The Chinese Labor Contract Law went into effect on Jan. 1, 2008, amid suspicions that it might be used to force Western companies into compliance with the whim of whatever Chinese regulator happened to use it.

Then China’s economy began to unravel along with the rest of the world’s. Today, the law might as well have never been written.

“January to June [of 2008], we won 90 percent of our cases,” says Li Qiang, executive director of China Labor Watch, a New York-based activist group that helps Chinese employees sue their employers. “But from July, the tide seemed to have turned. ...