁰
• External initiatives: Long-term work with the Fair Labor Association, participation in initiatives like Better Work (ILO/IFC) and the Social & Labor Convergence Program to improve conditions industry-wide.³²¹²²
• Living wage benchmarking: Collaboration with the Anker Research Institute to develop living wage benchmarks in key supplier countries like Indonesia.²³

Nike and the FLA stress that the company’s program is repeatedly reaccredited, with the FLA noting Nike’s “continuous review and improvement” of social compliance tools.¹²²⁴

How reliable is Fair Labor Association accreditation?

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3. Independent Evidence of Exploitation and Abuse

Despite this architecture of policies and audits, a wide range of independent investigations, NGOs, unions, journalists, and even investors continue to document serious abuses and exploitation in Nike’s supply chain.

3.1 Ongoing wage theft and unpaid work

1. Cambodia & Thailand unpaid wages cases

   • Investor groups and labor-rights advocates have repeatedly called on Nike to pay over US$2.2 million in unpaid wages and benefits owed to more than 4,000 garment workers in Cambodia and Thailand, related to pandemic-era closures and unpaid leave.²⁵²⁶²⁷
   • Campaigners describe Nike as a “long-term holdout” refusing to pay workers what they are owed, despite the company’s human rights and supply chain commitments.²⁸

2. Unpaid security checks and late wage payments in retail

   • In the U.S., Nike agreed to pay US$8.25 million to settle a class action over unpaid time spent in mandatory bag/security checks for retail employees.²⁹³⁰
   • Another class action alleged late payment of wages for workers at New York retail locations.³¹

3. Hansae Vietnam wage theft and abuses

   • A Worker Rights Consortium (WRC) assessment of Hansae Vietnam, a Nike supplier factory with ~8,500 workers, documented wage theft, bribery for jobs, pregnancy discrimination, high heat, unsafe chemicals, locked exits, and chronic fainting episodes.⁴³²
   • The Fair Labor Association’s own report on Hansae found the factory violated all nine elements of its workplace code of conduct.³³

These cases indicate that systemic wage theft and unpaid labor still occur at Nike-linked facilities, even as Nike touts strong policies.

3.2 Heat stress, fainting, and unsafe conditions

At several Nike suppliers, workers have reported extreme conditions:

• In Cambodia, workers at a Nike-supplying factory described factory temperatures above 90°F (32°C), excessive heat and overtime, and mass fainting episodes among workers at sewing machines.³²
• A detailed investigation of the Y&W Garment factory in Cambodia—where Nike products were made—found workers collapsing from exhaustion and heat over a period of years, despite Nike’s claimed safeguards.³⁴¹⁸

Nike did respond in some cases by sending executives, consulting international labor officials, and coordinating with Better Factories Cambodia, but reporters concluded that serious risks persisted long after high-profile promises of reform.³⁴¹⁸

3.3 Harassment, abuse, and discrimination

Investigations at Nike-linked factories have documented:

• Verbal abuse, threats, and harassment, especially toward women workers, sometimes linked to productivity pressure.³²³⁵
• Pregnancy discrimination and pressure to resign or accept worse conditions.⁴
• Padlocked exits, unsafe handling of chemicals, and insufficient protective equipment.³²

While these abuses are not unique to Nike, they directly contradict the brand’s codes and public statements about respect, safety, and dignity.

Are wage theft cases at Nike suppliers isolated or systemic?

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4. Has Nike Actually Improved Over Time?

The critical question is not whether Nike has some abuses—virtually every major apparel brand does—but whether Nike’s total impact and trajectory represent meaningful improvement or ongoing exploitation.

4.1 Evidence of real improvements

1. Structural changes and disclosure

   • Nike’s creation of a labor practices department, formal supply chain policies, and systematic monitoring represented a real departure from the near-total opacity of the early 1990s.¹⁰
   • Being the first major brand to disclose supplier lists significantly empowered NGOs and unions to investigate and pressure specific factories.¹³

2. External accreditation and collaboration

   • The FLA has accredited and repeatedly reaccredited Nike’s compliance program, highlighting its continuous improvement and sophisticated social compliance tools.¹¹¹²²⁴
   • Nike participates in Better Work, SLCP, and other multi-stakeholder initiatives aimed at improving working conditions industry-wide.²¹²²

