Wal-Mart gets significant concessions in settlement

Tuesday, November 1, 2005

WASHINGTON -- There were serious breakdowns in a government settlement with Wal-Mart Stores Inc. over child labor law violations -- including allowing attorneys for the world's largest retailer to write key parts of the deal, according to a Labor Department inspector general report Monday.

The inspector general attributed the problems to inadequate management controls and guidelines.

As a result, Wal-Mart received "significant concessions" in the $135,540 settlement made public in February, the report said. Among them: The Labor Department was required to notify the retail giant 15 days in advance of opening an audit or investigation, something that's inconsistent with guidelines for the department's Wage and Hour Division.

Wal-Mart also could avoid formal citations or penalties if it brought facilities into compliance within 10 days of being notified about a violation.

The report said the Wal-Mart deal was "significantly different" from other agreements the Labor Department has made with companies and included far-reaching restrictions on the government's ability to assess monetary penalties.

"These breakdowns resulted in (the Wage and Hour Division) entering into an agreement that gave significant concessions to Wal-Mart ... in exchange for little commitment from the employer beyond what it was already doing or required to do by law," the report said.

The report said it found no evidence of violations of federal laws or regulations. Nor did inspectors find evidence of pressure from internal or external sources during development of the agreement.

"The Bush Labor Department chose to do an unprecedented favor for Wal-Mart, despite the fact it is well known for violating labor laws, including child labor laws," said Rep. George Miller of California, top Democrat on the House Education and Workforce Committee, who sought the investigation.

"The sweetheart deal put Wal-Mart employees at risk, undermined government effectiveness and further undermined public confidence that the government is acting on its behalf," Miller said.

A Wal-Mart spokesman did not immediately return a call for comment.

The settlement involved alleged violations at 25 stores in Arkansas, Connecticut and New Hampshire between 1998 and 2002 that had to do with teenage workers who used hazardous equipment such as chain saws, paper balers or forklifts.

Child labor laws prohibit anyone under 18 from operating hazardous equipment. Wal-Mart, based in Bentonville, Ark., denied the allegations but agreed to pay the penalty.

In a letter responding to the report, Victoria A. Lipnic, the Labor Department's assistant secretary for employment standards, agreed that more controls were needed in negotiating settlement agreements, and she said the inspector general's recommendations were being implemented.

Lipnic disputed the inspector general's criticism of the deal, saying it was successful in securing penalty payments and agreements from Wal-Mart to change its policies. It noted the company had agreed to take measures including conducting more than 9,000 facility audits and training more than 160,000 managers on compliance with child labor laws.

"Most of these measures never would have been implemented in the absence of the agreement," Lipnic wrote.

Wal-Mart is the world's largest retail company as measured by sales. The company had sales of $285 billion in its last fiscal year, ending last January.

Respond to this story

Posting a comment requires free registration: