Walt Disney: Corporate Rap Sheet
By Philip Mattera
Over nearly a century, Disney has grown from a small animated cartoon producer into a massive media and entertainment conglomerate with some of the world’s most famous brands. It controls several movie studios; a major U.S. television network; leading cable television channels; theme parks in the U.S., France, Japan and China; a cruise line; hotels and resorts; a book publisher; and more.
Yet it is a relatively small part of its operations—the licensing of characters from its animated films to producers of children’s clothing, toys and other merchandise—that has put the company at the center of much controversy. That’s because those goods are frequently produced in sweatshop conditions in countries such as China and Bangladesh.
Disney, which has a history of anti-union animus going back to its early years, has also faced criticism over its U.S. labor practices and has recently emerged as one of the leading corporate opponents of the campaign to enact paid sick days laws.
After studying at the Kansas City Art Institute and founding an unsuccessful animation company in that city, Walt Disney joined his brother Roy in Hollywood in 1923. There they enjoyed success from the creation of Mickey Mouse cartoons and later animated features such as Snow White and Seven Dwarfs, Pinocchio and Fantasia. After the Second World War, the Disney company moved into live-action features and television. Its Disneyland theme park opened in Anaheim, California in 1955. That was followed by Disney World in Orlando, Florida in 1971 and the EPCOT Center, also in Orlando, in 1982.
In 1984 Disney fought off a takeover bid by corporate raider Saul Steinberg and then thwarted another effort by Irwin Jacobs with the help of the Bass Brothers. By the end of the 1980s Disney, helped by its Touchstone Pictures unit, was finally reaching the top ranks of the industry. It also had a resurgence in animated features with hits such as Aladdin and the Little Mermaid, while profiting nicely from the sale of some of its classic titles on videocassette. The Disney Channel debuted on cable TV in 1983. Disney agreed to purchase Miramax Films, an independent distributor of sophisticated grown-up films, in 1993 (it was sold in 2010).
Disney got into television in a much bigger way in 1995, when it agreed to purchase Capital Cities/ABC for $19 billion. The deal gave Disney control of one of the major broadcast networks as well as its cable properties, such as the increasingly popular ESPN sports channel.
Starting in the mid-1990s, Disney experienced extended periods of boardroom unrest. Michael Eisner, who had been hired away from Paramount Pictures in 1984 to be chief executive, ended up in an ugly legal battle with former studio chairman Jeffrey Katzenberg over compensation. There was also controversy over the large severance package given to Michael Ovitz, the former superagent who had been hired as Disney’s president in 1995 but departed suddenly the following year. In 2003 Roy E. Disney, son of the company’s co-founder and a member of the board, pushed for Eisner’s removal, saying he was mismanaging the firm. Eisner lost his position as chairman and ultimately resigned as CEO. Amid the turmoil, Comcast launched a hostile takeover bid but later backed off. Eisner was succeeded in 2005 by Robert Iger, who remains chairman and CEO.
Disney entered the cruise business in 1998 and purchased the Anaheim Angels in 1999 (the baseball team was sold in 2003). The company acquired the Muppet properties in 2004, Pixar Animation Studios in 2006, Marvel Entertainment in 2009 and Lucasfilm in 2012.
Supplier Sweatshop Controversies
A January 1996 report published by the National Labor Committee (now the Institute for Global Labour and Human Rights) alleged that clothing contractors in Haiti producing “Mickey Mouse” and “Pocahontas” pajamas for U.S. companies under license with Disney were in some cases paying as little as little as 12 cents an hour, below the minimum wage in that country. The report contrasted that figure to the $97,600 per hour it calculated that Disney CEO Michael Eisner was receiving from salary, incentive pay and stock options.
In a follow-up report, the group found that the contractors had raised wages to the legal minimum of about 28 cents an hour but said this still left workers living “on the edge of misery,” especially since they were often short-changed by employers. The report described the shock a group of workers expressed when they were told that one of the Pocahontas garments sold in the United States for $10.97—equivalent to nearly five days of their wages.
