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U.S. Inspector General to Investigate Labor Department Deal with Wal-Mart

The U.S. Department of Labor’s inspector general announced on Feb. 18 his office would investigate the department’s agreement to give Wal-Mart 15 days advance notice to investigate and fix complaints of all federal wage-and-hour law violations before any department investigation.

In a letter to Rep. George Miller (D-Calif.), Inspector General Gordon Heddell agreed “to review the circumstances surrounding” the Jan. 6 agreement, which The New York Times revealed Feb. 12. Although the settlement grew out of child labor investigations, the deal covers all violations of federal wage-and-hour law, not only child labor provisions. Miller had asked the inspector general for an investigation.

The deal was part of a settlement in which Wal-Mart agreed to pay $135,540 for child labor violations involving young workers’ use of dangerous equipment. Most of the violations involved children younger than 18 operating heavy machinery, including cardboard balers and chain saws. In one case, a minor hurt his thumb while cutting Christmas trees with a chain saw. Wal-Mart just announced that its profits last year were a record-breaking $10 billion.

Labor Department officials, including Victoria Lipnic, assistant secretary of labor for employment standards, insisted to reporters this week that the agreement is similar to those the department signed with Sears, Roebuck and Co. in 1999 and Foot Locker in 2000. But a House Education and the Workforce Committee Democratic staff analysis shows, despite the Labor Department’s repeated claims to the contrary, it gave Wal-Mart an unprecedented sweetheart deal.

The department gave Sears and Foot Locker 10 days notice for child labor investigations only at a limited number of stores—those that already had been scheduled for self-audits regarding child labor law compliance.

“The 10-day notice for Sears and Foot Locker stores, which had scheduled but not yet completed self-audits, was for the explicit purpose of allowing the store to complete the self-audit with the results to be shared with DOL as it opened its investigation,” the committee report finds. “With no self-auditing system in place in the Wal-Mart agreement, there is no reason for the advance notice. The results of an internal Wal-Mart investigation or audit are not turned over to DOL to assist in the investigation. Indeed, the Wal-Mart agreement provides no reason for the advance notice.”

Neither Wal-Mart nor the Labor Department has offered any evidence to explain why this arrangement is acceptable, says Miller. “I am very concerned about this secret agreement between Wal-Mart and the Bush administration,” he says.

The Labor Department agreed to provide the retailer advance notice of investigations of wage-and-hour laws even though Wal-Mart has a long record of repeatedly violating them. Maine fined the company more than $200,000 in March 2000 for child labor law violations in every one of the 20 stores in the state. A weekly internal audit of 128 stores found more than 1,300 instances of children working improper hours, although company officials later said the audit was faulty, according to The New York Times.

Connecticut Attorney General Richard Blumenthal said earlier this week he will seek to enlist other states in a states-led investigation into allegations Wal-Mart violated child labor laws. Throughout the nation, dozens of individual and class-action lawsuits have been filed by current and former workers alleging Wal-Mart made them work overtime without pay.

“Once again, it looks like the Bush administration is doing a favor for a powerful friend and contributor at the expense of workers who do their jobs and still cannot get fair treatment in the workplace,” says Miller.

Wal-Mart donated $2.1 million to candidates and campaigns in the 2004 election cycle, with 80 percent going to Republicans, according to the Center for Responsive Politics website OpenSecrets.org.

The Labor Department’s agreement to give Wal-Mart advance notice before inspections is “quite shocking and the notion that the wage-and-hour division would give Wal-Mart advance notice on some level is a compromise of its investigative authority,” says John Frasier, who retired in 2001 as deputy administrator of the Labor Department’s wage and hour division, in the Feb. 15 Wall Street Journal. Notifying the retailer of an alleged violation, he says, compromises a complaining worker’s privacy.

Wal-Mart has admitted it has locked workers in overnight at about 10 percent of its more than 3,500 stores, according to a June 18, 2004, New York Times story. Saying they have been denied promotions and pay raises because of their gender, a group of women sued Wal-Mart this year in the largest sex-discrimination case in history, and in June, a U.S. District Court in San Francisco gave class-action status to 1.6 million women who have worked at Wal-Mart since 1998. Wal-Mart also has had to pay hundreds of thousands of dollars to workers throughout the company who were subject to race discrimination.


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