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Wal-Mart Sweetheart Deal With Labor Department Involved “Serious Breakdowns” that Benefited the Company, Government Report Concludes

Representative Miller Says Report Underscores Special Relationship Between Bush Administration and Major GOP Donor Wal-Mart

WASHINGTON, DC -- A federal inspector general has found that a secret and controversial agreement between Wal-Mart and the U.S. Department of Labor, signed in January, was the result of “serious breakdowns” in the Labor Department’s normal procedures and resulted in an agreement that was “significantly different” than other agreements signed by the Department. The investigators also concluded that the agreement has brought significant benefits to Wal-Mart while weakening future federal oversight of labor practices at Wal-Mart.

The breakdowns resulted in Wal-Mart being able to author “key provisions” of the agreement, reached after the Labor Department found the company had violated child labor laws at operations in three states, the IG reported.

Representative George Miller (D-CA), the lawmaker who requested that the DOL’s Inspector General investigate the sweetheart deal after it was revealed in news accounts in February, said today that the IG report bolsters his belief that the Bush Administration was doing a favor for a powerful friend by making the deal. Miller said that he would join legislation, offered by Rep. Rosa DeLauro (D-CT), to prevent DOL from making these sweetheart deals with companies in the future.

“Instead of looking out for all Americans, the Bush Administration took care of one of its closest friends, Wal-Mart,” said Miller, the senior Democrat on the House labor committee. “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. 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.”

The controversial arrangement reached in January only became public when it was leaked in February. Under the arrangement, Wal-Mart is given 15 days advance notice before any wage and hour audit or investigation by the Department of Labor. Upon receiving a complaint about a potential violation of wage and hour laws, DOL’s field offices around the country are now instructed to notify the DOL office in Little Rock, Arkansas, which will then notify Wal-Mart’s headquarters in Bentonville, Arkansas of the complaint. The Department will not launch its own investigation during that time.

Miller said that such an arrangement could allow the giant employer to cover up evidence of a violation and would discourage aggrieved employees who might fear retribution from the company from ever filing a complaint. In addition to the 15 days advance notice, if a violation is ultimately found, Wal-Mart is given an additional 10 days to come into compliance with the law, in order to avoid any penalties for such violation. Finally, the deal included a provision that restricts how the DOL may disseminate information to the press or public about the agreement.
The Inspector General said today that the Labor Department had entered “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 Department entered into the deal – formally known as a “compliance agreement” – in settlement of dozens of child labor violations by Wal-Mart in three states involving the use of dangerous equipment by minors. The deal included the payment of $135,000 in fines, amounting to just 15 seconds of sales for the retailer. Compliance agreements are meant to prevent similar violations by the employer from recurring, not to give employers advance notification of future violations.

“This report proves what we have known all along – that Wal-Mart’s settlement with the Department of Labor put the interests of one of the nation’s worst labor law violators ahead of the protection of America’s workers,” said DeLauro. “Imposing a fine equivalent to what Wal-Mart generates every 15 seconds and granting the company advance notice before any federal labor investigation was not only unprecedented for labor settlements, but literally a slap on the wrist for the country’s largest employer.”

Wal-Mart is a major contributor to the Republican Party. In the 2004 election cycle, Wal-Mart donated $2.1 million to candidates and campaigns – more than any other retailer. Eighty percent of those donations went to Republicans, according to OpenSecrets.org. Wal-Mart’s closeness to Republicans was further demonstrated in May 2004, when Vice President Dick Cheney said, “The story of Wal-Mart exemplifies some of the very best qualities in our country – hard work, the spirit of enterprise, fair dealing, and integrity.”

In fact, Wal-Mart has a long history of labor violations, from failing to pay workers for overtime hours, violating child labor laws, and locking workers into stores at night. Last year, Miller’s staff prepared a report that detailed Wal-Mart’s egregious labor practices, and the costs to taxpayers who pick up medical, educational and other costs associated with the company’s well-known low wage policy.

For a copy of the IG report, visit: http://www.democraticleader.house.gov/GM/DOL_ESA.pdf (pdf file).
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