Global Compliance Program Guidebook 0217
Global Compliance Program Guidebook 0217
The Sears Holdings Global Compliance Program for merchandise vendors and factories is designed
to help ensure that Sears and Kmart suppliers operate according to the Program requirements and
all applicable local legal laws governing such issues as child labor, wages, benefits, working hours,
harassment, health and safety, and factory security.
The Program was established to protect the integrity of the Sears Holdings’ brands, and to hold all
suppliers accountable to a set of generally accepted employment standards and workplace practices
that we refer to as the Global Compliance Program Requirements.
One of the benefits of the Global Compliance Program is fewer or less frequent audits for factories
with high compliance performance levels and effective internal systems to manage labor and social
issues. Additionally, we place a strong emphasis on ways that we can support remediation and
continuous improvement within the Sears and Kmart supply chain.
Please note that as of April 2014, Lands’ End is no longer part of Sears Holdings. However, at this
time, the Sears Holdings Global Compliance Department will continue to assess factories producing
merchandise for Lands’ End. All questions related to social, labor, C-TPAT, and environmental
requirements for factories producing for Lands’ End, should be directed to Steve Peterson
([email protected]).
This GUIDEBOOK to Program Requirements was developed to help suppliers understand our
requirements and what will be reviewed during a Sears Holdings audit. The manual provides
indicators of compliance and non-compliance, and outlines good management practices for
factories. It is available in English, Simplified Chinese, Traditional Chinese, Hindi, Spanish, Thai,
and Vietnamese.
While we expect adherence to the Sears Holdings Global Compliance Program requirements as
outlined in the GUIDEBOOK, we understand that full compliance can be challenging for some
factories. Therefore, our goal is to work with factories that are honest and transparent, and
committed to making continuous improvements. However, factories that fail to be honest and
transparent or show limited response to outstanding compliance issues will be terminated.
Please review this GUIDEBOOK to learn more about how the Program is interpreted and how
your company can improve factory compliance levels. If you have any questions or concerns
regarding our Program, please contact us at [email protected].
Sincerely,
Vendors may not produce merchandise for Sears Holdings in countries which have been sanctioned or
embargoed by the Office of Foreign Assets Control (OFAC). In addition, vendors may not procure goods or
engage in transactions with select people or entities that have been sanctioned by OFAC. Vendors should
reference the US Department of the Treasury website (http://www.treasury.gov/resource-
center/sanctions/Programs/Pages/Programs.aspx) to confirm the list of OFAC sanctioned countries, as well
as sanctioned individuals or entities within a country.
We have approved production of merchandise for Sears and Kmart in factories located in Myanmar. Please
note that all factories will be subject to an initial audit based on the requirements of the SHC Global
Compliance Program; no audit exemptions will be granted. All factories must be registered prior to
production by contacting [email protected] , or through your vendor’s profile at
www.shcfactorycompliance.com.
And, as a reminder, vendors, factories, and all supply chain partners are prohibited from using cotton
harvested in Uzbekistan in any phase of the production process for merchandise sold in any Sears or Kmart
retail channels. Sears Holdings also prohibits our suppliers from doing business with companies that are
either invested in the cotton sector in Uzbekistan, or using Uzbekistan cotton for any production.
Audit Exemptions
Worldwide Responsible Apparel Production (WRAP) or SA8000 certifications may exempt a factory
from a STANDARD audit if the factory has been audited by Sears Holdings within the last 12 months and it
received an Acceptable or Acceptable with Issues rating. If at any time the Global Compliance Department
does not have a valid WRAP or SA8000 certificate on file, the factory will be audited by Sears Holdings. A
WRAP application or letter of acceptance from WRAP is not a substitute for the actual certificate.
To learn more about WRAP certification, please go to www.wrapcompliance.org.
We will also consider an International Council of Toy Industries (ICTI) exemption for factories
producing toys, or infant/baby hardlines. We will also exempt factories producing sporting goods with the
exception of: exercise equipment, camping, hunting, and fishing equipment and luggage and backpacks.
All factories must reflect a “Certified” or “On Probation” status on the ICTI website to be exempted from a
Sears Holdings audit. Once a factory is exempt, it is the vendor’s responsibility to ensure that the certificate
has been renewed prior to the expiration date. If at any time the ICTI website does not reflect a “Certified”
or “On Probation”, the factory will be audited by Sears Holdings. We no longer exempt factories that only
have an ICTI audit report or an intent-to-renew the ICTI certification.
We also reserve the right to audit any ICTI factory, at our expense, to ensure consistent results between the
Sears Holdings audit program and the ICTI certification program.
Please contact Joseph at [email protected] for any questions related to our acceptance of ICTI
certification. For more information about the ICTI program please contact www.toy-icti.org.
If you are working with a consulting company approved by Sears Holdings, we may consider exempting
your factory from an SHC audit.
An example of an approved program includes the Factory Improvement and Support (FIS) program,
sponsored by Elevate Global Limited. It supports the concept of transparency, capacity building, and gradual
improvement. Elevate supports factories in creating tailor-made remediation programs designed to help
address complicated business, human resource, production, environmental, and health and safety issues.
Audit Notifications
All audit notifications will be sent to the factory contact person with a copy to the vendor. The audit
notification includes a request for the factory to confirm via e-mail the factory name as found on the business
license, location, and contact information in the local language. All audit notifications will also include a list
of documents that will be needed for the auditor to review on the day of the audit, and an anti-bribery letter
for factory management to sign before the audit begins.
Notifications for a STANDARD social compliance audit will include a 15-day audit window, and will be sent
to the vendor and factory at least 7 calendar days before the start of the audit window. Only notifications for
WRIP and C-TPAT-ONLY audits will specify an audit date.
If the factory does not respond to the audit notification after a reminder has been sent, we will proceed with
the audit per the audit window or audit date provided. If the auditor is unable to find the factory based on
inaccurate information, or the auditor is not provided access to the factory and all necessary documents, it
will be considered an access-denied audit, and the vendor will be charged for the denied audit as well as the
re-scheduled audit.
Please keep in mind that we do not delay any audit for reasons which may include the factory not being
“ready” or the factory management not being available. If there is a valid reason why the audit cannot be
conducted during the given timeframe (e.g. official power outage notice from power station provided,
national holiday, vacation shutdown), it is the responsibility of the vendor to contact the Global Compliance
Department at [email protected] at least 4 calendar days before the start of the 15-day audit window for a
STANDARD audit, 4 calendar days before a WRIP audit, and 7 calendar days before a C-TPAT-ONLY
audit.
The factory must be prepared with the required documents specified in the audit notification, factory
personnel who can provide access to necessary documents and records, and facilitate private worker
interviews.
There are certain situations when an audit will be totally unannounced. For instance, the previous audit cited
a serious violation, payroll or wage records were not complete, or there were indications of inconsistent
records. We may also conduct an unannounced audit when the previous WRIP audit received a “Pending
Termination” rating. In these cases, no advanced warning will be provided to the vendor or the factory of an
upcoming audit.
A STANDARD social compliance audit assesses the level of compliance compared with all applicable local
legal requirements including compliance with the law, health and safety, child labor, forced/slave labor,
human trafficking, harassment/abuse, discrimination, working hours, wages and benefits, freedom of
association, environmental compliance, and notice and record keeping. Please refer to the Requirements
outlined on A-21 of the Appendix for a description of each of these.