The National Labor Committee singled out Disney and Kathie Lee Gifford’s clothing line in its campaign to publicize exploitative conditions in overseas garment factories. Charles Kernaghan, director of the group, told a Congressional committee that workers producing the Disney garments “are on the edge of starvation.” The campaign, which dogged Disney at its annual meetings and other public events, expanded its focus to Bangladesh in 2002. Kernaghan charged that workers in Dhaka making garments for a U.S.-based Disney licensee were working up to 15 hours a day, seven days a week and were being paid the equivalent of 8 to 19 cents an hour.
In 2005 a Hong Kong-based group called Students and Scholars Against Corporate Misconduct (SACOM) turned the focus to conditions in Disney’s supplier factories in China. In report entitled Looking for Mickey Mouse’s Conscience, SACOM identified several dozen of those factories and found that just about every one was violating Chinese labor law. The abuses included excessive hours, improper wage calculations, excessive deductions for substandard dormitories, and frequent workplace accidents.
SACOM also joined with the National Labor Committee in publishing a report on the high rate of injuries at a Chinese printing plant producing Disney children’s books. The report charged that workers there were forced to toil up to 90 hours a week and were paid just 33 to 41 cents an hour.
In 2006 SACOM succeeded in getting Disney chosen as one of the “winners” of the Public Eye Awards, bestowed on irresponsible corporations by the Swiss group the Berne Declaration and Friends of the Earth (Greenpeace later replaced FOE). The nomination document stated: “Serious labor and human rights violations by Walt Disney subcontractors tarnish the carefree image that the entertainment giant tries to present to us through its films and cartoon figures.”
In 2007 China Labor Watch blamed Disney and other major Western toy companies for allowing brutal conditions to exist in their Chinese supplier factories. The group said it investigated eight plants and discovered widespread labor violations, including the hiring of under-age workers, excessive overtime, unsafe conditions and sexual harassment. SACOM then brought out another report on abuses at toy factories, focusing on a Disney supplier called Hao Wei. Shortly thereafter, a group of Hao Wei workers fed up with 15-hour shifts took the extraordinary step of suing the local labor bureau for failing to enforce overtime compensation rules; a court awarded them $90,000.
Throughout all these controversies, Disney maintained that its licensees were responsible for labor conditions in the factories, though the company did perform some inspections, the results of which it did not make public. It also refused, for what it said were competitive reasons, to publish a list of all the facilities. Disney did, however, join with McDonald’s and a group of NGOs in what was called Project Kaleidoscope to promote better working conditions in the Chinese plants producing goods linked to the two companies. A 2008 report by the initiative spelled out some broad principles and claimed that a group of 10 target facilities had succeeded in improving working conditions.
Nevertheless, there was continuing criticism of conditions in Chinese factories producing Disney-branded toys. In December 2008 the National Labor Committee came out with a report entitled Toys of Misery Made in Abusive Chinese Sweatshops, which described 96-hour workweeks, rampant wage theft and brutal conditions at a factory in Dongguan in which Disney toys were being manufactured. A 2010 report by China Labor Watch argued that Project Kaleidoscope had failed to eliminate labor abuses at Disney supplier factories and described widespread use of child labor at two such plants.
In 2012 the Institute for Global Labour and Human Rights (the new name taken by the National Labor Committee) issued a report about dangerous conditions at the Dream International toy factory in Shenzen, China, a Disney licensee that sold to retailers such as Wal-Mart. Bearing the unsubtle title Toys from Hell, the report accused Dream International of not only imposing low wage rates and inhumane conditions but also of forcing workers to toil in what it called a “fire trap.”
That accusation took on added significance because of the fire at the Tazreen Fashion factory in Bangladesh in which more than 100 workers were killed. Disney-branded garments were reported to be among the goods produced at the plant. Following an even worse industrial disaster in Bangladesh involving Disney suppliers—the collapse of the Rana Plaza building that killed more than 1,000 workers—Disney announced in May 2013 that it had notified licensees that it wanted to phase out production in Bangladesh as well as Pakistan, Belarus, Ecuador and Venezuela. The moved was criticized by some as an evasion of the company’s responsibility to improve conditions. Liana Foxvog of Sweatfree Communities and Judy Gearhart of the International Labor Rights Forum published a column on the New York Times website calling the move “shameful.”