3. Policy advance on child labor and recruitment

   • Nike’s policies directly forbid child labor in supplier facilities and set specific age rules.²
   • Since 2008, Nike has had explicit policies against workers paying recruitment fees, aligning with “responsible recruitment” standards.³⁶

Independent academic work finds some improvement in working conditions and compliance scores among Nike suppliers over time, though results vary by region and factory.³⁷³⁸

4.2 Limits of the “audit and code” model

Multiple studies and NGO reports argue that Nike’s improvements are partial and fragile, because they rely heavily on voluntary codes and audit regimes:

• Researchers examining 800 Nike suppliers concluded that monitoring alone produced “only limited results” in raising labor standards.³⁷
• The Worker Rights Consortium and similar groups emphasize that binding labor agreements and worker organizing are far more effective than brand-led auditing and “scorecards,” which often miss or understate violations.³⁹⁴⁰
• Analysts note that price pressure from brands like Nike incentivizes suppliers to cut labor costs, undermining improvements unless backed by binding commitments and cost-sharing.⁴⁰

In this framing, Nike has professionalized and polished its supply chain management, but not fundamentally changed the power imbalance between global brands and low-wage workers.

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5. Current Allegations and Investor Pressure

Recent developments show that concerns about exploitation are not just historical but very current.

5.1 Wage theft and unpaid wages since COVID-19

• NGOs and unions describe a pattern of pandemic-era wage theft at Nike suppliers, where workers lost legally due wages and severance during suspensions, closures, or coerced unpaid leave.²⁶²⁷²⁸
• A high-profile case involves Hong Seng Knitting in Thailand; the FLA confirmed workers had been forced to give up mandatory leave pay, and a remediation plan including back payment of wages was only formalized in 2024–2025.⁴¹⁴²

Critics argue these slow, case-by-case responses amount to damage control, not systemic prevention, especially when Nike denies responsibility for some supplier factories despite significant evidence of production links.⁴³

5.2 Investor and shareholder activism

• Investor groups and activists have filed shareholder resolutions and public letters warning that Nike is being “pulled back into its 1990s image” as a brand associated with exploitation.⁴⁴⁴⁵
• One shareholder campaign expressed “grave concern” that Nike lacks an adequate remediation process for aggrieved supply chain workers, leading to human rights violations such as wage theft.⁴⁶
• Commentators note the reputational, legal, and financial risks to Nike from failing to address forced labor risks and unpaid wages more decisively.⁴⁷

This pressure reflects a broad sense that Nike’s public narrative of responsible sourcing is not fully matched by conditions on the ground.

Are Nike investor resolutions changing its labor practices?

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6. So: Does Nike Exploit Workers?

6.1 Understanding “exploitation” in this context

For this report, worker exploitation means patterns such as:

• Wage theft or systematic underpayment (including unpaid overtime and benefits).
• Forced or coerced labor (e.g., forced unpaid leave, recruitment debt, no meaningful exit).
• Dangerous or degrading conditions (extreme heat, chemical exposure, locked exits, harassment).
• Lack of meaningful voice (union-busting, retaliation for complaints, no effective grievance/remedy).

6.2 Evidence-based assessment

Based on the reviewed sources:

• There is strong historical evidence that Nike’s earlier supply chains relied heavily on exploitative practices, including child labor, low wages, forced overtime, and abusive treatment in multiple countries.⁶¹⁷
• Nike has since implemented more sophisticated policies and monitoring, achieved FLA accreditation, and contributed to industry initiatives. These steps have prevented some of the worst abuses in many factories and improved transparency.¹²¹⁷
• However, credible, well-documented cases of wage theft, forced unpaid leave, hazardous conditions, and harassment at Nike supplier factories exist into the 2010s and 2020s. Many of these are acknowledged not just by NGOs but also by the FLA itself, which found major code violations at certain suppliers.⁴³³⁴¹
• Experts and advocacy groups argue that Nike’s system still relies too heavily on voluntary promises and audits, without binding agreements or structural changes that ensure workers share in profits and have enforceable rights.⁴⁰³⁹

Conclusion:

• Nike today is not operating at the same level of blatant, unregulated exploitation as in the 1990s, thanks to years of pressure and reforms.
• Nonetheless, Nike’s business model continues to generate serious exploitation risks, and there is hard evidence of ongoing wage theft, abusive conditions, and inadequate remediation in specific parts of its supply chain.
• Describing Nike as a company that no longer exploits workers at all would be inaccurate. A more precise statement is that Nike operates within a global system that structurally enables exploitation and, despite improvements, has not fully eliminated or consistently remedied those harms in its own supply chain.