Most STANDARD audits will last one day. An additional day may also be needed for initial or annual audits
in large factories, those with several buildings or units, or when there were significant issues cited on the
previous audit. Please note that all production areas will be audited even if there is no current production for
Sears Holdings in those areas.
A STANDARD social compliance audit will generally include an opening meeting with factory management,
a factory tour including dormitory (if applicable), a review of factory records and documents, private and
confidential interviews with selected employees, and finally, a closing meeting with factory management to
discuss preliminary audit findings. The audit may be conducted by either a Sears Holdings internal auditor, or
an approved 3rd party auditor who audits on behalf of Sears Holdings. All auditors assess the factory based
on the same requirements and program philosophy.
There are several types of STANDARD audits including: Initial, Follow-up, Annual, Annual+, and Pre-
approval. Here is a brief description of each:
Initial audits are scheduled when a factory is registered for the first time on the Global Compliance website,
and is in-scope for our audit program. The initial audit will take place within 60 days of factory registration.
Follow-up audits are scheduled when the most recent audit received a rating of Probationary, Needs
Improvement, or Pending Termination based on the specific violations cited. Sears Holdings will conduct a
follow-up audit in 3-10 months (see page 3 for follow-up schedule), depending on the rating, to ensure that
the outstanding violations have been addressed. An immediate audit will be scheduled for factories where
access was denied to the auditor on the previous audit.
An Annual audit will be scheduled after a factory receives an Acceptable with Issues rating, or when an
inactive factory with previous audit history is re-activated. The next audit for factories that receive an
Acceptable with Issues rating will be conducted in 12 months.
An Annual+ audit indicates that the audit received an Acceptable rating based on no or very minor violations
in the factory and the next audit will be conducted in 18 months.
Pre-approval social compliance audits are conducted prior to the start of production in all factories when the
last Sears Holdings audit conducted resulted in termination.
Vendors who want to use a factory for production that is currently in a terminated status for Sears
Holdings must send a request for a Pre-approval audit to be conducted to [email protected]
Production can begin as soon as the audit is conducted, and the vendor and factory receive a
“Production Permitted” letter from the manager in the region.
Reasons for “Production Denied” include inconsistent/falsified records, child labor, forced labor,
harassment, abuse, discrimination, bribery, or refusal to allow the auditors access to the factory.
Insufficient wage and excessive working hour issues cited on a Pre-approval audit will not prevent a
factory from producing for Sears Holdings. Factories that are transparent with wages and working
hours will be provided time to make continuous improvements on these difficult issues.
To ensure the best results on a Pre-approval audit, we require that a key representative from the factory
meet directly with a Global Compliance manager before the audit to review the audit history, and
discuss what is required for the factory to be approved for production. We will not allow a follow-up
Pre-approval audit to take place if production was denied on the first Pre-approval audit unless it is
authorized by the local Global Compliance Manager.
The rating for a STANDARD audit will be determined based on the level of transparency with wages and
hours, and the level of compliance relative to the Requirements listed on A-21.
Needs
Multiple and major violations including access- Future
Improvement or
denied, harassment, abuse, holding of passports, 3 months orders at
Pending
downgrading, or loss-of-life risk. risk
Termination
The Wage Research and Improvement Program is a Sears Holdings program available to factories located in
China which are producing merchandise for Sears Holdings. The benefits include the ability to continue to
produce merchandise for Sears Holdings while working gradually to raise compliance levels on wages and
working hours. To be considered for this program, the most recent STANDARD social compliance factory
audit must reflect no inconsistent records or egregious violations, and insufficient wages must be cited based
on complete and accurate attendance and payroll records. The vendor (not the factory) must send a request
for the factory to be considered for WRIP within 2 months of the most recent audit date to Joseph
([email protected]). The request should include the reasons for wanting the factory to join WRIP,
and an estimated timeline to meet legal wages. Please keep in mind that the application process requires the
vendor to submit past and expected factory production information for Sears Holdings merchandise.
Factories that are accepted into the Program are expected to work with Sears Holdings to develop an initial
WRIP Plan, which sets realistic wage increases to be met by the factory within designated timeframes. A new
Plan must be developed annually by the factory, and approved by Sears Holdings for the factory to remain in
the program. All WRIP audits are conducted by a Sears Holdings internal auditor, and will last a day. We
conduct 1-2 audits per year in WRIP factories.
Although the audit process is similar to STANDARD audits (see page 1), the focus of the WRIP audit will be
on whether the factory has met the wage improvements outlined in the WRIP plan, and the accuracy and
completeness of the wage records.
Sears Holdings expects WRIP factories to reach the legal wage requirements within 3 years after
enrolling in the program. Factories who fail to meet legal wage requirements within 3 years must provide a
written explanation to Joseph Wong as to why this goal was not achieved. Factories that are granted
extensions may be encouraged to seek professional support to achieve compliance with wage requirements.
The goals of these programs may include capacity building and productivity enhancements. Factories that do
not adhere to the annual WRIP Plan, or to legal wage requirements within the established timeframe, or do
not agree to seek professional support after 3 years may be terminated from WRIP and from producing for
Sears Holdings.
Factories that are eventually able to pay all workers minimum and overtime wages according to the local law
will no longer be part of our WRIP program; the factory will transition to our STANDARD compliance
audit, and the next audit will be conducted 12-18 months from the previous WRIP audit.
Please keep in mind that a factory participating in WRIP will be removed from the Program when the factory
is inactivated by all vendors. If the factory is re-activated at a later time, the first audit conducted will be a
STANDARD Global Compliance audit. A factory may reapply to participate again in WRIP if 1) they meet
the program requirements, 2) they previously participated in the Program for less than 3 years, and 3) when
they previously participated, they met the individualized WRIP goals that were outlined in their WRIP Plan.
While the WRIP program is currently only available to factories located in China, we will consider a similar
approach in non-China factories that are willing to show us true records and have no egregious violations, by
helping set realistic wage improvements for the factory to reach from audit to audit. Please contact
[email protected] for more information regarding the WRIP approach in non-China factories.
The rating for a C-TPAT–ONLY audit will be determined based on how effective the security practices in a
factory mitigate the risk of loss, theft, and contraband smuggling which could potentially introduce acts of
terrorism into the supply chain.
Continuous Improvement
It is common for a factory to have a number of deficiencies to correct in order to comply with local law and
the Sears Holdings Global Compliance Program. In some instances, in order to strengthen long-term
compliance levels, it may be necessary to provide factories additional time and support to address deficiencies
unique to their business, industry, or location.
As an example, additional time and support may be extended to help factories reduce excessive working
hours during peak production months. Other factories may need help in developing a piece rate pay plan that
ensures that new/unskilled workers meet the legally required wage rates, without reducing productivity rates
of the skilled workers. And, we can support factories that employ migrant workers in addressing compliance
issues related to communication and cultural differences between management and the workers.
It is important that you contact [email protected] when you receive an Audit Results letter with a
“Warning” message. We will put you in touch with the regional manager who will provide you with the steps
necessary to continue to produce for Sears Holdings.