Other Labor Issues
In its 10-K filing with the Securities and Exchange Commission, Disney state that: “a significant number of employees in various of our businesses are covered by collective bargaining agreements, including employees of our theme parks and resorts as well as writers, directors, actors, production personnel and others employed in our media networks and studio operations.”
That did not come about without some resistance. Walt Disney was not happy when the union organizing wave of the 1930s reached his film studio. Although Disney’s animators were relatively well treated, there was discontent over inequities in pay rates among staff members. Many of the animators joined the recently created Screen Cartoonists’ Guild, which demanded union recognition. When Disney refused, the guild called a strike in 1941 that ended after five weeks when Disney agreed to sign a collective bargaining agreement. Disney later participated in the red-baiting of the Guild, which resulted in its replacement by IATSE as the main union at the studio. (IATSE Local 839 is also known as the Animation Guild).
Relations with members of the numerous unions representing workers at the company’s theme parks have at times been contentious. In 1980, for example, union musicians at Disney World in Florida staged a strike of several days in a dispute over wages. In 1984 more than 1,800 workers at Disneyland in California walked off the job after rejecting management’s demand for a wage freeze. Disney brought in replacement workers and continued to operate. After three weeks, the strikers approved a new contract offer containing the freeze and ended the walkout.
In later years, Disneyland and Disney World workers took strike votes several times during difficult contract talks, but there were no significant walkouts. Workers at Disneyland Paris stayed on strike for more than two weeks in 1998 and later staged a number of shorter walkouts, including one in 2012 over pay as well as sexual harassment.
In 2002 Teamsters members at two hotels at Disney World (but not owned by Disney) stayed on strike for two weeks in an effort to win a guarantee of full-time schedules. The walkout ended with a wage increase but not the guarantee.
In 2008 Disney pressured members of UNITE HERE working at three of the company’s Disneyland hotels to accept substantial increases in their healthcare costs. They refused, and the workers carried out an extended pressure campaign against the company—including a hunger strike—before resolving the issue in late 2011.
When Disney took over ABC in 1995 it inherited a new set of collective bargaining relationships. The union NABET, representing camera operators and other technicians, targeted Disney starting in 1997 as part of its effort to resist an effort by ABC management to gain the right to replace full-time workers with daily hires; changes in health coverage were also an issue. After NABET members staged a one-day protest strike in November 1998, the company locked them out. ABC ended the lockout after 74 days when the union agreed to hold a vote on management’s latest contract offer, which included the expanded use of daily hires. The membership reluctantly ratified it.
Disney was one of the targets of the 100-day strike the Writers Guild launched in November 2007 against major film studios and television networks.
Domestic sweatshops. Disney’s problems with suppliers who violate labor standards have sometimes occurred in the United States. For example, in 2001 federal and state investigators found that a Disney supplier in California was violating minimum wage, overtime, industrial homework and child labor laws. After the company went out of business, Disney agreed to pay $903,000 into a fund to cover back wages for the workers whose rights had been violated.
Wage and Hour Violations. In 2010 the U.S. Labor Department recovered $433,819 in back wages owed to 69 employees of Disney’s operations in Florida. The settlement covered inventory control clerks who were not being paid for work activities occurring before and after their normal shifts. In addition, they were not paid for working through their meal times and when working from home.
Workplace Safety. Disney’s theme parks can be dangerous places to work. Over the years, Disneyland and Disney World have been cited numerous times by federal and state agencies for violations of safety rules. For example, in 2004 OSHA found that Disney was not enforcing its own safety regulations when a costumed worker at Disney World was killed in an accident involving a float. In 2008 OSHA fined Disney $21,500 for five safety violations linked to a fatal employee accident at Disney World.
There were three employee deaths at Disney World during the summer of 2009. OSHA later proposed to fine the company $44,000 for a serious safety violation linked to one of those fatalities, which resulted from a monorail crash (the amount was later reduced to $35,200). The matter was also investigated by the National Transportation Safety Board, which found that “a lack of standard operating procedures” was a contributing cause of the accident. The 2009 incidents were later alluded to by the head of OSHA in charging that the theme park industry had a lax commitment to worker safety.
