Thursday, December 29, 2005


Last week, an Oakland, California jury awarded $172 million to thousands of Wal-Mart employees who claimed they were illegally denied lunch breaks.

The news is just the latest blow to the world's largest retailer, which has been repeatedly stung by negative publicity regarding the manner in which it treat its workers.

Wal-Mart was ordered to pay $57 million in general damages and $115 million in punitive damages to about 116,000 current and former California employees for violating a 2001 state law that requires employers to give 30-minute, unpaid lunch breaks to employees who work at least six hours.

The practice is hardly uncommon. According to the New York Times, one week of time records from 25,000 employees in July 2000 found that there were 60,767 missed breaks and 15,705 lost meal times.

The class-action lawsuit is just one of more than 40 nationwide alleging workplace violations by Wal-Mart, and was the first to go to trial. The company had already settled a similar lawsuit in Colorado for $50 million. However, the company doesn't seem to have learned its lesson or changed its ways. But the latest award will hardly hurt the Arkansas-based retailer, since it earned $10 billion last year.

Fred Furth, the attorney who brought the case on behalf of the workers, seemed satisfied that the jury "held Wal-Mart to account."

Naturally, Wal-Mart's attorney said the retailer would likely appeal the jury's verdict, which was reached after nearly three days of deliberations and four months of testimony. His basis for appeal? That state law can only be enforced by California regulators, not by workers in a courtroom. An interesting, though dubious strategy. He also added that Wal-Mart did not believe the lunch law allowed for punitive damages.

Apparently Wal-Mart just doesn't get it. The company is so huge, and so powerful that it thinks it can just ignore the law. It's been caught denying employees fair treatment under the law, yet its corporate governors think that it's appropriate to simply begin following the law now, albeit by court mandate, without any punishment. They are indignant at notion that they should actually be punished for their illegal and unethical actions.

"We absolutely disagree with their findings," attorney Neal Manne said of the jury's verdict. He conceded that Wal-Mart made mistakes in not always allowing for lunch breaks when the 2001 law took affect, but he said the company is "100 percent" in compliance now.

Oh, so now they get it. Finally. I wonder what it took. Could it be the tens of millions in punitive damages? I'll be that had something to do with it. Fines can be somewhat motivational.

The verdict could hardly have come at a worse time for Wal-Mart. The company is waging an intense public-relations campaign to counter critics who are attempting to stop the retailer's expansion and make it boost workers' salaries and benefits.

Wal-Mart was so concerned about Robert Greenwald's new film, Wal-Mart: The High Cost of Low Price, that they hired a "war room" of public relations people to fight back. Apparently their efforts haven't paid off very well: a Zogby poll showed that Americans don't approve of Wal-Mart's worker-unfriendly policies.

Paul Blank, campaign director for, an union-affiliated advocacy group that believes Wal-Mart's policies over wages, health benefits and other issues harm families and communities, said he was delighted by the verdict.

"It is a sad day when Wal-Mart provides these so-called low prices by exploiting their workers and even the law," Blank said.

In 2003, sales associates, the most common job in Wal-Mart, earned on average $8.23 an hour for annual wages of $13,861. The 2003 poverty line for a family of three was $15,260, while the national median family budget in the United States for a two-person family (one parent and one child) in 1999 was $23,705.

This year, Harper’s Magazine reported that Wal-Mart employees were eligible for $2.5 billion in federal assistance in 2004. Yet, a national report documented at least $1 billion in subsidies to Wal-Mart from state and local governments.

But an analysis of Wal-Mart's 2005 annual report reveals that the company could cover the cost of a dollar an hour wage increase by raising prices a half penny per dollar. For instance, a $2.00 pair of socks would then cost $2.01. This minimal increase would annually add up to $1,800 for each employee.

After an internal memo surfaced that showed 46 percent of Wal-Mart employees' children were on Medicaid or uninsured, the company decided to add lower-cost health insurance this year. Wal-Mart has generally been content to let the government - meaning taxpayers - pay it's employees healthcare costs.

And Wal-Mart's President and CEO Lee Scott doesn't deny it. In fact, he admits that public health care assistance may be a “better value” than Wal-Mart's own employee healthcare program. Despite $10 billion in profits, Scott said, "In some of our states, the public program may actually be a better value - with relatively high income limits to qualify, and low premiums."

It's repugnant for a mullti-billion dollar company, the number one employer in the US, to shamelessly pass the buck like that.

According to the Wall Street journal, Wal-Mart’s average spending on health benefits for each covered employee was 27% less than the industry average and 37% less than the national average.

And a federal lawsuit is pending in San Francisco that accuses the company of paying men more than women. The beat goes on, and on.

Earlier this year, the PBS series Frontline aired a documentary called "Is Wal-Mart Good for America?" The answer from almost all of those interviewed was unequivocally, no.

Copyright © 2005 The Independent Report. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed without the author's consent.

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