From an ethical-consumer standpoint, Nike remains a contested brand: better than its own past, highly polished in policy, but still frequently cited by labor-rights organizations as failing to meet basic workers’ rights in practice.

Which sportswear brands have stronger worker protections than Nike? · What would a non-exploitative sportswear supply chain look like?

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7. How to Interpret This as a Consumer

If you are deciding whether to buy Nike products based on labor issues:

• Understand that nearly all big sportswear brands source from the same low-wage manufacturing hubs, and exploitation is industry-wide, not unique to Nike.
• Nike’s high visibility and extensive documentation can make it look worse than peers, but it also means more information and more organized pressure exist around Nike than around many competitors.
• If you want to reduce your complicity in exploitation, you might:
  • Favor brands with binding labor agreements and clear evidence of living wage commitments and union access, not just codes and audits.
  • Support campaigns and organizations (e.g., Worker Rights Consortium, Clean Clothes Campaign) that pressure Nike and others to pay owed wages and sign enforceable agreements.

The key takeaway is not that Nike is uniquely evil, but that voluntary CSR has not solved structural exploitation—and Nike is a prominent example of this gap between promises and reality.

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Key Sources (Selected)

• Historical abuses and sweatshop context: Stanford lecture and case materials on Nike’s labor practices; documentation of sweatshops and child labor in Nike’s early supply chains.⁶¹⁷
• Nike’s policies and official stance: Nike’s Code of Conduct, human rights and labor standards, supply-chain responsibility pages, and FLA accreditation reports.^2173612
• Independent investigations: WRC and FLA reports on Hansae Vietnam and Hong Seng Knitting; ProPublica and Oregon reporting on fainting and heat stress; Business & Human Rights, Clean Clothes, and WSR Network wage-theft dossiers.^{433413418262728}
• Academic analysis: Research by Richard Locke and others on the limits of monitoring, and MIT Sloan/Stanford case studies on Nike’s evolving supply-chain strategy.³⁷³⁸¹⁴

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Footnotes

1. Overview of Nike sweatshop controversies and timeline of factory audits and reforms. "Nike sweatshops" (Wikipedia) ↩ ↩² ↩³ ↩⁴ ↩⁵

2. Nike human rights and labor compliance standards, including child labor prohibitions and age requirements. Nike ↩ ↩² ↩³ ↩⁴ ↩⁵ ↩⁶

3. FLA membership page describing Nike’s long-term collaboration and role. Fair Labor Association ↩ ↩²

4. WRC assessment of Hansae Vietnam documenting serious labor violations at a Nike supplier factory. WRC ↩ ↩² ↩³ ↩⁴ ↩⁵

5. Texfash analysis of Nike’s unpaid wages controversies and broader structural issues in global supply chains. Texfash ↩

6. Stanford lecture excerpts describing Nike’s role in lowering human rights standards in pursuit of profit. "Trade & Environment: Nike" (Stanford) ↩ ↩² ↩³ ↩⁴

7. Reporting on child labor and visibility challenges in global apparel supply chains, using Nike as a key example. The Fashion Law ↩ ↩² ↩³

8. Article summarizing Nike’s own 108-page report acknowledging abuses and audits in Asian factories. YaleGlobal ↩ ↩²

9. ProPublica coverage noting Phil Knight’s acknowledgement that Nike had become synonymous with "slave wages, forced overtime and arbitrary abuse." ProPublica ↩

10. Case analysis of Nike’s post-scandal labor practices department and monitoring changes. Network for Business Sustainability ↩ ↩²

