(MintPress) — “Let this be a signal to other companies that when violations are found, the Labor Department will take appropriate action to ensure that workers receive the wages they have earned,” U.S. Department of Labor (DOL) Secretary of Labor Hilda L. Solis said, after ordering behemoth retailer Wal-Mart to pay nearly $5 million in back wages and damages after failing to compensate 4,500 employees for hours worked.
But the company, with more than 2 million employees worldwide, is facing sharp criticism stemming from its treatment of employees to allegedly allowing Mexican officials to be bribed in order to open new stores. Employees are banding together, protesting policies and calling for reformed business practices.
Back wages owed
Bentonville, Ark.-based Wal-Mart Stores Inc. will pay $4.83 million in back wages and damages following an investigation by the U.S. Department of Labor’s Wage and Hour Division, which found violations of the federal Fair Labor Standards Act’s overtime provisions.
The company, which is the biggest private employer in the world, operates in 27 countries and reported fiscal year 2012 sales of approximately $444 billion.
Those affected included current and former vision center managers and asset protection coordinators at Wal-Mart Discount Stores, Wal-Mart Supercenters, Neighborhood Markets and Sam’s Club warehouses, who worked at Wal-Mart between 2004 and 2007 and were not compensated overtime pay because the company considered them to be exempt from the FLAS’s overtime requirements.
A DOL investigation found that the employees are nonexempt and consequently due overtime pay for any hours worked beyond 40 in a week.
“Misclassification of employees as exempt from FLSA coverage is a costly problem with adverse consequences for employees and corporations,” Solis said in a statement.
The asset-protection coordinators will receive an average of $290 under the agreement, while the average for vision center managers is $2,300, under terms of the settlement.
Wal-Mart will pay $463,815 in civil money penalties, stemming from “the repeat nature of the violations” according to the DOL.
“When the issues resolved today were initially raised, we took them seriously and fully cooperated with the Department of Labor to make sure they were corrected,” Wal-Mart spokesman Greg Rossiter told the Washington Post.
Nancy J. Leppink, deputy administrator of the Wage and Hour Division, said she hopes the case will send a message to other employers.
“Thanks to this resolution, thousands of employees will see money put back into their pockets that should have been there all along. The damages and penalties assessed in this case should put other employers on notice that they cannot avoid their obligations to their employees by inappropriately classifying their workers as exempt” Leppink said.
In an interview with MintPress, a DOL spokesman said of the case, speaking on condition of anonymity, “The name of the employer doesn’t matter, but because the name of the company is Wal-Mart, when they’re in the news, it grabs attention. While we don’t put out a press release for every single case like this, unfortunately they are far too common.”
The spokesman stressed that workers do have recourse if they are not being paid properly and that the DOL works on thousands of similar cases a year.
“In a challenging economy,” he said, “workers might be conscious about blowing the whistle, but they do have recourse.”
Wal-Mart workers protest, demand for CEO’s resignation
Wal-Mart is also under investigation after a New York Times article was published in April alleging that its company executives in Mexico turned a blind eye while employees allegedly bribed local officials to approve new stores.
A former executive in the company’s Mexican operation, Wal-Mart de Mexico, alleged that the company had orchestrated a bribery campaign in its race to build new stores and achieve market domination. The former executive was the lawyer in charge of obtaining construction permits for Wal-Mart de Mexico and possessed names, dates and bribe amounts, according to the report.
The Making Change at Wal-mart group – a national coalition of Wal-Mart workers, shareholders and community leaders, backed by the United Food and Commercial Workers Union – has called for the immediate resignation of Wal-Mart’s Chairman Rob Walton and CEO Mike Duke following that news.
A Wal-Mart associate and company shareholder, Venanzi Luna from South Gate, Calif., has started an online petition calling for the resignations of the retailer’s chairman and chief executive officer for reportedly squelching an internal probe into bribery allegations. Luna, who has worked at Wal-mart for seven years, said she wanted to get 10,000 online signatures or more. As of May 21, there were more than 16,000 signatures collected.
“I am angry that top Wal-mart executives were involved in illegal activity and then tried to cover up the scandal,” Luna said. “For years my co-workers and I have been saying that this company has lost its way. We didn’t know it had gotten this bad.”
Currently, the the Justice Department is conducting a criminal probe of the company to determine whether it violated the U.S. Foreign Corrupt Practices Act stemming from the incident.
And, leaders in congress are examining Wal-Mart’s lobbying efforts. Two Democratic lawmakers, Reps. Henry A. Waxman (D-Calif.) and Elijah E. Cummings (D-Md.), sent letters to the U.S. Chamber of Commerce and the Retail Industry Leaders Association after a report in the Washington Post alleged that a top Wal-Mart official sat on the board of the Chamber’s Institute for Legal Reform as that organization sought to change the Foreign Corrupt Practices Act.
Employee activist groups rally for corporate change
As the company celebrates its 50th anniversary this year, the Making Change at Wal-mart group says the company has unparalleled size and impact on the American economy as the country’s largest employer and retailer and released a set of proposals calling on Wal-mart and the Walton family, the richest family in America with a combined wealth of more than $100 billion – more than the 30 percent of American families combined – to commit to improve workers’ lives, rebuild communities, guarantee workers’ rights and elevate global and sustainable living standards.
The proposal charges, “Yet despite their exceptional wealth, Wal-mart and the Waltons force American taxpayers to pay the costs of healthcare and other services that its Associates rely on for their economic survival. It takes away the good jobs our communities need and its business practices cause global environmental damage. In short, Wal-mart exerts incredible power on the country’s economy and its suppliers worldwide to drive down labor and living standards.”
The proposal calls on the company to pay workers in Wal-Mart’s U.S. distribution chain a minimum of $25,000 per year, sign a national community benefits agreement that guarantees when the company expands it will take into consideration environmental and issues of community well-being and sign a global labor agreement that guarantees the fundamental human right of the freedom of association for all associates and Wal-Mart suppliers.
Another employee, Cindy Murray of Laurel, Md, who has worked for the company for 12 years said,“If Wal-mart makes the changes we’re calling for, we can take a big step toward turning this country around for regular people. It’s time for Wal-mart to come clean and regain the trust of customers, workers, shareholders and the communities where it has stores.”
Both Murray and Luna are members of Organization United for Respect at Wal-mart, or OUR Wal-mart, an independent group of Wal-mart Associates aimed at improving conditions for the retailer’s workers and the company.
“To rebuild America, and restore the economy for the middle class, we need to make change at Wal-mart today,” said Rev. Eric Lee of the Southern Christian Leadership Conference, who was present at a rally in Washington in April put on by the organization. “Our country cannot afford another minute of a ‘Wal-mart economy’ where owners and executives make billions of dollars while workers struggle just to pay the rent and keep food on the table.”