KEY REQUIREMENTS
Compliance with the Law requires that all vendor and factory partners:
Know all applicable legal requirements and the requirements of this Program.
Track legal and regulatory changes specifically relating to minimum wage, working hours,
holidays, benefits, child labor, health and safety, forced labor, harassment or abuse,
discrimination, freedom of association, environment, and factory security.
Ensure that the factory operate in compliance with the law and the requirements of this
Program.
INDICATORS OF NONCOMPLIANCE
The factory identifies and maintains copies or summaries of all applicable local laws.
Factory maintains all necessary records and required permits related to the operation of the
factory.
Factory designates management representative(s) to have responsibility for ensuring that the
factory complies with its legal obligations and the requirements of the Global Compliance
Program.
The factory cooperates with enforcement officials responsible for reviewing compliance
practices.
The factory periodically reviews work rules and employment handbook to ensure that they
comply with current law.
The vendor/factory periodically monitors compliance.
KEY REQUIREMENTS
Health and Safety requires that all vendor and factory partners:
Take all necessary precautions to ensure that workers under the age of 18 are protected from
working conditions likely to endanger their health, safety or welfare.
Provide workers with a safe and healthy work environment and effectively manage such risk
areas as toxic substances and dangerous machinery.
Prevent accidents or injuries in the workplace and provide appropriate protective equipment.
Routinely arrange for the factory building to be inspected by an engineer to ensure structural
integrity.
Comply with all local legal regulations and the requirements of the Global Compliance
Program.
Provide a safe living environment for workers, and comply with all legal regulations regarding
residential facilities, where provided.
Adhere to the specific requirements spelled out in the Sears Holdings Health and Safety
Supplemental Guidelines (see A-1).
INDICATORS OF NONCOMPLIANCE
The factory has a written Health and Safety plan that indicates how all health and safety issues
are being managed at the factory. The plan includes what steps the factory is taking to ensure
that health and safety risk areas are being identified and addressed.
The factory has a health and safety manager to oversee compliance.
Health and safety education is provided to all workers during initial orientation and on an
ongoing basis.
Workers are trained on how to operate machinery in a safe and effective manner.
Emergency evacuation drills are conducted regularly.
A sufficient number of workers are trained in administering first aid and in handling fire
emergency equipment.
Outside health and safety professionals are consulted for guidance and evaluation on existing
practices and performance.
Factory provides on-site medical assistance.
The factory follows the specific advice outlined in the Sears Holdings Health and Safety
Supplemental Guidelines document (see A-1).
Workers who have removed themselves from a work situation that they reasonably believe
presents an imminent and serious danger to their health are protected from undue
consequences.
The factory provides workers with adequate information, in the language of the workers, on
measures taken by the factory to manage health and safety.
The factory consults with workers periodically on health and safety issues and how best to
effectively manage them.
There is supervision, at suitable intervals, of the health of workers exposed or liable to be
exposed to occupational hazards due to air pollution, noise or vibration in the working
environment. Such supervisions could include periodic medical examinations.
All workers concerned are adequately and suitably informed by the factory of potential
occupational hazards in the working environment due to air pollution, noise and vibration, and
are instructed in the measures available for the prevention and control of, and protection
against those hazards.
Q: In one factory, there are several machines A: More information is needed. Hazardous chemicals
that use very strong chemicals. It is not need to be handled appropriately and in accordance
clear whether these chemicals are with the Material Safety Data Sheets (MSDS)
hazardous. Does this violate the Global guidelines on storage, labeling, protection and
Compliance Program? ventilation.
KEY REQUIREMENTS
Fire Safety Risk requires that all vendor and factory partners:
Allow workers to safety exit the premises in the event of a fire.
Comply with all local legal regulations and the requirements of the Global Compliance
Program related to fire safety.
Provide a safe living environment for workers, and comply with all legal regulations regarding
residential facilities, where provided.
Adhere to the specific requirements spelled out in the Sears Holdings Fire Safety Risk
Supplemental Guidelines (see A-7).
INDICATORS OF NONCOMPLIANCE
KEY REQUIREMENTS
Child Labor sets the expectation that all vendor and factory partners:
Comply with all applicable laws governing minimum working age. If set at or below 15, then
no one under 15 is permitted to work. If set above 15, then no one under the age established
by law may work in the factory.
Comply with all legal restrictions placed on “young workers.” In many countries, these
restrictions include the number of overtime hours, hazardous work and/or night work, as well
as a medical fitness certificate and/or annual medical checkup.
Take all necessary precautions to ensure that workers under the age of 18 are protected from
working conditions likely to endanger their health, safety or welfare.
INDICATORS OF NONCOMPLIANCE
Use of workers under the host countries’ legal minimum age, or below the requirement in the
Global Compliance Program, of 15, whichever is higher.
Minors or “Young Workers” (workers under 18 years of age) working in hazardous positions,
past legal limits or in violation of applicable law.
Historical child labor (i.e., workers hired prior to legal working age).
Children present in the factory but not working (except in approved separated childcare
facilities).
Insufficient hiring procedures to ensure compliance.
Incomplete, false, or missing age documentation records verifying the age of all workers at the
date of hire.
The factory has hiring policies and procedures that ensure that the minimum age of workers
corresponds to all local laws and the Global Compliance Program.
The age of each worker is verified prior to his or her employment, including a background
check, whenever possible.
Updated personnel files are maintained for each worker. Such files have copies of basic
worker information such as an identification card, birth certificate, passport or other
documentation. In countries where official documents are not available, the factory must use
an appropriate and reliable method of assessment, which must be documented. (see A-15).
KEY REQUIREMENTS
Forced/Slave Labor, Human Trafficking strictly prohibits the use of indentured, bonded, prison
labor, or any other practices that create an unreasonable legal or practical limitation on a worker’s
ability to leave his/her employment. This requirement stipulates that vendor and factory partners
adhere to the following:
Factories may not create unreasonable legal or practical limitations on a worker’s ability to
leave his/her employment at their own discretion. Examples include 1) a labor contract that
requires the payment of “excessive” fees upon entering employment, or 2) the payment of a
penalty upon termination of a labor contract.
Fees associated with a labor contract may not be in excess of the amount legally permitted by
the applicable law of the host or home country. In the absence of such law, fees may not be
substantially above the prevailing market rate.
Bonded labor where work is done to pay off a debt is strictly prohibited. This is still prevalent
in parts of South Asia where migrant workers are forced to take on the burden of repayment
of debt through labor.
Factories must provide an individual locker for each worker to store personal items which may
include: original government-issued identification, passport, work permit or other personal
documents.
Compulsory overtime is considered forced labor (please refer to REQUIREMENT 8:
Working Hours).
The factory may not impose unreasonable restrictions on worker movement in the factory
and, where applicable, the factory compound or worker dormitories.
Workers are free to refuse to perform certain tasks that the worker believes to be hazardous
without penalty of termination.
INDICATORS OF NONCOMPLIANCE
The factory establishes a written set of instructions for all factories involved in secondary
processes and labor recruiters which prohibits the use of forced labor, trafficked persons, or
slave labor.
Factory management eliminates all unreasonable restrictions on the movement of workers in
the factory and dormitories.
Labor contracts do not contain penalties for terminating employment.