11. FLA’s initial accreditation report of Nike’s labor compliance program. FLA 2008 report ↩ ↩²

12. FLA statement on Nike’s third reaccreditation, praising long-term commitment. Fair Labor Association ↩ ↩² ↩³ ↩⁴ ↩⁵

13. Reporting on Nike disclosing supplier lists and expanding CSR reporting. ProPublica ↩ ↩²

14. Stanford GSB case on Nike’s sustainability and labor practices from 2008–2013. Stanford GSB ↩ ↩²

15. Nike’s foundational expectations and Code of Conduct for suppliers. Nike ↩

16. Nike’s sustainability and supplier policy overview. Nike ↩

17. Nike’s description of a “responsible supply chain" and continuous improvement. Nike ↩ ↩² ↩³

18. OregonLive follow-up reporting on persistent fainting at a Nike supplier despite promised reforms. OregonLive ↩ ↩² ↩³ ↩⁴

19. Nike’s description of health and safety support for suppliers. Nike ↩

20. Nike’s explanation of supplier capability-building programs. Nike ↩

21. Better Work overview of its collaboration with global brands such as Nike. Better Work ↩ ↩²

22. Social and Labor Convergence Program’s mission to improve working conditions in global supply chains. SLCP ↩ ↩²

23. Nike’s work with the Anker Research Institute on living wage benchmarks, e.g., in Indonesia. Nike ↩

24. FLA detailed reaccreditation report summarizing Nike’s compliance program strengths. FLA ↩ ↩²

25. Business & Human Rights Resource Centre summary of investor and advocate demands for Nike to pay $2.2M in unpaid wages in Cambodia and Thailand. BHRRC ↩

26. Clean Clothes Campaign article on investor and activist pressure over Nike’s failure to pay garment workers. Clean Clothes Campaign ↩ ↩² ↩³

27. Clean Clothes Campaign article describing Nike’s continued refusal to address unpaid wages cases. Clean Clothes Campaign ↩ ↩² ↩³

28. WSR Network report "Nike Lies" detailing wage theft schemes and Nike’s failure to remediate. WSR Network ↩ ↩² ↩³

29. HR Dive news on Nike’s $8.25M settlement over unpaid time spent in bag checks. HR Dive ↩

30. Law firm summary of the Nike bag-check settlement and unpaid wage claims. Valiant Law ↩

31. Plaintiff firm summary of a class action alleging late payment of wages to Nike retail workers in New York. Kessler Matura ↩

32. Local news summary of wage theft, forced overtime, and fainting at Hansae Vietnam, citing WRC and FLA findings. KGW ↩ ↩² ↩³ ↩⁴

33. FLA summary report acknowledging widespread violations at Hansae Vietnam. FLA ↩ ↩² ↩³

34. ProPublica investigation into fainting and conditions at Y&W Garment, a Cambodian factory producing Nike goods. ProPublica ↩ ↩² ↩³

35. Auburn University case study on Nike’s supply chain, documenting allegations of poor conditions and harassment. Harbert School of Business ↩

36. Nike policy statement on prohibition of workers paying recruitment fees and employment of foreign workers. Nike ↩ ↩²

37. Academic study “Does monitoring improve labor standards? Lessons from Nike” concluding monitoring alone has limited impact. ResearchGate ↩ ↩² ↩³

38. MIT Sloan article on improving work conditions in a global supply chain, including Nike’s suppliers. MIT Sloan Management Review ↩ ↩²

39. Worker Rights Consortium overview of binding labor standards and worker-centered investigations. WRC ↩ ↩²

40. Workers Rights Consortium commentary on the need for enforceable agreements and price reforms to prevent abuses. WRC ↩ ↩² ↩³

41. FLA investigation report on Hong Seng Knitting, a Nike supplier in Thailand, confirming mandatory leave pay violations and back-pay remediation plan. FLA ↩ ↩² ↩³

42. WRC communication on Hong Seng, describing forced forfeiture of mandatory leave pay. WRC ↩

43. Business & Human Rights commentary on Violet Apparel case, where Nike disputed sourcing links despite evidence. BHRRC ↩

44. Clean Clothes Campaign report on unprecedented shareholder revolt at Nike’s AGM over worker rights. Clean Clothes Campaign ↩

45. Reuters coverage of investor pressure on Nike to sign binding agreements and better protect garment workers. Reuters ↩

46. Supply Chain Dive article quoting concerns that Nike lacks adequate remediation processes, risking wage-theft violations. Supply Chain Dive ↩

47. Just-Style analysis of how costly Nike’s silence on worker rights could be. Just-Style ↩