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Wal-Mart: Just the Latest Round of Corporate Evil Personified

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Just when you start to think that Wal-Mart is too easy of a target, or maybe — just maybe — they might be starting to clean up their act a little bit, a story comes along that makes you realize that all of the bad press Wal-Mart earns might be all it’s cracked up to be and then some. The retail giant is already keeping lawyers busy across the country in an effort to stave off the worst of their practices, but the latest set of accusations against them would be beyond the pale — that is, if they were leveled against anybody but Wal-Mart.

So what are the latest accusations that has everyone so riled up? According to a Bloomberg News story, a group of current and former cashiers in Texas has asked a federal judge for a restraining order to prevent Wal-Mart management from attempting to stifle participation in a lawsuit seeking to recover unpaid wages, where workers claim they were forced to work “off-the-clock.” This lawsuit is one of over 40 lawsuits claiming workers weren’t paid for off-the-clock time they worked that pending as of April 2006 (See Washington Monthly article.)

On August 4, notices were sent out to over 100,000 workers inviting them to join the case of Adcox v. Wal-Mart Stores Inc., No. 3:04-cv- 00633, U.S. District Court, Southern District of Texas (Galveston). (In a lawsuit for unpaid wages, workers generally have to opt-in, meaning that they have to affirmatively join the lawsuit if they want to join in any recovery, so these notices told them about the lawsuit so the workers could choose whether or not to opt in by signing and sending in the enclosed forms.)

Once Wal-Mart workers started receiving the notices, that’s when all hell broke loose, according to some of the affected employees. According to an affidavit filed with the court, Anette Thomas, a cashier in Kingwood, Texas, says the store manager and assistant manager at Store No. 3579 were threatening workers with firing if they joined the lawsuit. The managers are also “calling in every associate who works when they report for work,” with “each associate…made to log on to the computer to a section called The Wire, where they must complete an electronic survey stating they do not work off the clock.” After finishing the electronic survey, each individual associated was instructed to “handwrite a statement saying they do not work off the clock,” Thomas said. Managers told the associates “if they do not compete the electronic survey in The Wire and execute the handwritten statement they can be written up and/or terminated,” she said.

Former employee Latasha Walters reports a similar experience in her affidavit filed with the court on August 15. She said a personnel representative of the Lancaster, Texas, Wal-Mart told her “if I filled out the opt-in notice and mailed it in, I would not be eligible for re-hire at that store or any Wal-Mart store.” The personnel representative “also informed me that she was having all cashiers at her store who received similar opt-in packets to bring them into the store and turn them over to her,” Walters said.

If this is going on, it’s retaliation, and it’s against the law. The Fair Labor Standards Act makes it illegal to “discharge or in any other manner discriminate against any employee because such employee has filed any compliant or instituted or caused to be instituted any proceeding under or related to this Act.” Section 15 (a)(3). Even a defense lawyer whose firm who owns Wal-Mart stock says, “It’s bad if you’ve got store managers doing it….[s]tore managers from Wal-Mart have better things to do than to thumb through legal filings.” (See Bloomberg News article.)

Thus far, only 1500 have joined the lawsuit since the notice went out in early August, but who knows how many would like to join if they didn’t fear for their jobs. And if they lose their jobs, they may not have too many options, since as the workers’ lawyer, Russell Lloyd, points out, “In some places, Wal-Mart is the only job in town because they’ve run everyone else off.” (See Bloomberg News article.)

We’ll know soon whether the judge believes there’s sufficient evidence of the workers’ allegations — the hearing to make Wal-Mart stop its intimidating practices is tomorrow (August 23). Wal-Mart spokesman John Simley said the claims have “no merit and we plan to demonstrate that in court on Wednesday.” (See Bloomberg News article.)

Workers have until November 3 to join the lawsuit — that’s plenty of time for both good news and bad news to spread throughout Texas, and for workers to determine whether or not to trust that the legal system will protect them. Wal-Mart often makes the claim that a chain of its size is bound to have some rogue managers operating unlawfully, but that a few isolated instances do not a widespread illegal practice make. (See Washington Monthly article.)

