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Wal-Mart’s Labor Problem

The company has a history of (not) dealing with workers’ rights and shirking on employee benefits.


A Wal-Mart employee walks into a Wal-Mart store in Milpitas, Calif. (AP Photo/Paul Sakuma)

There are a lot of reasons to dislike Wal-Mart. From running small-town businesses into the ground to its notorious environmental “green washing,” Wal-Mart has a reputation for being the big corporation everyone loves to hate.

But the company’s most egregious problems are with labor. Accusations against the company range from workers being denied overtime to union busting. The company’s corporate management insists that these accusations are unfounded and that this rhetoric is slander meant to bring down the company. But Wal-Mart continues to pay out millions of dollars in settlements from lawsuits brought against the company. In the last two years, the National Labor Relations Board (NLRB) ruled against Wal-Mart six times for activities related to union-busting.

Since it was founded in 1962, Wal-Mart has opened 3,800 stores in the United States and an additional 2,800 worldwide. The company employs approximately 2.1 million people worldwide and 1.4 million domestically, making it the largest private employer in the United States. Roughly 100 million people shop at the retail giant every week.

Campus Progress has rounded up a list of the company’s worst alleged labor practices. You can decide for yourself whether Wal-Mart deserves its bad rap.

Income Discrepancy

CEO Lee Scott’s total compensation: $29.8 million in 2003.

Average employee’s income: $8.23/hour, total annual full-time salary $13,861. Most work about 24 hours a week, making an average annual income closer to $10, 271. In 2003, the poverty line was $14,630 for a family of three. During this same fiscal period, each Wal-Mart store was worth an average of $204 billion. In 2005, the net worth of the family members who own the corporation was approximately $100 billion combined.

Violation of Fair Labor Standards Act

The Fair Labor Standards Act (FLSA) of 1938 guarantees workers rights like overtime pay, equal wages regardless of gender or race, and a minimum wage. Also called the Wages and Hours Bill, it has been amended several times and is still the predominant tool used to protect workers’ rights.

Perhaps one of the more egregious offenses is the company’s refusal to appropriately compensate its employees for overtime work. In 2002, Wal-Mart was found guilty in a lawsuit that charged that “managers got employees to work off the clock by asking them to clean up the store after they had clocked out and by deleting hours from time records.” Even if employees aren’t forced to stay after their shift ends, they often feel compelled to do so since they may be assigned tasks that require more time than their shift allows. Wal-Mart has faced over 50 lawsuits in state and federal courts. The company paid $50 million in 2000 to settle an “off-the-clock lawsuit” involving 69,000 workers in Colorado, and another for $500,000 covering 120 workers in New Mexico. In 2007, Wal-Mart paid more than $33 million in back wages plus interest for violating overtime rules.

Wal-Mart also has denied workers their federally mandated breaks. According the United Food and Commercial Workers (UFCW), “a[n] internal audit of 128 Wal-Mart stores found 127 were ‘not in compliance’ with company policies concerning workers not taking breaks. The audit found workers nationwide didn’t take breaks 76,472 times in a one-week period.” Today, the company is facing (PDF) 80 more lawsuits at various stages regarding wage and hour violations.

The Family Medical Leave Act Violations

In 2005, the California Fair Employment and Housing Commission fined Wal-Mart $188,000 when the company refused to reinstate a woman after her maternity leave was up. According to Wal-Mart Watch, this is one of many violations of the Family and Medical Leave Act filed against the company.

Union Busting

A Wal-Mart store manager who hears rumors of unionizing is required by corporate policy to report the activity to the Bentonville, Ark. headquarters. The store manager is then essentially relinquished of his responsibilities, and all further decisions about labor policy at the store go through upper-tier management at the headquarters.

