Shopping at Wal-Mart: The Savings are Not Worth the Price

posted by Nina Pirrotti  |  Nov 19, 2009 6:06 PM in Other

Shopping at Wal-Mart- The Savings Are Not Worth the Price
By Nina Pirrotti*

 

Do you think of yourself as a smart consumer? Fight back against big retail stores like Wal-Mart that charge low prices but mistreat their employees. You may save at the cash register but you will invariably lose at tax time. Wal-Mart’s brutal cost-cutting practices force many of its employees onto public assistance. In the end, these practices not only harm Wal-Mart’s 1.8 million employees, but all of us taxpayers who must subsidize those Wal-Mart employees who, despite working full-time jobs, hover at the poverty line.

Wal-Mart, the world’s largest retailer, provides a model study guide for a lesson in virtually all forms of unlawful employer conduct. From sub-standard employee wages and health care, to gender, race, and age discrimination, to violations of the Americans with Disabilities Act and Family Medical Leave Act, to child labor violations, Wal-Mart is an offender in every area.

Low Wages at Wal-Mart

Despite nearly $9 billion in profits last year, Wal-Mart’s wages are so low that many of its employees are eligible for food stamps. In fact, in California alone, Wal-Mart workers turn to the state for about $86 million a year in health-related services and assistance such as subsidized school lunches, food stamps and subsidized housing[1]. This heavy reliance on public assistance is not surprising given that workers at California’s Wal-Mart and sister Sam Club’s stores earn 31 percent less than workers in large retail stores as a whole[2].

Not only are Wal-Mart’s wages pitifully low, there are currently more than 40 lawsuits against Wal-Mart in this country which claim that the company short-changes its hourly employees by deleting hours from time sheets or forcing workers to work unpaid overtime hours. One such lawsuit even charges that not only did Wal-Mart delete its employees’ overtime hours, but it falsified time records to make it appear that they were taking meal breaks when they were actually working[3].

Inadequate Health Care Coverage at Wal-Mart

Another area in which taxpayers are inadvertently subsidizing Wal-Mart’s mistreatment of its employees is health care. In a 2005 internal memo obtained by Wal-Mart watch, a nonprofit group, Wal-Mart’s own executive vice president, M. Susan Chambers, acknowledged that 46 percent of the children of Wal-Mart’s employees in the United States were uninsured or on Medicaid. Ms. Chambers acknowledged that: “. . . our critics are correct in some of their observations. Specifically, our coverage is too expensive for low-income families and Wal-Mart has a significant percentage of associates and their children on public assistance.”

In fact, instead of providing affordable health care for its employees, Wal-Mart actually encourages them to seek out public health assistance. A former Wal-Mart manager who had been with the company for ten years stated that managers kept “a list of the state agencies so that we could have some place to send these associates…for Medicaid, for well-baby care, for whatever it is that they need.[4]” In 2003, Las Vegas Wal-Mart managers even gave workers special forms to help them in applying for public assistance by certifying their poverty status[5]. To put the cost to the taxpayer in even more concrete terms, every Wal-Mart store that employs 200 people costs the taxpayer $420,750 in public assistance. [6].

Inadequate Women’s Health Care Coverage at Wal-Mart

Wal-Mart’s record on providing adequate health care coverage for its female employees is particularly abysmal. For example, women are covered for only one routine ultrasound per pregnancy.

Ironically, given the poor pregnancy benefits, Wal-Mart’s medical plan is particularly harsh on women who practice birth control. The Wal-Mart Associate’s Medical plan specifically excludes coverage for contraceptive drugs, implants and devices. A class action suit has been brought against Wal-Mart by female employees who are seeking insurance coverage for contraception.

Gender Discrimination at Wal-Mart

Wal-Mart’s record is no better on critical issues of women’s work and worth. In fact, Wal-Mart has been hit with the world’s largest pay discrimination lawsuit ever- a federal class action law suit brought on behalf of 1.6 million former and current female employees. The class action included the following charges:

· Women comprise 72 percent of Wal-Mart’s total workforce, but only 33 percent of its managers.
· Women comprise 92 percent of Wal-Mart’s cashiers, but only 14 percent of Wal-Mart Store Managers
· Female managers earn nearly $5,000 less than male managers in yearly salary.

In his ruling granting the plaintiffs class action status against Wal-Mart, the federal judge stated that the plaintiffs presented virtually uncontested statistics “which show that women working at Wal-Mart stores are paid less than men in every region . . . that women take longer to enter management positions, and that the higher one looks in the organization, the lower the percentage of women[7]”.

Race Discrimination at Wal-Mart

Not surprisingly, Wal-Mart’s record with respect to its African American employees is also poor. The following are some of the lawsuits pending against Wal-Mart for race discrimination:

· In September 2004, a federal lawsuit was filed against Wal-Mart alleging that the company regularly rejects and discourages black applicants for truck driving positions at the chains’ distribution sites in 12 Southern States. According to the EEOC, only one in 20 truck drivers hired by Wal-Mart were African American.

· In July 2005, two African American truck drivers filed a federal lawsuit against Wal-Mart, alleging race discrimination and seeking class action status.

Child Labor Violations at Wal-Mart

In June, 2005, three Wal-Mart stores in the state of Connecticut -- Hartford, Norwalk and Putnam -- were fined for child labor violations, including lack of required working papers and operating dangerous equipment. According to a report issued by the Connecticut Department of Labor, 337 minors worked in Connecticut’s 32 Wal-Mart stores between 2003 and 2005. As a result, Wal-Mart stores were assessed fines in the amount of $3,300, the maximum amount allowed by law.

