Labor Dept. Is
Rebuked Over Pact With Wal-Mart
By STEVEN GREENHOUSE,
NYTimes on the Web, November 1, 2005
The Labor Department's inspector
general strongly criticized department officials yesterday for "serious
breakdowns" in procedures involving an agreement promising Wal-Mart Stores 15
days' notice before labor investigators would inspect its stores for child labor
violations.
The report by the inspector general faulted department officials for making
"significant concessions" to Wal-Mart, the nation's largest retailer, without
obtaining anything in return. The report also criticized department
officials for letting Wal-Mart lawyers write substantial parts of the settlement
and for leaving the department's own legal division out of the settlement
process.
The report said that in granting Wal-Mart the 15-day notice, the Wage and Hour
Division violated its own handbook. It added that agreeing to let Wal-Mart
jointly develop news releases about the settlement with the department violated
Labor Department policies.
The inspector general, Gordon S. Heddell, said the agreement did not violate
federal laws or regulations.
The Labor Department reached the settlement in January after finding 85 child
labor violations at Wal-Mart stores in Connecticut, New Hampshire and Arkansas,
involving workers under 18 who operated dangerous machinery, including cardboard
balers and chain saws.
Wal-Mart settled the investigation by agreeing to pay $135,540, but it continued
to deny any wrongdoing.
In addition to allowing the 15-day notice, the agreement lets Wal-Mart avoid
civil citations and fines if it brings a store into compliance within 10 days of
when the department notifies it of a violation.
In exchange for these concessions, the inspector general wrote, there was
"little commitment from the employer beyond what it was already doing or
required to do by law."
"In our view," the inspector general's office wrote about the Wage and Hour
Division, "the Wal-Mart agreement may adversely impact W.H.D.'s authority to
conduct future investigations and issue citations or penalty assessments, and
potentially restrict information to the public."
Responding to its inspector general, the Labor Department said it "strongly
disagrees with the report's overall characterization of the effectiveness of the
Wal-Mart child labor settlement agreement."
The department said the inspector general had wrongly given the impression that
Wal-Mart had been permitted to avoid all penalties for violations of wage and
hour laws by bringing its stores into compliance.
Even though department officials asserted that the agreement was much like that
with other companies, Mr. Heddell found that the agreement between Wal-Mart and
the Wage and Hour Division "was significantly different from other agreements
entered into by W.H.D." and "had the most far-reaching restriction on W.H.D.'s
authority to conduct investigations and assess" fines.
Representative George Miller, the California Democrat who asked the inspector
general to investigate the settlement, said the report showed that the Bush
administration was seeking to do favors for a powerful friend and a major
Republican contributor in Wal-Mart.
"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," Mr. Miller said. "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."
Mr. Heddell said he did not find that the agreement resulted from improper
pressures. "Nothing came to our attention indicating evidence of influence
or pressure from internal or external sources," he wrote.
Martin Heires, a Wal-Mart spokesman, said, "We think it's important to note that
the inspector general's office found that the agreement is in compliance with
federal law."
"We continue to believe the agreement was the appropriate course of action," he
added. "Our goal remains to make sure that our stores are in full
compliance in that our associates are fully informed of all policies,
regulations and laws that apply to the employment of workers who are 16 and 17
years of age."
The inspector general recommended that the Wage and Hour Division develop
procedures for developing and approving agreements and require that all future
settlements be developed in coordination with the department's legal division.
The department said that it had developed a new policy on reaching settlements
that, it was confident, would carry out the inspector general's recommendations.
The Labor Department said that the advance notification provisions applied only
to child labor matters. But the inspector general voiced concern that "the
plain language of the advance notification clause applies to any potential
violations, not just child labor violations." Department officials say
that giving 15 days' notice helps to ensure that Wal-Mart will come into
compliance.
The department denied the inspector general's suggestion that it had consulted
with Wal-Mart before issuing a news release on the settlement. The
department took the unusual action of announcing the agreement a month after it
was signed, doing so only after some details were leaked to a newspaper.
The report said: "The inspector general has specific concerns with the
Wal-Mart agreement because it contained significant provisions that were
principally authored by Wal-Mart attorneys and never challenged by W.H.D., and
because it did not receive adequate W.H.D. review and approval.
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