All workers are voluntarily present. No workers are imprisoned or locked in the factory.
No policies exist which restrict the workers’ right to leave – whether that is the end of shift or
to terminate employment.
No locked gates or doors are used which prevent workers from exiting.
The factory should pay all costs related to hiring migrant workers, including recruitment and
travel fees.
Workers are not disciplined for refusing to work overtime.
The factory provides lockers for each worker to store personal property, original government-
issued identification, passport, or work permit.
If migrant workers are part of the workforce, supervisors are provided training in
professionally and fairly managing a culturally diverse workforce. Migrant workers are
provided with basic needs including items for daily hygiene, and the ability to regularly
communicate with their family in their home country.
KEY REQUIREMENTS
INDICATORS OF NONCOMPLIANCE
The factory has established and implemented a progressive disciplinary system that includes
verbal warnings, written warnings, suspension, and finally, termination as a way of disciplining
workers.
The factory ensures that all disciplinary actions are clearly documented and recorded properly
(see A-15).
Workers are not subject to corporal punishment or abusive disciplinary practices.
Factory has a written policy, which defines rule infractions, and what the disciplinary actions
are for each infraction.
Q: Prior to work each day, a unit manager in A: This is in compliance with the Global Compliance
one factory calls his workers together for Program requirement because shouting alone does
chants about teamwork. He often shouts not create problems unless it is abusive in nature,
this chant during the course of the day. or if workers are required to participate without
Does this violate the Global Compliance pay. It is not, however, a preferred form of
Program? discipline.
KEY REQUIREMENTS
Discrimination ensures that each worker is treated with respect and dignity and is judged solely
based on the worker’s ability to perform the job. This requirement:
Applies to all employment decisions, including recruitment, hiring, training, promotion,
termination and retirement.
Prohibits discrimination based on legally protected criteria such as gender, race, age, disability,
nationality, or cultural beliefs.
Requires that training, development, promotion and advancement of opportunities be
provided to all workers, whether full time, part time, short-term, permanent, or with any other
contracts of employment.
Ensures factory does not question prospective workers about their pregnancy status and that
pregnancy tests are not conducted before hiring or as a pre-condition to employment.
INDICATORS OF NONCOMPLIANCE
Pregnancy testing.
Hiring practices that require applicants to devulge maternity status.
Termination or disciplinary procedures taken against workers for personal characteristics.
Targeting groups for certain types of jobs.
Variations in pay, benefits or advancement based on personal characteristics.
Reduction in wages or pay for workers who return after pregnancy.
The factory actively recruits and employs qualified candidates from the local population at all
levels of the factory.
The factory has a written policy on discrimination that is consistent with the Global
Compliance Program discrimination policy and ensures that it is followed.
The factory creates written job descriptions that focus solely on “occupational qualifications,”
not personal characteristics.
KEY REQUIREMENTS
With respect to working hours during peak production seasons, Sears Holdings permits factories to
work more than 60 hours in a week so long as the factory complies with the following 5
supplemental requirements:
It does not exceed 12 hours per day, 6 days per week for a total work week of 72 hours.
One day off in seven is provided or workers are provided another day of rest during the next
week. If work must be carried out on the rest day during peak season, it cannot occur more
than once in a two week time period.
Peak season is limited to no more than 4 months or 17 weeks distributed throughout a one-
year period. The maximum 60-hour workweek for non-peak production should be employed
for at least 8 months out of 12.
Workers are compensated for regular and overtime hours in accordance with local law.
Workers are educated on the standard workweek and the factory seeks their willingness to
work overtime hours. For workers not interested in working overtime, the factory must be
supportive of their decision and will not, in any way, force or coerce them to work overtime
hours.
The factory maintains an accounting system that ensures that all workers are paid for overtime
in accordance with the premium pay.
The factory ensures that piece rate workers in particular are aware of the requirement that they
be paid a premium rate for overtime work.
Workers are provided with pay slips that clearly indicate overtime hours and overtime
compensation (see A-15).
Workers are not required to work in excess of the standard workweek established by law.
The factory workweek is the same as that mandated by law.
The factory provides a worker manual/work rules that define breaks, rest periods, and days off
provided.
The factory ensures that the workweek does not change from week to week and that all
workers are aware of the work schedule.
The factory defines, according to local law, the different types of overtime: workdays,
weekends, holidays and corresponding pay rates.
The factory finds good management solutions, such as hiring additional help during peak
periods, to ensure that overtime hours are in accordance with the above standards.
The factory includes in the personnel policy and labor contracts, if applicable, that workers
have the right to refuse overtime, with no repercussions, and does not issue fines for refusing
overtime.
The factory implements a system, such as a sign-up sheet, for workers to volunteer for
overtime.
The factory ensures that working hours do not exceed 60 per week during non-peak
production (8 months out of 12) and that working hours do not exceed 72 in a week for peak
production months (no more than 4 months out of 12).
The factory posts the operation breakdown and piece rate on the production floor so that
workers are aware of pay rules and targets in advance.
KEY REQUIREMENTS
INDICATORS OF NONCOMPLIANCE
Workers are compensated for all hours worked in accordance with the law. All overtime
hours are compensated at the premium wage rate established by law.
The factory has a base wage that is at least the lawful minimum wage.
All workers (regular, trainees, and contract) are paid at least this base wage.
The factory has a system that shows wage rate increases based on seniority and productivity.
The factory posts a simple written description of how pay is calculated and workers are given
this description upon hiring.
All workers receive pay slips that show gross and net wage calculations and applicable
deductions (see A-15).
The factory has workers maintain their own time cards and wage slips.
The factory has time clocks or other comparable automated method for tracking working time
and calculating pay.
The factory educates workers on their pay, production bonuses and what deductions are
removed from workers’ pay.
The factory outlines what benefits are available to workers and instructs workers on how
benefits are accessed.
The factory ensures that workers know what paid leave is due them.
The factory has an established pay schedule that is strictly adhered to.
The factory maintains records of payroll, which show that workers are being paid the
applicable overtime rate.
KEY REQUIREMENTS
Freedom of Association ensures workers are free to organize and join legal workers’ organization
without discrimination or interference and to engage freely in collective negotiations to regulate the
terms and conditions of employment.
This Program requirement prohibits vendor and factory partners from:
Worker discrimination for engaging in collecting bargaining activities and other worker
committees.
Unlawfully interfering with workers’ ability to exercise their right to associate or join legal
organizations of their own chosing.
Threatening, disciplining, punishing, or firing workers because they exercise this right.
Refusing to hire workers because of their associations.
Affirmatively seeking the assistance of state entities to interfere with this right.
Participating in “blacklisting” of union organizers by providing their names and details of their
activities to other employers, or to employers’ associations.
In countries where only state-approved workers’ organizations are permitted, Sears Holdings
vendors and factories:
Are not required to recognize illegal workers’ organizations.
Should not, to the greatest degree possible, permit direct government interference in workers’
right to associate.
Should seek to find appropriate and legal mechanisms through which workers can effectively
express workplace concerns to management. These include: developing labor-management
committees, making space for informal workers’ groups to meet, or conducting employee
surveys to promote harmonious, productive workplace conditions.
