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US: Wal-Mart Agrees to Pay Fine in Child Labor Cases

by Steven GreenhouseThe New York Times
February 12th, 2005

Wal-Mart Stores, the nation's largest retailer, has agreed to pay $135,540 to settle federal charges that it violated child labor laws in Connecticut, Arkansas and New Hampshire.

Labor Department officials said most of the 24 violations covered by the settlement involved workers under age 18 operating dangerous machinery, including cardboard balers and chain saws. In the agreement, Wal-Mart denied any wrongdoing.

Department officials said that one of the violations was in New Hampshire, three were in Arkansas and 20 were in Connecticut, where the investigation began in 2001. One violation involved a youth who injured his thumb while using a chain saw to cut Christmas trees.

The Labor Department and Wal-Mart signed the agreement on Jan. 6, but made no public announcement. The department disclosed the settlement yesterday after a reporter questioned officials about concerns raised by several department employees that the agreement gave Wal-Mart special favors.

The agreement states, "Compliance with the child labor laws and regulations will be an important factor in evaluating the performance of managers."

A provision also promises to give Wal-Mart 15 days' notice before the Labor Department investigates any other "wage and hour" accusations, like failure to pay minimum wage or overtime.

That provision drew criticism yesterday from Representative George Miller of California, the senior Democrat on the House Education and Workforce Committee. It also prompted complaints from some Labor Department investigators who spoke on the condition of anonymity for fear of retaliation.

"With child labor cases involving the use of hazardous machinery, why give 15 days' notice before we can do an investigation?" asked a district office supervisor who has worked in the wage and hour division for nearly 20 years. "What's the rationale?"

Victoria Lipnic, assistant labor secretary for employment standards, called the settlement typical, saying that giving Wal-Mart notice before conducting investigations would encourage the company to correct the problems sooner.

The department employees also said the agreement was unusual because the department had never announced it.

Department officials said they were preparing a news release and were waiting for Wal-Mart to pay the $135,540 before making the settlement public.

In the settlement, Wal-Mart agreed not to employ any worker under age 14 and agreed to prohibit any employee under 18 from operating cardboard balers. It also agreed to post a notice on each cardboard baler saying that minors may not use or touch the balers. Wal-Mart also agreed to train new store managers about compliance with child labor laws and to provide more training to current managers on the subject.

"We worked with the Department of Labor to strengthen our training and compliance programs," said Gus Whitcomb, a spokesman for Wal-Mart, which is based in Bentonville, Ark. "Again, our focus is to be 100 percent compliant with all applicable laws."

Wal-Mart has faced previous child labor charges. In March 2000, Maine fined the company $205,650 for violations of child labor laws in every one of the 20 stores in the state. In January 2004, a weeklong internal audit of 128 stores found 1,371 instances in which minors apparently worked too late at night, worked during school hours or worked too many hours in a day. Company officials said the audit was faulty and had incorrectly found that some youths had worked on school days when, in fact, those days were holidays.

Under the new agreement, the Labor Department did not waive its right to conduct future investigations. Still, several department officials suggested that the provision for 15 days' notice might give Wal-Mart an opportunity to hide violations.

John R. Fraser, the government's top wage official under the first President Bush and President Bill Clinton, said the advance-notice provision was unusually expansive.

"Giving the company 15 days' notice of any investigation is very unusual," Mr. Fraser said. "The language appears to go beyond child labor allegations and cover all wage and hour allegations. It appears to put Wal-Mart in a privileged position that to my knowledge no other employer has."

Ms. Lipnic countered,

"We usually call employers before we go to investigate," and said there was "nothing uncommon or unprecedented about that."

Several federal employees voiced concern about a Jan. 10 e-mail message sent by the director of the Little Rock, Ark., office for the Labor Department's wage and hour division after the settlement was reached, that said, "Wage & Hour will not open an investigation of Wal-Mart without first notifying Wal-Mart's main office and allowing them an opportunity to look at the alleged violations and, if valid, correct the problem."

But Cynthia Watson, the division's Southwest regional director, said advance notice would speed compliance. "We are seeking to centralize the points of contact in order to get the people involved to resolve the issue," Ms. Watson said.

Correction Tuesday, Feb. 15, 2005
Because of an editing error, an article on Saturday about the settlement of a child labor case against Wal-Mart omitted a response from the Labor Department in some copies to an assertion that the agreement granted Wal-Mart privileged treatment by giving it 15 days' notice of future investigations of any wage-and- hour complaints. Victoria Lipnic, assistant labor secretary for employment standards, said the advance notice applied only to complaints alleging child labor violations.





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