Family Medical Leave Act Violations at Wal-Mart

According Wal-Mart Watch, a non-profit group dedicated to pressing the company to improve its employee wages and benefits, Wal-Mart is well known for failing to comply with the federal Family Medical Leave Act, which requires employers to permit employees to take up to 12 weeks of unpaid leave to care for themselves or a loved one without losing their jobs. In one case in 2005, Wal-Mart was fined $188,000 for refusing to reinstate a six-year veteran employee upon completion of her maternity leave.

Discrimination against Senior and Sick Employees at Wal-Mart

Not only does Wal-Mart fail to reward the loyalty of its senior employees, it appears eager to discourage these employees from staying with Wal-Mart. In an internal memo sent to Wal-Mart’s Board of Directors by Executive Vice-President M. Susan Chambers and obtained by Wal-Mart Watch, Ms. Chambers proposed ways to cut spending on health care and other employee benefits. Although Ms. Chambers fell short of proposing pushing out its more senior workers, she brooded in the memo that Wal-Mart workers with seven years seniority earn almost 55 percent more than workers with one year’s seniority but are no more productive.

Ms. Chambers then suggested that Wal-Mart discourage unhealthy job applicants by arranging for “all jobs to include some physical activity (e.g. all cashiers do some cart-gathering)” in order to weed out the less physically fit. The memo stated that “these moves would dissuade unhealthy people from coming to work at Wal-Mart.”

While the memo Ms. Chambers wrote was intended for internal review among Wal-Mart’s Board of Directors only, Wal-Mart’s own CEO, H. Lee Scott Jr., has not been shy about Wal-Mart’s goal in keeping employee benefits to a minimum. When a manager inquired about retiree health benefits on a Wal-Mart website supposedly designed to encourage store managers to share their concerns with the CEO, Mr. Scott had this response: “Quite honestly, this environment isn’t for everyone. There are people who would say: “I’m sorry but you should take the risk and take billions of dollars out of earnings and put this in retiree health benefits . . . If you feel that way, then you as a manager should look for a company where you can do those kinds of things[8].

Current Law Makes it Difficult to Punish Wal-Mart

Unfortunately, it is almost impossible to meaningfully punish Wal-Mart for its violations of Title VII (which prohibits discrimination based upon age, sex, race and other factors) or the Americans with Disabilities Act (which mandates that employers provide reasonable accommodations for employees with certain disabilities) because these statutes cap all punitive damages at $300,000. Such caps, when used to reduce verdicts against behemoths such as Wal-Mart, can lead to absurd results.

For example, in a lawsuit filed in New York federal court, an employee with cerebral palsy sued Wal-Mart for subjecting him to adverse employment action and a hostile work environment in violation of the American Disabilities Act. The jury was so outraged by Wal-Mart’s conduct in that case that it awarded the plaintiff $3 million in punitive damages. The judge was forced, however, to reduce the punitive damage award to $300,000 to comply with the statutory maximum imposed on all Americans with Disability Act and Title VII claims.

In reluctantly reducing the punitive award from $3 million to $300,000, the federal judge spoke out strongly against statutory caps to the extent that they protect a “commercial titan” such as Wal-Mart:

The preceding ruling respects the law, but it does not achieve a just result. . . It took Wal-Mart only 37 seconds this year to achieve sales equal to the $300,000 It must now pay to [plaintiff] in punitive damages. There is no meaningful sense in which such an award can be considered punishment[9].

Taking Action Against Wal-Mart

There are many groups that have formed in reaction to Wal-Mart’s mistreatment of its workers. Wal-Mart watch and Wakeupwal-mart.com are among the most vocal. Employees and concerned taxpayers who want to keep informed about Wal-Mart’s practices, and perhaps even get involved to counter them, should consult these websites[10]. Some ways to take a personal stand against Wal-Mart are to boycott their stores, urge your Attorney General and local representatives to hold large companies such as Wal-Mart accountable for their conduct, and vote in politicians who pledge to do just that.

Conclusion

As the word is getting out about the ugly explanation for Wal-Mart’s attractive low prices, the public’s tolerance for the company’s arrogance is wearing thin. With greater frequency, employees are standing up for their rights and taking legal action against Wal-Mart. In addition to being morally outraged by the company’s unfair practices, consumers are also beginning to recognize they may be spending more at tax time to subsidize Wal-Mart’s abusive practices than they are saving at the register.

We are all affected by companies who mistreat their employees and we must all share in the responsibility of taking action against such companies. That action should include advocating for stricter enforcement of existing laws designed to keep companies such as Wal-Mart in check. Perhaps even more importantly, we should encourage our congressional leaders to implement new legislation to ensure that when huge companies like Wal-Mart violate the law, there will be an equally significant impact to their bottom line.
[1] 2004 study conducted at UC Berkley
[2] Id.
[3] Lawyer’s Weekly USA, February 27, 2006.
[4] December 19, 2003 broadcast of “NOW” with Bill Moyers.
[5] Fortune Magazine, 2003
[6] Everyday Low Wages: The Hidden Price of Wal-Mart, a report by the minority staff of the U.S. Representatives Education and Workforce Committee
[7] Wal-Mart Class Press Release, 6/22/04.

[8] The New York Times. “On Private Web Site, Wal-Mart Chief Talks Tough” by Steven Greenhouse and Michael Barbaro, February 17, 2006.

[9] Brady v. Wal-Mart Stores, Inc. 2005 WL 1521407 *4-5 (E.D.N.Y. June 21, 2005) Orenstein, J.
[10] Those who are interested in learning more about Wal-Mart may also want to rent a documentary that was released in 2005 entitled “Wal-Mart: The High Cost of Low Price.” The movie uses humor to show some of Wal-Mart’s worst employment practices and discusses Wal-Mart’s negative impact on the communities in which it does business.

 

* While Nina Pirrotti is currently the President of CELA, she wrote this article in 2006 in a personal capacity.


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

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