KEY REQUIREMENTS
Environmental Compliance specifically attempts to ensure that Sears Holdings vendor and factory
partners do not violate any local environmental regulations. To ensure that environmental legal
compliance is maintained, Sears Holdings encourages vendor and factory partners to:
Appoint an employee who is responsible for implementing and maintaining the factory’s
environmental management system.
Provide periodic environmental training to the workers.
Periodically review existing environmental management systems by performing a factory walk-
through looking for potential environmental hazards and how they are being managed.
Ensure that waste is disposed of properly and that waste disposal systems effectively manage
environmental risk.
Ensure that all applicable environmental certificates are up to date.
Develop environmental management practices with respect to water and air quality, water and
energy efficiency and waste reduction.
INDICATORS OF NONCOMPLIANCE
Willful violation of environmental legal requirements.
Dangerous pollutants exposed to workers and/or local community.
Inappropriate storing/handling of chemicals (see A-3 and A-11).
GOOD MANAGEMENT PRACTICES
The factory complies with all environmental legal requirements.
All applicable environmental regulations are identified and kept on file.
All required permits and necessary records including wastewater permits, emission permits,
water testing records, waste disposal records, factory inspections, and any other records which
relate to environmental concerns are maintained on site.
The factory appoints a designated worker with responsibility for overseeing compliance with
environmental regulations.
The factory has a written environmental management plan that details how these issues are
addressed. The plan includes items such as description of worker responsible for
implementing, a description of the environmental impact of the production processes,
governmental permits and records necessary, government agencies responsible.
The factory’s management staff attend environmental management conferences and speak
with other contractors to learn of ways to minimize the use of materials and reduce impact on
environment.
Q: A factory allows a Sears Holdings auditor to A: This is a possible violation. It will depend upon
interview workers but is unwilling to let the what other wage and hour documentation is
auditor review the wage and hour documents available for review and how much time the factory
because they are being updated. needs to produce the appropriate documentation.
Q: A factory subcontracts the cutting process to A: Yes, this violates the Global Compliance program.
another factory. Does this violate the We do not allow the subcontracting of primary
Global Compliance Program?? processes, including the cutting process
KEY REQUIREMENTS
Factory Security requires that all vendor and factory partners producing merchandise for Sears or
Kmart.:
Take all necessary precautions to ensure against the introduction of unauthorized material
and/or persons into containers and trailers.
Prevent unauthorized entry to facilities, maintain control of employees and visitors, and
protect company assets.
Have processes in place to screen prospective employees, and to periodically check current
employees.
Create procedures to ensure the integrity and security of processes relevant to the
transportation, handling, and storage of cargo in the supply chain.
Have IT security policies, procedures and standards in place.
Offer employees specific training in how to maintain cargo integrity, recognize internal
conspiricies, and protect access controls.
Have a documented and verifiable process for determining risk throughout their supply chain.
INDICATORS OF NONCOMPLIANCE
Lack of perimeter fencing, guard stations, or security personnel to prevent unauthorized entry
to the cargo handling and storage area of the facility.
Lack of locking mechanisms on containers and trailers, facility windows and doors, or
perimeter fencing.
Ability to enter production facility without proper documentation, and visit without an escort.
Employees are hired without verification of employment history, or background checks.
No controls exist to identify shortages, overages, or other significant cargo discrepancies.
Q: A factory manager performs background A: No. Our factory security provision requires
checks on only prospective foreign background checks on all prospective employees.
workers. Does this meet the Global And it is also a violation of our provision on
Compliance Program with regard to discrimination since background checks are only
factory security? performed on a certain category of employees.
The bolded items below are minimum requirements based on international health and
safety guidelines. In addition, all factories must comply with the specific legal requirements
governing health and safety in the countries that they operate. All other items listed below are
suggestions or good practices adopted by “model” factories.
If legally required, factory has a written health and safety plan that indicates how
the factory is managing safety and health issues. The plan, with a special attention
to minors and pregnant workers, includes roles and responsibilities of personnel
and on-going activities necessary to ensure that a safe and healthy workplace is
provided. As well as the steps the factory is taking to ensure that health and safety
risk areas are being identified and addressed.
Factory has a written personal protective equipment (PPE) policy which describes
workplace areas and what PPE should be used, worker responsible for PPE
program, where the PPE is stored, how it is distributed, and how training is
performed.
Factory has a written policy on chemical usage at the factory that includes an
inventory of what chemicals exist, quantities stored, where stored, how handled,
and training of personnel. Material Safety Data Sheets (MSDS) exist for all
chemicals used in the factory.
Factories take all necessary precautions to ensure that workers under the age of 18
are protected from working conditions likely to endanger their health, safety or
welfare.
Factories provide workers with adequate information, in the language of the workers, on
measures taken by the factory to secure occupational health and safety.
Factory consults with workers periodically on health and safety issues and how best to
effectively manage it.
Workers who have removed themselves from a work situation that they reasonably believe
present an imminent and serious danger to their health are protected from undue
consequences.
There is supervision, at suitable intervals, of the health of workers exposed or liable to be
exposed to occupational hazards due to air pollution, noise or vibration in the working
environment. Such supervisions could include periodic examination
Where there is risk, all workers are provided with the appropriate PPE, trained on
the use of the PPE, and why using it is important.
Factory provides impact-resistant goggles or other eyewear to workers in areas
where there is persistent glare, flying debris or dust, splashing of primers or
cleaners.
Factory provides gloves to workers that are handling/applying chemicals such as
solvents, adhesives, and finishes. Gloves are resistant to these chemicals.
Metal gloves are provided when working with sharp objects or cutting instruments.
Proper respirators are worn in areas where vapors are present and are not
sufficiently reduced by other methods such as ventilation.
Appropriate footwear is provided for workers working on wet surfaces. Reinforced
shoes or boots for workers operating or moving heavy equipment.
Dust masks are provided to minimize exposure to particulate matter such as dust or textile
particles.
Factory has signs, with the appropriate international symbol, showing what personal
protective equipment should be worn when in this area.
All workers are adequately and suitably informed by the factory of potential occupational
hazards in the working environment due to air pollution, noise and vibration, and are
instructed in the measures available for the prevention and control of, and protection
against, those hazards.
Rubber mats are required in front of electrical switch boards and control panels to absorb
potential electrical shock.
3. NOISE LEVELS:
In high noise level areas, ear protection (ear plugs) is provided, potential hazards
are communicated, and worker usage is enforced in an appropriate manner.
Factory uses a sound meter to take periodic measurements of noise levels in the factory
and keeps a record of sound levels in various work areas.
4. LIGHTING:
5. VENTILATION:
Factory has adequate ventilation system in work areas where chemicals are
handled and where there is significant dust or material particles.
Factory ensures that the daily average temperatures inside the factory do not exceed a
differential of 10 degrees F(5.6 degrees C), with ambient temperatures outside the
workplace building.
Factory has ventilation system present in enclosed spaces where heat-generating
equipment is operated.
Factory stores chemicals in a separate area which is equipped with appropriate fire
extinguishers, safety signs, ventilation, instructions on handling and disposal, and
personal protective equipment for personnel.
Factory is familiar with all chemicals on site and the potential health effects (see
list of commonly found hazardous chemicals in manufacturing facilities at the end
of this document).
