The past use of unpaid labor by an Arkansas plastics company has become an issue before the stockholders of the national Home Depot chain.
North Star Asset Management has proposed that Home Depot shareholders approve a resolution requiring the company to report on the use of prison labor in its supply chain. The money manager, which describes itself as engaging in socially responsible investing, cites a pending lawsuit against Hendren Plastics, which supplies dock floats to Home Depot, anong others. The company is facing a lawsuit over use of unpaid labor from people assigned by a drug court to a rehabilitation program that is paid for their work at various private employers. Those sentenced got food and housing and rehabilitation programs.
Sen. Jim Hendren (R-Gravette), who heads the plastics company, has defended the rehab program as useful to its volunteer participants. He has stopped using the unpaid labor since the issue became public and he was sued. He has sued for defamation against a lawyer who described the arrangement as slave labor.
The resolution says:
Prison labor (both voluntary and involuntary) is often deployed in a manner that involves prisoner mistreatment and is frequently compared to modern slavery. Although companies benefit from low overhead expenses when inmates work for the company or its suppliers, companies have experienced public backlash, boycotts, and longterm brand name and reputation harm from a connection to prison labor;
Home Depot management has recommended a vote against the resolution. It said it had long had a policy against use of forced labor and had updated the policy in 2019 “to better address practices that can create an environment in which labor is forced even if it appears voluntary on its face. … Any use of prison or convict labor must not be forced and must be consistent both with the laws where the products are manufactured and the laws where they are imported.”
Northstar has responded to management’s opposition with a statement to shareholders that says more reporting is necessary because of the risks associated with unpaid labor, even if legal. The resolution recounts reporting that the drug rehab program that supplied workers to Hendren Plastics and Simmons Poultry had been accused of providing little rehabilitation and poor living and working conditions.
The shareholders meeting is May 23 in Atlanta. Resolutions such as these are typically defeated by major shareholders, but sometimes the publicity can influence company actions, such as, perhaps, the recent review and changes in Home Depot.