Global IT Outsourcing and Supply Chain Law” – Dr. Franziska Lietz at the Responsible Innovators Meetup.

On February 29, 2024, Dr. Franziska Lietz was invited by the initiative Responsible Innovators to speak about globalized IT services, the boundaries of labor law protection, and human rights. The title of her presentation was “Global IT Outsourcing and Supply Chain Law – How does Regulation Shape the Globalisation of IT Services?”. Not only members of Responsible Innovators Germany attended her presentation, but also interested individuals from Kenya, as part of an inaugural event for the establishment of a corresponding initiative on responsible innovation locally. Fun fact: They rented a movie theater to watch the event on a big screen. The second equally interesting presentation of the meetup was given by Yannik Hirt, focusing on “Green IT”.

Dr. Lietz initially discussed IT outsourcing and the globalization of the remote work environment and the gig economy.

Due to the great interest of the Kenyan participants, the case of Daniel Motaung, a Facebook moderator from South Africa, who was tried in a Kenyan court, was also discussed. Supported by the law firm or organization Foxglove, Daniel Motaung filed a lawsuit against the outsourcing client Meta and its direct employer, the outsourcing company Sama. The lawsuit was based on the moderator’s psychological stress due to PTSD caused by moderating extreme content. Ultimately, the Kenyan court ruled that Meta, as an employer, is liable for the damages suffered by the moderator from his work for Meta. The case is very revealing as it highlights many facets of the issues with outsourced tasks, where clients mainly assign individual tasks (so-called micro-gigs) and generally show neither knowledge nor interest nor responsibility towards the individuals performing the tasks. As a result, the achievements of labor protection, which are established in most legal systems today, are not effective in such cases.

Is there “Human Rights Leakage” and what can be done about it?

Another focus of the presentation was comparing the cross-border dumping of labor protection regulations with the phenomenon of “Carbon Leakage,” known from climate protection law. In both cases, the concern is that in more advanced economic nations, or the global North, there are already well-established environmental and labor protection laws. If production is physically or remotely outsourced to other regions of the world where such high standards are not yet established, there is a risk not only of “Carbon Leakage” but also of “Human Rights Leakage”. Since the challenges are similar, the solutions could also be similar. Starting from the CBAM (Carbon Border Adjustment Mechanism), which envisages taxing or financially burdening goods imported into the EU that are produced in countries without emissions trading, the question arises whether, for example, taxing purchased services provided in countries without a minimum wage is worth considering.

Conclusion:

You cannot outsource your responsibilities – At least not for good. Based on these considerations and the increasing case law in this area, the presentation concludes that responsibility for human rights and working conditions cannot be permanently outsourced (“You cannot outsource responsibilities”). The developments outlined suggest that binding regulations will be established over time. Therefore, companies are well advised to prepare for this now. They should be aware of their fundamental responsibility even when outsourcing activities and take at least basic protective measures for the individuals working for them. After all, these individuals significantly contribute to the success of the companies.