Over the years, there have been many anecdotal stories regarding Walmart’s labor practices—low wage rates, use of part-time workers and contract agencies, making employees work off-the-clock, etc.—as ways to lower wage and benefit costs and to improve corporate profits.
On October 22, 2012, the Huffington Post carried a story that reported that Walmart and two staffing agencies in the Chicago area were named as defendants in a class action lawsuit filed in Illinois. The story says that the suit alleges that Walmart, Labor Ready Midwest, and QPS Employment Group violated federal and state laws by denying workers legally mandated overtime pay and, in some cases, paid them less than minimum wage for hours worked.
The story says that the 20 initial plaintiffs in the case each worked for one of the two staffing agencies and were regularly placed at Walmart stores for temporary work, often stocking shelves in the stores. The story notes that Walmart utilizes hundreds of such workers in the Chicago area alone, and plans to hire thousands more nationwide during the upcoming holiday season.
According to the story, workers allege that Walmart failed to keep records of the time they worked, making it impossible for them to prove that they were underpaid by the staffing agencies. They also allege that Walmart and the agencies failed to pay the minimum required amount to workers who were told to come in to work only to be sent home because they were not needed.
In the story, two workers were quoted as follows:
There have been so many times I’ve been told to stay late after my shift to finish stocking the shelves, but I didn’t know they wouldn’t pay me for it, said Anthony Wright, a temp worker at Labor Ready and who has worked at some of the area Walmart stores since late last year.
I only get paid minimum wage and yet Labor Ready and Walmart still try to cheat me by not paying me for the time I actually work. I’ve proven that I’m a good worker, and they just want to take advantage of that, another worker, Twanda Burk, said.
The story says that the suit alleges that the violations stretch back to 2009 and continue to the present. The plaintiffs are seeking back pay and an injunction against the three companies.
Walmart is not the only large retailer to be accused of using part-time workers to replace full-time workers or to rely on outside contractors, like temporary help agencies and logistics firms, or to have employees work off-the-clock to cut wage and benefit costs. In order to cope with Walmart’s market dominance, other big-box operators, large grocery chains, and others have adopted Walmart’s labor practices, as well as Walmart’s reliance on imports from low-wage countries, to lower their costs.
Walmart’s labor and purchasing practices, as well as those of its imitators, are cited as major causes of, or contributors to, the demise of American manufacturing of consumer goods, the slow GDP growth rate, and the decline or stagnation of median income levels.
While the lawsuit discussed above was brought by just 20 people, a miniscule fraction of Walmart’s domestic workforce, it is a class action suit, meaning if the plaintiffs prevail, the outcome affects all other similarly situated persons and, thus, its potential impact on Walmart could be far greater than one might otherwise expect. And, if the suit against Walmart succeeds, one can expect that suits against Walmart imitators will soon follow.
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