All workers handling hazardous chemicals or materials have undergone training on
appropriate handling, emergency procedures and personal protective equipment.
Explore opportunities for hazardous chemical/material minimization and document
changes made.
7. MACHINE GUARDS:
Factory ensures that where there is risk (bar tack, button, overlock, grinding, snap
machine, die cut, etc.) machines have the necessary safety devices and guards.
Workers are trained on how to operate machinery in a safe and effective manner.
A written maintenance plan exists which outlines machine inspections.
Factory keeps records of machine, equipment and wiring inspections and repairs.
Factory maintains records of permits for equipment such as elevators and any other types
of equipment requiring special permits.
8. MEDICAL CARE:
Factory has a medical clinic available on-site or in close proximity to address basic
health and injury needs.
Factory has a system in place to address severe injuries (such as an agreement with
the local hospital, transportation arrangements, etc.).
A schedule for medical personnel (doctors or nurses) is established to ensure that trained
medical personnel are available during all working hours.
Factory maintains copies of licenses for all applicable medical personnel.
Post the medical clinic service days/hours, the nearest hospital’s names and full address,
and the police and fire station phone number on the notice board.
Included in the personnel policy is a description of what medical care is available and how
to access it by workers.
A record of injuries is maintained at the factory to focus on how injuries can be reduced.
9. FIRST AID:
General
Factory has one properly stocked first aid kit available for every 100 workers.
At a minimum, factory maintains standard first aid kits that include basic supplies
such as bandages, scissors, gloves, gauze, eyewash solution, antiseptic ointment,
and an emergency log.
In cases where first aid supplies are locked for security reasons, supplies must be
accessible to the first aid trained staff within 3 minutes.
First aid stations are posted with a first aid sign and the names and photos of trained first
aid personnel are posted.
The first aid kit is inspected regularly and restocked when needed.
Factory trains an adequate number of personnel (production workers and supervisors) in
first aid procedures.
Records are maintained for workers seeking first aid to track injury/illness as well as
remedy.
Kit Maintenance
Outside label lists staff members with certified first aid training (all shifts) and an
emergency contact phone number.
Inside label shows minimum contents and quantities.
Contents periodically reviewed for relevance by designated staff.
Box inspected regularly, written inspection record on file.
Number of boxes: 1 per 100 workers, or a minimum of 1 box per production area.
It is recommended that the first aid kit be unlocked during working hours.
If locked, key must be within easy reach, and/or at least three workers with key are near
the box.
Training
Depending on the risk and size of the factory, each production area/shift has an adequate
number of workers trained to treat common workplace industries.
Factory keeps written, clearly defined procedures for common workplace injuries.
10. TOILETS:
Factory has at least 1 toilet for the first 25 workers of a particular gender, with an
additional toilet for each additional 40 workers of the same gender.
Ventilation system exists to provide good circulation of air to reduce odors.
Facilities provide adequate privacy (i.e. ability to lock doors, etc.).
Factory has a cleaning and maintenance schedule with adequate janitorial staff to ensure
that the facilities are clean and working at all times.
Factory does not unreasonably restrict access to toilet facilities.
Factory provides wash basins with cleansing agents or hand soap and hand towels or
dryers.
Factory has purified/potable drinking water for each worker that is available at all
times.
Access to drinking water is not unreasonably restricted.
Drinking water containers are kept clean and have adequate protections to restrict any type
of contamination from getting into the water.
Workers are provided separate drinking cups to prevent illness and contamination.
Drinking water is tested periodically (i.e. every 6 months) to ensure that water is safe.
Further, the test report is posted at the drinking water station.
12. CANTEENS:
Canteen staff ensures that any spoiled or questionable food is not utilized and
properly disposed.
Utensils, dishes and cookware are properly sanitized after use.
If legally required, factory has the necessary inspections from government health
officials and maintains records of these inspections.
Factory prepares meals that are high quality and nutritious.
Factory holds training for kitchen personnel in areas of hygienic food preparation and
nutrition.
If legally required, the canteen staff has a heath check at least annually and obtains
a health certificate.
If applicable, steam boiler must have operation certificate and maintenance record
endorsed by local labor authority or certified safety inspector.
If legally required, the operator of the boiler should be trained on its use with
proper occupation certificate.
The steam boiler should be placed in a separate, well-ventilated room. The safety check
certificate should be posted on wall in room.
14. DORMITORIES:
All health and safety guidelines listed above are implemented in factory sponsored
dormitory buildings.
Factory provides a safe living environment for workers, and complies with all legal
regulations regarding residential facilities, where provided.
The minimum amount of square footage allocated per resident is 20 square feet per
worker.
Residents should have their own bed, an area for personal items and the ability to
secure belongings.
Toilets and showers provide adequate privacy.
Water usage for showering and bathing should not be restricted and/or limited to
unreasonable hours of operation.
Dormitory has adequate lighting and ventilation to produce a comfortable living area.
Male and Female workers are on separate floors.
The bolded items below are minimum requirements based on international fire safety
guidelines. In addition, all factories must comply with the specific legal requirements governing
fire safety in the countries where they operate. All other items listed below are suggestions or good
practices adopted by “model” factories.
Factory has fire and emergency evacuation plans and diagrams posted in local
language in various locations around the factory. The plan illustrates critical
information such as emergency evacuation routes, “you are here” mark, correct
layout direction, location of fire extinguishers and hydrants, and instructions in
local language of what to do in the event of an evacuation.
Evacuation assembly point is not obstructed.
Factory has a written fire safety plan that indicates how the factory is managing
issues that support fire safety protocol as required legally or by the Sears Holdings
Global Compliance Program Requirements. The plan includes roles and
responsibilities of personnel and on-going activities necessary to ensure that a safe
workplace is provided. It also outlines the steps the factory is taking to ensure that
Fire safety risks are being identified and addressed.
Factory educates workers on how to identify a factory working environment that is
properly managing fire safety risks, and reducing the risk of fire and worker injury.
Factory educates workers on how to respond in the event of a fire, to reduce the chance of
injury or death.
Workers who have removed themselves from their work location when they reasonably
believe there is imminent and serious fire danger are protected from undue consequences.
Factory has the correct types of extinguishers for various types of materials present:
- Class A for ordinary combustibles: wood, paper, and textile fires
- Class B for flammable liquid, gas or grease: solvent, grease, oils, petroleum
- Class C for electrical: electrical equipment fires
- Class ABC for any of the above
- Class D for combustible metals such as magnesium
Factory has adequate number of extinguishers.
All fire extinguishers have instructions in local language on front.
Fire extinguishers are placed in accessible locations, mounted on wall or column,
with clear, prominent markings.
While no specific height guidelines are provided, fire extinguishers mounted on
wall or column must be at a height that is “accessible” by workers in the factory.
3. FIRE TRAINING:
Factory personnel (workers and supervisors) are trained at regular intervals in fire
safety, emergency evacuation and the use of fire extinguishers.
Certificates and pictures of fire safety and emergency evacuation training are
maintained (with proper dates).
Factory holds fire emergency drills regularly (at least twice per year), Factory holds
fire emergency drills regularly (at least twice per year).
For factories with high turnover, fire drills are held more frequently.
Factory trains new workers in fire drill procedures.