In 2011 OSHA proposed $69,000 in fines for violations that it concluded had contributed to the death of a Disney World mechanic who was struck while performing maintenance on a ride called Primeval Whirl. In 2013 Cal/OSHA cited unsafe maintenance practices and initially imposed a fine of $234,850 against Disney in connection with an accident in which a contract worker was injured while cleaning the Space Mountain ride in Disneyland (the penalty was later reduced to $82,025).
Employment Discrimination. In 2010, managers at Disney Grand Californian Hotel & Spa's Storyteller's Cafe did not allow a Muslim employee to wear a hijab, or a head scarf, at work, saying it did not comply with the ”Disney look.” Instead Disney gave the employee three choices: to work away from customers, to wear a specially-designed uniform, or to wear a hat on the top of her hijab. After refusing those options, the worker was suspended without pay and later quit. The woman also reported being verbally abused by her coworkers and said that management ignored her multiple complaints. In 2012 the worker sued Disney for discrimination.
It was not the only time Disney refused to allow female Muslim workers to wear a hijab at work. In 2010, a worker at Disneyland requested permission to wear the head scarf. She was also refused and initially was offered a position away from the public. After she declined a new position, the dispute was settled when Disney designed a costume headpiece that the worker accepted.
In 2000, Disney paid $2 million to settle a discrimination law suit filed in Los Angeles Superior Court by an employee at one of its radio stations who was offended by a promotion called “Black Hoes.” Initially Disney ignored the complaint, but after being pressured by civil right groups the company settled.
In 2006, the French group SOS Racisme released a report in which it revealed that the temp agency Adecco was rating job applicants based on their national origin and skin color. The report listed Euro Disney as one of the agency’s clients and described Disney as “main contracting party for racial discrimination.” Disney was said to have limited the number of its workers who were not of European background to 20 percent.
Immigration Abuses. In 2015 the New York Times published a front-page story reporting that the company was using the H-1B temporary visa program to replace regular employees with foreign workers provided by an outsourcing firm based in India. Disney later dropped the plan.
Paid Sick Leave. Disney has emerged as one of the main corporate opponents of a campaign to enact laws requiring employers to provide paid sick days to workers. There were press reports that Disney played a role in getting the Florida legislature to pass a bill preventing localities from establishing their own paid sick leave policies.
In the late 1980s and early 1990s, Disney was involved in several significant environmental controversies. In 1988 the Florida Department of Environmental Regulation accused the company of sloppiness in its handling of hazardous waste at Disney World and proposed fines of about $174,000. Two years later, the federal EPA announced that Disney would pay a fine of $375,000 to resolve charges of polluting Reedy Creek, a stream near Disney World.
Also in 1990, Disney agreed to pay $550,000 to settle EPA charges relating to violations of federal law in the disposal of toxic waste from Disneyland.
In 2004 Greenpeace issued a report documenting that Disney-brand childrenswear sold in 19 countries contained hazardous chemicals apparently linked to the use of PVC plastisol techniques to print images of Disney characters on the garments.
In 2005 the Center for Environmental Health disclosed the results of an investigation showing that Disney-brand children’s jewelry contained high levels of lead. Under pressure from the Consumer Products Safety Commission, hundreds of thousands of the items were recalled.
In 2012 the Los Angeles Times reported that federal and state regulators were investigating whether a vintage air conditioning system at Walt Disney Studios in Burbank, California was responsible for contaminating groundwater with carcinogenic chromium 6. Two days later, the newspaper reported that the investigation had been abruptly terminated.
Various Disney-brand products were among those mentioned in a 2012 report by the Center for Health, Environment & Justice about high levels of dangerous phthalates in children’s school supplies. CHEJ and other groups have been campaigning to get Disney to make sure phthalates are removed from its banded products.
Online Privacy Issues
In 2011 the Federal Trade Commission announced that Playdom Inc., a Disney subsidiary involved in creating online multi-player games, would pay $3 million to settle charges that it violated the Children’s Online Privacy Protection Rule by illegally collecting and disclosing personal information from hundreds of thousands of children under the age of 13 without their parents’ prior consent.
Economic Development Subsidies
Theme Parks. When Disney announced plans in the early 1990s for a $3 billion expansion of its Disneyland theme park in Anaheim, California the company insisted that local, state and federal governments provide some $800 million in infrastructure improvements at and around the site. Disney announced a scaled-back $1.4 billion plan in 1996, and Anaheim agreed to spend $200 million to build a huge new parking garage and provide other improvements connected to the expansion. This figure does not count the additional $150 million the city agreed to spend to renovate and expand its convention center, which would indirectly benefit Disney.
