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Nike Potentially Risks $500M Fine Over Labor Practices
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Nike Potentially Risks $500M Fine Over Labor Practices

Back in the late 1990s, the “Doonesbury” comic strip took aim at Nike (NYSE:NKE) and went at them, full-bore, revealing how Nike workers were paid sums that were minuscule even in the late 90s; about $46 per month. Now, Nike faces a much larger potential fine connected to some of its labor practices. These practices will sound quite familiar to those who follow Uber (NASDAQ:UBER) and Lyft (NASDAQ:LYFT) and the troubles they’ve had with independent contractors. Nike is down over 4% at the time of writing.

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Reports from The Guardian noted that Nike’s fine could reach up to $530 million and possibly beyond, as it misclassified workers in the United States and Western Europe as independent contractors when they really met the definition of employees. Nike, for its part, has kept quiet about the case so far, though that likely won’t be the case much longer as it will need to respond to the allegations at some point.

A report from workforce services provider People2.0 looked at Nike’s potential liability for payments in just the United States and discovered that Nike paid over $7.2 billion to independent contractors, law firms, and the like. It further discovered that around a quarter of those contractors may have been improperly classified as independent contractors, which may put Nike’s liability as high as $293.2 million just in the United States.

This isn’t discouraging analysts much; currently, Nike has a Moderate Buy rating, made up of 22 Buy ratings, three Holds, and two Sells. With an average price target of $140.72, Nike stock also offers investors 23.56% upside potential.

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