Factory sets up a fire safety team to address any fire safety issues
Factory personnel should inspect their designated area for each shift
During a fire drill, all workers must be able to safely evacuate the factory building within 3
minutes.
Factory has a fire alarm system that is audible throughout the entire facility.
Fire alarm has a distinct sound from other notice systems.
Alarm is tested regularly in coordination with fire drills.
Factory trains all new workers about alarm system sound and procedures.
Smoke detectors are installed based on the national building code requirements.
5. EMERGENCY EXITS:
Factory has at least two emergency exits per floor in buildings with less than 1,000
workers.
At least three exits exist per floor in buildings with more than 1,000 workers.
Factory ensures that the maximum travel distance to an emergency exit is 200 feet
or 60 meters for un-sprinkled industrial buildings.
Exit doors are on opposite sides of the building.
Exit doors are well designated and have a width adequate for the number of
workers it must accommodate.
Exit doors are not locked and do not have locks that require special operation. If
the door pushes out, the door must open easily from the inside. Doors should be
push-bar operation.
Emergency exit signs are visible from 30m and use letters at least 18cm high. Also,
signs have bright colors are illuminated or have a photo-luminescent front panel.
Battery-operated exit signs are checked regularly and batteries are replaced.
Doors swing in the direction of exit travel and lead directly to the outside.
Doors that are not exits are labeled such (e.g. Not-An-Exit).
Doors to emergency exit staircases and fire escapes are unlocked.
Barred windows have an internal release, and open in the direction of travel.
Exit routes are not obstructed by equipment, materials, product, etc. and are
regularly checked.
Two exit routes exist on opposite sides of the factory.
Factory marks on the floor with photo-luminescent paint or stripes the appropriate
exit routes.
All exit routes are at least 112cm wide.
Factory should have a one hour fire rating on enclosed fire escapes.
The building roof top must not be obstructed, so that it may be used for evacuation in the
event of a fire or emergency.
7. EMERGENCY LIGHTING:
Factory has emergency lighting for all stairways and exit routes.
Emergency lights are fire grade industrial for use in smoke and fire conditions.
Lighting will last for a reasonable period of time.
Factory regularly checks test-button and replace batteries immediately if needed on
emergency lighting systems.
Electrical cords in the factory and dormitories are in good condition and properly
encased to prevent shorting or fire.
Electrical equipment is grounded to prevent injury and/or fire where there is risk.
Electrical cords are not found in damp areas of in standing water.
Electrical wiring is not in the aisles unless they are securely taped to the floor in a
manner that does not create additional hazard.
Safety switches on electrical switch boards are properly labeled.
9. DORMITORIES:
All fire safety guidelines listed above are implemented in factory sponsored
dormitory buildings.
Factory provides a safe living environment for workers, and complies with all legal
regulations regarding residential facilities, where provided.
Dormitories are not located above any production or warehouse buildings.
Each dormitory floor has at least 2 accessible, unlocked, and clearly marked exits
leading to the outside.
It is common for factories to encourage or require workers to work hours in excess of legal limits or
to discourage or deny workers their right to a day of rest, vacation or sick leave.
To prevent this, the Global Compliance Program requirement on working hours prohibits: (1) work
in excess of the legal limits; (2) not providing at least one day off out of seven; and (3) the practice
of not providing workers with all vacation, sick and other leave required by law. Where the law
permits working hours beyond 60 in a week, the Global Compliance Program also requests that
factories work no more than 60 hours per week.
With respect to working hours during peak production seasons, Sears Holdings permits factories to
work more than 60 hours in a week (regular and overtime) so long as the factory complies with the
following 5 supplemental requirements:
1. It does not exceed 12 hours per day, 6 days per week for a total workweek of 72 hours;
2. One day off in seven is provided or workers are provided another day of rest during the next
week. If work must be carried out on the rest day during peak season, it cannot occur more
than once in a two week time period.
3. Peak season is limited to no more than 4 months or 17 weeks distributed throughout a one-
year period. The maximum 60-hour workweek for non-peak production should be employed
for at least 8 months out of 12;
4. Workers are compensated for regular and overtime hours in accordance with local law
5. Workers are educated on the standard workweek and the factory seeks their willingness to
work overtime hours. For workers not interested in working overtime, the factory must be
supportive of their decision and will not, in any way, force or coerce them to work overtime
hours.
All factories must comply with the specific legal requirements governing environmental in the
countries that they operate.
1. E N V I R O N M E N T A L M A N A G E M E N T S Y S T E M :
2. W A S T E M A N A G E M E N T :
Waste Storage
Waste must be labeled correctly.
Hazardous & Non Hazardous waste must be stored separately, and hazardous waste
must be stored in a designated area away from the production areas.
Factory is required to keep records regarding all aspects of waste management.
Waste Transport
Factory must fill out duplicate forms for transferring wastes and apply to the
environmental protection administrative departments of the local people’s government,
or above the level of city divided into districts where the hazardous waste is to be moved
out.
Illegal transport of waste is prohibited.
Waste Disposal
Factory must only send hazardous waste to suppliers that have a relevant business permit
for disposing waste.
Factory must not discharge any waste into rivers, lakes, reservoirs, or water drainage
systems.
Factory must not bury or burn waste on the factory site.
3. WASTEWATER TREATMENT:
The wastewater from washing, dying operation or other hazardous liquid waste streams must
be separated, analyzed and treated before disposal.
The wastewater system must have an official inspection certificate from a recognized
government authority, and the copy of the certificate must be posted near the facility.
Drainage system is built and examined periodically for leakage.
Wastewater is processed by an authorized wastewater treatment plant.
4. ENVIRONMENTAL IMPACT:
Factory must compile Environmental Impact Report, Environmental Impact Report Form
or fill out Environmental Impact Registration Form and send it to the local government
prior to construction.
Factory needs to receive approval before starting construction.
Factory needs to resubmit all necessary documents to the local government after the
construction is complete.
During the construction the factory must make decisions that result in the least amount of
damage to the environment.
5. AIR EMISSIONS:
The items bolded below are minimum requirements. In addition, all factories must comply
with the specific legal requirements governing notices and record keeping. All other items listed
below are suggestions or good practices adopted by “model” factories.
1. PERSONNEL FILES:
2. TIME CARDS:
All factories use a time card, electronic bar card system, or attendance sheets to
measure actual working hours for all production workers.
If a time card or electronic bar card system is used, time measured must include in
and out times at the start and end of each day.
Attendance sheets may be used so long as they include time in and out each day,
overtime hours, rest day hours, and the signatures of workers acknowledgement
(on at least a weekly basis) confirming the accuracy and completeness of the
attendance sheets.
Time card records should be maintained for at least 1 year. Some countries require
factories to maintain time card records for longer than 1 year.
3. PAYROLL RECORDS:
Each factory must maintain a payroll register that proves proper payment of wages
to each worker per hour, per day, per month or per piece.
Payroll register should include regular working hours, overtime working hours,
gross wages derived from pieces produced or working hours, applicable production
bonuses, allowances, applicable deductions, and net wages.
Original piece rate and other supporting documentation for the payroll register
must also be maintained as proof.
Payroll records must be maintained for at least 1 year. Some countries require
factories to maintain payroll records for longer than 1 year.