In Florida, Disney does not have to ask local officials for subsidies, since the company in effect runs the government in the form of the Reedy Creek Improvement District that Disney arranged to create for the land it purchased when planning Disney World and EPCOT in the 1960s. The existence of the district gives the company complete control over land use policies and freedom from customary taxation while allowing it to issue its own tax-exempt bonds. In 2013 Disney used the district to float bonds to finance two parking garages for the company’s Downtown Disney shopping district.
Film and Television. Disney’s film and television production operations have made frequent use of the tax credits and other subsidies that many states provide to movie and TV producers. For example, in 2012 Walt Disney Studios was granted $9.5 million in tax credits by the Ohio Film Office in connection with the filming of “Captain America: The Winter Soldier.” Ohio also provided an $8.1 million credit to Disney’s Marvel Studios in connection with the filming of “The Avengers” movie.
In 2000 ESPN (80 percent owned by Disney) announced plans for a $500 million expansion of its broadcasting operations in Bristol, Connecticut but said it would not proceed unless the state legislature enacted a law allowing it to calculate its state corporate income taxes using the single sales factor method, which meant a savings of $15 million a year. The legislature complied.
In 2011 state officials announced that ESPN would receive a $17.5 million low-cost construction loan for a new digital facility along with up to $6 million in sales tax exemptions on construction materials and up to $1.2 million in training funds. That same year, ESPN received more than $18 million from the state’s Digital Media and Film Tax Credit program.
Disney Interactive. In 2008 the state of Utah awarded Disney Interactive up to $5.25 million in financial assistance under the state’s Economic Development Tax Increment Financing Program.
Other. In 1998 Disney got the city of Anaheim to contribute $30 million toward the cost of renovating the stadium used by the California Angels baseball team owned by the company at the time.
Other Information Sources
Violation Tracker summary page
Watchdog Groups and Campaigns
Institute for Global Labour and Human Rights (formerly National Labor Committee)
Key Books and Reports
An Appeal to Walt Disney Company (National Labor Committee, April 1996).
Code of Conduct is No More than False Advertising: Disney Suppliers Continue Exploiting Chinese Workers (China Labor Watch, November 2010).
Disney in China: Disney’s Children’s Books Made with the Blood, Sweat and Tears of Young Workers in China (SACOM and National Labor Committee, August 2005).
Disney in Haiti: Are Human Rights Campaigns Necessary (National Labor Committee, July 1997).
Disney War by James Stewart (Simon & Schuster, 2005).
Finding Chemo: Toxic Childrenswear by Disney (Greenpeace, April 2004).
Haowei Toys Brings You…Mickey Mouse: A Survey of Conditions at a Disney Supplier in China (Students and Scholars Against Corporate Misbehavior, September 2007).
Hidden Hazards: Toxic Chemicals Inside Children’s Vinyl Back-to-School Supplies (Center for Health, Environment & Justice, August 2012).
Investigations on Toy Suppliers in China; Workers are Still Suffering (China Labor Watch, August 2007).
Looking for Mickey Mouse’s Conscience—A Survey of the Working Conditions of Disney’s Supplier Factories in China (Students and Scholars Against Corporate Misbehavior, August 2005).
Project Kaleidoscope: A Collaborative and Dynamic Approach to Code of Conduct Compliance (Project Kaleidoscope Working Group, March 2008).
The Disney Version: The Life, Times, Art and Commerce of Walt Disney by Richard Schickel (Simon & Schuster, 1968).
The Keys to the Kingdom: How Michael Eisner Lost His Grip by Kim Masters (William Morrow, 2000).
The U.S. in Haiti: How to Get Rich on 11 Cents an Hour (National Labor Committee, January 1996).
Toys from Hell: Walmart & Disney (Institute for Global Labour and Human Rights, December 2012).
Toys of Misery Made in Abusive Chinese Sweatshops (National Labor Committee, December 2008).
Walt Disney: The Triumph of the American Imagination by Neal Gabler (Knopf, 2006).
Last updated July 9, 2015
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