Each new employee is shown videotapes explaining the corporation’s “open door” policy where complaints can be directed to others above one’s immediate superior. It is said to serve as an alternative to unionizing. However, many employees have insisted that this is anti-union propaganda that amounts to intimidation. It has become a running not-so-funny joke among many employees that the “open-door” policy is more like the "open-your-mouth-and-they’ll-show-you-the-door” policy. In 2005, Wal-Mart decided to shut down its Jonquiere, Quebec, store just six months after its workers had unionized. This put over 200 employees out of work without severance.

In some instances, the NLRB found that cameras have been installed in parking lots to keep an eye on employees who might organize to discuss potential union operations. Employees have also reported Wal-Mart officials trailing them around the store and spying on them in their homes. Management denies both of these practices.

Wal-Mart workers filed a lawsuit against the company in 2003 (Lupiani v. Wal-Mart Stores) that accuses the company of misleading workers with false statements about employees losing benefits provided by Wal-Mart if they became union-represented.

Recently, Wal-Mart headquarters warned managers and supervisors that should a Democrat take over in the fall, the administration would welcome a resurgence of the labor movement and, consequently, boost laws allowing for easier union membership. Although executives from the corporate headquarters insist that they were not telling employees how to cast their ballots this November, some employees aren’t buying it. One customer service supervisor from Missouri said, "I am not a stupid person. They were telling me how to vote.”

Deplorable Health Insurance Coverage

Most of the employees that work for Wal-Mart cannot afford the employer-provided health insurance. Many employees qualify for Medicaid, welfare, and WIC because Wal-Mart fails to provide adequate wages. Employees report that managers encourage them to seek out government programs like Medicaid. Between 2000 and 2005, the cost of premiums for the health insurance Wal-Wart offers its workers rose 169 percent for single coverage and 117 percent for coverage that extended to an employee’s family. For family coverage, deductibles range from a low of $350 to a high of $3,000. All of this means that the average worker would have to pay one-fifth to one-third of his or her paycheck for healthcare coverage through Wal-Mart.

This reliance upon government funded programs shifts the burden of responsibility from the company to taxpayers. Recent reports show that Wal-Mart is at the top of the list of companies whose employees and/or their children rely on the state to foot the bill for healthcare. The following list illustrates how Wal-Mart has dropped the ball:

· Alabama: Wal-Mart employees with children on Medicaid cost the state between $5.8 million and $8.2 million.

· California: Employees rely on the state taxpayers for about $32 million annually in health-related services.

· Tennessee: Approximately 10,000 Wal-Mart employees are on the state’s expanded Medicaid program.

· Georgia: 10,262 children of Wal-Mart employees are enrolled in the state’s PeachCare program for health insurance in families meeting federal poverty criteria.

Discrimination

The biggest civil rights lawsuit in history comes at the behest of Wal-Mart, in a class action suit (Dukes v. Wal-Mart Stores, Inc.) filed by 1.6 million current and past female employees. Wal-Mart Versus Women, a group dedicated to promoting gender equality in the corporation, says that, “Two-thirds of Wal-Mart’s hourly employees are women, but they hold only one-third of management slots and less than 15 percent of store management positions.” Corporate executives have been quoted saying that female employees are “not worth promoting” even though, on average, women have a lower turnover rate and receive higher performance reviews. When Wal-Mart employee Kathleen McDonald told her manager she was upset that her male coworkers made more money than she did and that she had not been given a promotion in her 15-year tenure, he promptly replied that, “God made Adam first, so women will always be second to men.”

Further Resources

- Wal-Mart Watch

- Selling Women Short: The Landmark Battle for Worker’s Rights at Wal-Mart by Liza Featherstone

- Wal-Mart: The High Cost of Low Price directed by Robert Greenwald

- The Case Against Wal-Mart by Al Norman

- The Wal-Mart Effect: How the World’s Most Powerful Company Really Works—and How It’s Transforming the American Economy by Charles Fishman

Aaron Ludensky is a former Editorial Intern at Campus Progress and a senior at University of Maryland-Baltimore County.

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