Even if it is only a handful of rogue managers who are out of line in this Texas case, however, the damage may already be done if the court does not take a firm stance protecting Wal-Mart cashiers who want to participate in this case. Workers throughout Texas, and in all of the other cases around the country — as well as their lawyers — will be paying attention.

More Information:

Workplace Fairness: Retaliation for a Complaint

Wal-Mart Watch
American Rights at Work

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Walking in the Woods: Free; Northwest’s Advice: Priceless

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Want a solution to that pesky problem of not receiving high enough wages? Northwest Airlines says: take a hike. Need something that you can’t afford? Easy: just dig through the trash to see if you can find it. In a publication for their employees facing layoffs and wage cuts, Northwest suggested that one way to cope was to take dates for walks in the woods, instead of the traditional dinner and a movie, and that employees shouldn’t be shy about pulling something they like out of the trash. Whew, I’m glad Northwest was able to solve those problems for us — hopefully they’re not digging through airport trash bins for extra parts for their planes.

It’s never easy when a company faces bankruptcy, and airline employees have been already been hit especially hard. Most employees of the major carriers have been forced to take pay cuts, layoffs and diminishing perks are commonplace, and pensions are also becoming a thing of the past. (See New York Times article.) Flight attendants in particular have it tough these days, as one analysis puts it: “Flight attendants, whose profession was once considered glamorous, may have one of the toughest jobs in the airline industry these days.” (See New York Times article.)

Recently, Northwest and its flight attendants have been locked in a struggle that could result in a strike. Northwest has asked the flight attendants for a 21 percent cut in base wages, with other changes that could cut take-home pay by anywhere from 16 to 40 percent. (See Star-Tribune article.) While there has been talk of a strike or work stoppages (known as CHAOS — Create Havoc Around Our System), those have been temporarily sidelined as everyone attempts to assimilate the new airport restrictions on liquid and gel items in response to news of a foiled terrorist plot in Great Britain. (See Star-Tribune article.)

So in the midst of all this chaos — pun intended — Northwest has devised a solution. All the problems of airline employees would just go away if they just needed less money to live on. It’s hard to imagine how too many people are living extravagantly on the less than $20,000 a year that beginning flight attendants make (which goes up to only $40,000 a year and up for veterans.) (See New York Times article.) But nonetheless, in an apparent effort to be helpful, Northwest published a four-page booklet, “Preparing for a Financial Setback” which contained suggestions such as shopping in thrift stores, taking “a date for a walk along the beach or in the woods” and not being “shy about pulling something you like out of the trash.” (See Reuters article.)

Some of the more than 50 employees who initially received the booklet, mostly ground workers facing job cuts as a result of outsourcing, found the suggestions a little offensive, and conveyed their displeasure to Northwest. The airline’s spokesperson, Roman Blahoski, “agree[s] that some of these suggestions and tips … were a bit insensitive,” and have pulled the booklet for reworking. (See Reuters article.) Perhaps the suggested transition from baggage handler to bag lady was a bit too much.

There are surely few among us who couldn’t use a thrifty tip here and there, but when a worker is facing layoffs or drastic wage cuts, a walk on the beach or scoring on a trip to the trash bin is not nearly enough to make it all better. Northwest, and the other major airlines, who have forced their workers to assume the brunt of the industry’s financial challenges, will be doing their workers the biggest favor if they figure out how to adopt the strategies that have made airlines like Southwest and JetBlue, not only financially successful, but places that their employees consider great places to work.

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Senate Spits Out Minimum Wage Poison Pill

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When I was a child and had difficulty swallowing pills, my mom would mash the pill up in grape jelly and feed it to me on toast or a spoon. Although the jelly was a little gritty, it made it palatable enough for me to choke down the pill. When faced with the same dilemma last week, the Senate decided that increasing the minimum wage a little bit was not sweet enough to make eliminating the estate tax more palatable. And while the medicine I took as a child was necessary for me to take, one way or another, the Senate made the right decision not to choke down the poison pill offered to them by the House of Representatives’ flawed tax bill.

