Wednesday, Dec. 31, 2008 | 2 a.m.
Employees forced to work off the clock. Workers locked in overnight. Illegal immigrants on the payroll. Union sympathizers banished or fired. Sweatshop and child labor.
When it comes to Wal-Mart, the stories are legion — and, from the perspective of the world’s largest retailer, unfair. The company’s outgoing chief executive, Lee Scott, has often blamed documented abuses on a bunch of “knuckleheads,” managers acting illegally without the knowledge of corporate headquarters. And over the years, Wal-Mart has fought these cases aggressively — in court and in print.
So it came as somewhat of a surprise last week when, two days before Christmas, the company settled 63 wage-and-hour lawsuits, many originating in Las Vegas and filed in Nevada, accusing it of systematically cheating employees out of hours they had worked. Wal-Mart operates 49 stores in Nevada.
Specifically, the class-action complaint alleged store managers engaged in a practice known as “time shaving,” clocking employees out one minute after their meal breaks ended — even though they worked for several hours afterward — and erasing overtime from their time cards.
The settlement, which involves hundreds of thousands of current and former employees, could cost the company as much as $640 million. How much money will flow to the company’s nearly 15,300 workers in Nevada is unclear.
The resolution seems to have as much to do with turning an embarrassing page (Scott is relinquishing the role of chief executive to Michael T. Duke) as it does with the country’s new labor-friendly political landscape.
Consider the environment: Sen. Barack Obama took Wal-Mart to task during the presidential campaign for its low wages and scant benefits and was elected in November with considerable organizing help from unions. His pick for labor secretary, Democrat Rep. Hilda Solis of California, has vowed to strengthen unions and enforce garden-variety labor law, such as the wage-and-hour rules at the heart of the Wal-Mart class-action suit. And, if Democrats stick together, Congress is just a few votes shy of passing a law that would make it easier for unions to organize.
“I’d be most interested to know when the (lawsuit) negotiations really got serious — before or after Nov. 4,” said Nelson Lichtenstein, a labor relations expert at the University of California, Santa Barbara, who’s writing a history of Wal-Mart. “I think they’re reading the tea leaves, and they know there’s a new era of labor law enforcement coming.”
Under the Obama administration, business leaders fear what Randel Johnson, vice president of labor policy at the U.S. Chamber of Commerce, has called a “shift from compliance assistance to pure enforcement.” Indeed, Lichtenstein said a lax regulatory environment and a business-friendly federal labor board have all but encouraged Wal-Mart and other companies to break the law, particularly during the past eight years.
A corporate statement announcing last week’s settlement seemed to strike a conciliatory note. “Resolving this litigation is in the best interest of our company, our shareholders and our associates,” said Tom Mars, Wal-Mart’s executive vice president and general counsel. “Many of these lawsuits were filed years ago and the allegations are not representative of the company we are today.”
Wal-Mart also recently reached a
$54 million settlement covering 100,000 former and current employees in Minnesota who had asserted they were owed money for off-the-clock work and missed breaks. Still, the company has appealed a number of cases alleging similar wrongs, and is still fighting a sex-discrimination lawsuit that has become the largest private civil rights case in U.S. history.
Another possible reason for last week’s settlement: There are indications all the bad press has affected Wal-Mart’s bottom line. A company-commissioned study found that between 2 percent and 8 percent of consumers have stopped shopping at Wal-Mart because of the negative stories.