US: In-House Audit Says Wal-Mart Violated Labor Laws

An internal audit now under court seal warned top executives at Wal-Mart Stores three years ago that employee records at 128 stores pointed to extensive violations of child-labor laws and state regulations requiring time for breaks and meals.

The audit of one week's time-clock records for roughly 25,000 employees 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. It also found 60,767 apparent instances of workers not taking breaks, and 15,705 apparent instances of employees working through meal times.

Officials at Wal-Mart, the world's largest retailer, employing 1.2 million people at its 3,500 stores in the United States, insisted that the audit was meaningless, since what looked like violations could simply reflect employees' failure to punch in and out for breaks and meals they took.

"Our view is that the audit really means nothing when you understand Wal-Mart's timekeeping system," said Mona Williams, Wal-Mart's vice president for communications. She said Wal-Mart did nothing in response to the audit, saying it always strives to comply with the law.

But missed breaks and lunches have become a major issue in more than 40 lawsuits charging Wal-Mart with forcing employees to work without pay through lunch and rest breaks, and several lawyers and former employees who have sued Wal-Mart said the audit only bolstered their cases. They said that many employees continued to complain of missing meals and breaks.

"Their own analysis confirms that they have a pattern and practice of making their employees work through their breaks and lunch on a regular basis," said James Finberg, a lawyer who has assisted several suits against Wal-Mart. "What this audit shows is against their own company policy and against the law in almost every state in which they operate."

Several lawyers who sued Wal-Mart also noted that over the years Wal-Mart had ordered its employees to make sure to clock out when they took lunch and breaks.

And John Fraser, who ran the federal Labor Department's wage and hour division during the 1990's, called the sheer volume of apparent violations surprising and troubling. "When you find the frequency of this kind of violation in such a large employer, such a pervasive employer, it has to be a source of great concern," Mr. Fraser said.

The audit was conducted in July 2000; a copy was given to The New York Times by a longtime Wal-Mart critic hoping to pressure the company to improve working conditions. Wal-Mart has asked various courts to seal the audit for the last two years and they have complied ever since the company gave copies to lawyers who accused it of making employees work off the clock.

The audit, written by Bret Shipley, a Wal-Mart auditor, indicated that time-clock records for thousands of workers showed tens of thousands of missed lunches and breaks. Ms. Williams said employees had probably taken their lunches and breaks but just failed to record them.

She and other Wal-Mart officials also asserted that time-clock records could have been wrong in indicating that minors had worked illegally during school hours. Schools might have been closed on a given weekday, they noted. "The audit that Shipley pulled together doesn't reflect actual behavior within the facilities," Ms. Williams said.

Wal-Mart officials, she said, always tried to comply with the law and repeatedly told employees to take lunches and breaks. Wal-Mart policies state that employees working seven or more hours a day are to receive a meal break and two 15-minute rest breaks. Federal law does not require lunch and meal breaks, but most states do for employees working seven or more hours a day.

Several months after the Shipley audit was finished, Wal-Mart stopped requiring employees to clock out and in for 15-minute breaks. Wal-Mart officials said they eliminated this requirement for their employees' convenience, but Frank Azar, a lawyer involved in the off-the-clock suits, said Wal-Mart did this to make sure no paper trail could show that employees were not taking breaks.

The audit warned that its findings could hurt the company. "Wal-Mart may face several adverse consequences as a result of staffing and scheduling not being prepared appropriately," it stated.

Commissioned to help Wal-Mart executives determine whether employees were taking their meals and breaks, the audit came as the company was facing several lawsuits accusing it of off-the-clock work and failing to give breaks.

Ms. Williams said that company auditors more senior than Mr. Shipley had determined that the methodology he used was flawed. "This audit is so flawed and invalid that we did not respond to it in any way internally," she said.

But several current and former Wal-Mart employees confirmed in interviews that violations of state law on child labor and breaks were a recurring problem at many understaffed Wal-Mart stores.

Leila Najjar said that when she worked for a Wal-Mart in a Denver suburb at age 16 and 17, she sometimes was forced to miss breaks, work past midnight and work more than eight hours a day even though Colorado bars minors from doing that. Time records from a court case showed that her store sometimes forced her to work illegal hours.

During the holidays, Ms. Najjar, a recent graduate of the University of Colorado, recalled, "the store closed at 11 and there were nights we had to stay to clean up until 12:30, 12:45. It was a long day, and I was tired the next day at school. And sometimes, I'd have to work 10, 11 hours on a Saturday or Sunday."

If the same rate of violations were found throughout the Wal-Mart system, that would translate into tens of thousands of child-labor violations each week at Wal-Mart's 3,500 stores and more than one million violations of company and state regulations on meals and breaks.

Company officials said such extrapolations were misleading, noting that many of the seeming time-record problems could be explained by legal behavior.

Wal-Mart employees clock in and out by swiping their identity badges, which the time clock reads electronically. Ms. Williams said employees sometimes forgot to swipe when they arrived at work or when they took lunch. Sometimes, she said, workers missed breaks not because management pressured them but, for example, because they wanted to finish early to take a child to the doctor.

John Lehman, who ran several Wal-Mart stores in Kentucky, said he was sure that large-scale violations on child labor, breaks and meals continued at Wal-Mart. In the months after the company distributed the audit internally, he said, store managers like him received no word to try harder to prevent violations.

"There was no follow-up to that audit, there was nothing sent out I was aware of saying, `We're bad. We screwed up. This is the remedy we're going to follow to correct the situation,' " said Mr. Lehman, who said he quit in 2001 because he was disgusted with the company's treatment of employees. He now works for a union trying to organize Wal-Mart workers.

"Wal-Mart stores are so systematically understaffed that they work minors just like they do adults," he said. "They don't have enough workers to take care of the business. Yes, their prices are low but then the stores are so understaffed that workers often don't have time to take their breaks or lunches."

Maria Rocha, who ran the restaurant inside a Wal-Mart in Dallas, said her workload was so great and the restaurant so understaffed that she never took breaks and often missed lunch. "It was just too busy to take a break," said Ms. Rocha, who quit in October. "There were a lot of customers, and the managers would be mad if you took a break."

Verette Richardson, a former Wal-Mart cashier in Kansas City, Mo., said it was sometimes so hard to get a break that some cashiers urinated on themselves. Bella Blaubergs, a diabetic who worked at a Wal-Mart in Washington State, said she sometimes nearly fainted from low blood sugar because managers often would not give breaks.

As for claims of child-labor violations and stores too understaffed for worker breaks, Ms. Williams said, "In a company that has more than 1 million people in the U.S. alone, I have no doubt that in some individual instances that can happen."

AMP Section Name:Retail & Mega-Stores
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