Detailed line items for things like holiday hours, top-up bonuses, overtime payment for
piece rate work, loans, tardiness deductions, etc. are also encouraged.
Signature on the payroll register from workers acknowledging the line items and receipt of
net wages is also encouraged.
4. PAY SLIPS:
Each factory must provide a pay slip to workers in the local language for each pay
period that details items such as regular working hours/days, overtime hours,
piece rate wages (if applicable), gross wages, deductions, and net wages.
Workers’ signature on the factory’s copy of the pay slip is also encouraged to prove that
workers have acknowledged the line items and have received the net wages.
The following questions are asked as part of a Global Compliance audit for factories producing for
direct vendors (I.e. the importer of record on shipments to the US is Sears, or Kmart. All questions
assess key security practices that help to mitigate the risk of loss, theft, and contraband smuggling
that could potentially introduce acts of terrorism in the global supply chain. The bolded items are
additional questions that may be asked based on certain regions/countries that pose a
higher security risk.
1. GENERAL SECURITY:
2. PERSONNEL SECURITY:
Does the factory have written personnel security guidelines for hiring, and are the
guidelines evaluated periodically to ensure their effectiveness?
Does the factory conduct employment screening and interviewing of prospective
personnel (including temporary, part-time) that includes application verifications and
periodic background checks?
Does the factory have established policies and procedures for handling terminated
employees including how they physically depart the premises, removal of access and IT
IDs, the return of keys and IT equipment?
Does the factory examine and verify the job applicant’s official identification?
Is there an established procedure to conduct periodic unannounced personnel
security checks to ensure that all personnel security procedures are being
performed properly?
3. PHYSICAL SECURITY:
Is the factory constructed of materials which resist unlawful entry and protect against
outside intrusion?
Does the factory have security personnel present to prevent unauthorized entry?
Does the factory have locking devices for external and internal doors, windows, gates and
fences, while maintaining proper safety rules for employee egress in an emergency?
Does the factory prevent unauthorized access to raw materials and finished cargo within
warehouse?
Does the factory have adequate lighting inside and outside facility, including parking areas?
Are private vehicles not able to freely access shipping, loading and cargo areas?
Does the factory have procedures in place to limit access to keys, key cards and computer
systems to only those persons who have a job related need for such access? Are
terminated employees immediately denied access to keys, computer system, etc.?
Are information systems password protected, and are relevant employees provided with
individually assigned IT system accounts?
Are passwords subject to regular forced changes?
Is there an established procedure to conduct periodic unannounced information
access control security checks to ensure that all information access control security
procedures are being performed properly?
Does the factory select and hire contractors to perform services which require access to
the factory?
Does the factory select the land carriers, sea carriers, rail carriers, consolidators, freight
forwarders, or other 3rd party logistics providers hired to transport goods destined to the
US?
Is there a procedure for contractors to report security violations to the factory
management?
Where applicable, does the factory require C-TPAT enrollment of its contractors?
Is there an established procedure to conduct periodic unannounced contractor
controls checks to ensure that all contractor controls procedures are being
performed properly?
Does the factory provide a security reporting mechanism for employees, including
confidential reporting?
Does the factory conduct security awareness training for management, supervision and
employees to include recognition of internal conspiracies, maintenance of product
integrity, and determination of unauthorized access and procedures to address
unauthorized access?
Is there an established procedure to conduct periodic unannounced checks to
ensure that the current security awareness and training program in place for all
personnel is being delivered properly?
Is security training documented for verification purposes?
Sears Holdings Management Corporation (collectively, “Sears Holdings” and all retail, catalog, and online formats operating under Sears or
Kmart, including but not limited to: Sears, Kmart, Super K) is committed to conducting business with a high standard of business ethics, a
regard for human rights, and in compliance with all applicable laws. Moreover, Sears Holdings expects its vendors to demand similar standards
in its entire supply chain including pre-assembly, and core and secondary facilities, whether owned or leased.
While Sears Holdings recognizes that different cultural, legal and ethical systems exist in the countries which manufacture merchandise for Sears
and Kmart, these Global Compliance Program Requirements set forth certain basic and fundamental requirements that all domestic and
international facilities must satisfy as a condition of doing business with us.
Compliance with the Law. Sears Holdings will only produce merchandise in facilities that we consider reputable and whose business and
labor practices conform to the requirements of applicable law and our Program Requirements. Where our Program sets a higher standard, it will
prevail.
Health and Safety. All production and residential facilities must be structurally safe, and factory conditions must be consistent with all
applicable laws, regulations, and the Sears Holdings Program Requirements.
Fire Safety Risk. All production and residential facilities must take all possible precautions to reduce the risk of fire, and have adequate plans to
protect the lives of the workers in the event of a fire. Facilities must adhere to all applicable fire safety laws and regulations in the counties
where they operate, as well as the Sears Holdings Fire Safety Program Requirements and Guidelines.
Child Labor. No factory worker shall be employed under the age of 15, or under the age of completion of compulsory education, or under the
minimum age for employment in the country of manufacture, whichever is greater.
Forced/Slave Labor, Human Trafficking. We will not allow forced labor whether in the form of prison labor, indentured labor, or bonded
labor. Overtime hours must be voluntary. Migrant workers should be provided with contracts, treatment, and wages that equal those of local
workers.
Harassment or Abuse. No worker shall be subject to any physical, sexual, psychological, or verbal harassment or abuse.
Discrimination. Discrimination in employment, including recruitment, hiring, training, working conditions, job assignments, pay, benefits,
promotions, discipline, termination, or retirement on the basis of gender, race, ethnicity, social origin, religion, age, disability, sexual orientation,
national origin, or political opinion is prohibited.
Working Hours. Except in extraordinary business circumstances, workers shall not be required to work (inclusive of overtime) more than the
legally prescribed limits or 60 hours, whichever is less, and one day off in every seven day period shall be provided. Production facilities shall
comply with applicable laws that entitle workers to vacation time, leave periods and holidays.
Wages and Benefits. Wages are essential for meeting the basic needs of workers. Workers will be compensated by wages, including overtime
pay and benefits which satisfy all applicable laws and regulations.
Freedom of Association. All workers must have the right to establish and join a legal organization of their own choosing, without being
penalized for the non-violent exercise of these rights.
Environmental Compliance. Adherence to all local laws protecting the environment is required. Factories must conduct business so as to
minimize the impact on the environment, including reducing waste and maximizing recycling initiatives.
Notice and Record Keeping. The Global Compliance Program Requirements must be posted in a location accessible to the workers in the
appropriate local language. Factories must also maintain and make available sufficiently detailed records that enable Sears Holdings to determine
their compliance with the Program. All outsourced factories involved in the secondary processes including embroidery, embossing, silk
screening, stamping, dyeing, washing, tufting, binding, latexing, storage of finished or packed goods, diecasting, molding, welding, weaving,
polishing/grinding, etc. should also be registered.
Factory Security. Factories must implement minimum security criteria and best practices to help secure our supply chain from terrorist activity
based on a set of recommendations developed as a result of the Customs-Trade Partnership Against Terrorism (C-TPAT) initiative with US
importers.
Violations
To report suspected violations of the Global Compliance Program Requirements, please
contact the Sears Holdings Global Compliance Department by e-mailing [email protected].