Since 1997, the federal minimum wage has stayed at $5.15, which, when adjusted for inflation, is at its lowest level in more than 50 years. An estimated 14.9 million workers (11% of the workforce) would benefit from an increase in the federal minimum wage to $7.25 by 2008. Of these workers, 6.6 million would be directly affected and 8.3 million would indirectly receive raises due to the spillover effect of a minimum wage increase. The minimum wage is not indexed to inflation — Congress must vote to raise it, so every year that doesn’t happen, almost 15 million workers lose ground. (See EPI Minimum Wage Issue Guide.)

This was starting to feel like the year that the minimum wage might be increased. In the past few years, there have been a number of successful campaigns to raise the minimum wage at the state level. Michigan, Arkansas, Pennsylvania, and North Carolina have already won wage increases this year, inaugurated by a successful 2004 campaign in Florida, while four states are currently being targeted by ballot initiative campaigns which would allow voters to decide on minimum wage increases in November. (See ACORN’s Taking It To the States.)

Meanwhile, those whose mission in Congress it is to protect the fortunes of the wealthy are starting to get anxious. Despite dubbing it the “death tax” and parading around a handful of farmers and family businesses adversely affected by the operation of the estate tax, Congressional leaders have not been able to muster majority support, either in Congress or among voters, for eliminating the estate tax. (See OMB Watch article.) Even the more conservatively inclined among us find it hard to muster up much sorrow that estates of $2 million or more are subject to taxes.

Since the estate tax elimination hasn’t proven so politically palatable, a plan was hatched to put together what was dubbed the “trifecta.” The estate tax provision would be hitched to two other much more politically popular measures, a set of popular tax credits (some of which had lapsed), and a minimum wage increase. As one analysis described it, “[Senate Majority Leader Bill] Frist [assumed] that a majority supporting each of the parts translated into a majority supporting the whole.” (See OMB Watch article.)

Also particularly odious was an effort to pit various groups of workers against each other, by eliminating a state’s ability to reject what is known as the tip credit. In most states, the amount of tips an employee earns can offset part of the wage the employer is required to pay, so that the employer is required to pay only $2.13 per hour in wages, as long as the remaining $3.02 is made up by the employee’s tips. However, in seven states, this tip credit is not applied, requiring employers to pay the state’s minimum wage for each hour worked, regardless of the tips earned. (See BLR article.) This only seems fair: after all, do you pay your server for the service that he or she provides, or do you intend for your tip to subsidize the restaurant’s low wages? (I hope that your answer is the former.)

You also have to wonder whether this was a shrewd and calculated effort to pit union groups against one another. It’s no secret that UNITE HERE, which includes restaurant workers, allied with SEIU in the Change-to-Win federation, has been among the more successful unions, both in organizing workers and in supporting a minimum wage increase. It’s hardly far-fetched to assume that this move was designed to cause a rift between the Change to Win unions and other unions who also have been aggressively working for minimum wage increases. Except that no one was buying it.

So the bill in its final formulation would: help some minimum-wage and near minimum-wage workers, but screw others; extend some popular tax credits, but at the same time enact an unpopular tax change that would cost the national treasury $750 billion dollars. Trifecta usually means “win – win – win,” but too many members of Congress had trouble counting to three when analyzing this legislation.

The vote in the Senate was four votes shy of the 60 votes needed to move the bill forward. (See CNN.com article.) Although one Democrat voted for the estate tax provision (Sen. Robert Byrd (WV) — who did so after some projects for miners were thrown into the bill), several others the Republicans had hoped to attract found the cost of the bill too high. Sen. Mark Pryor from Arkansas — targeted as a swing voter — ultimately concluded, “The estate tax package before the Senate goes far beyond what our nation can afford.” (See AP article.)

Will we see this again before Congress adjourns? Sen. Frist threatened that this was the last opportunity for Congress to pass these measures, and continues to insist that the measures be considered as a package. (See Journal Courier article.) How long will this all-or-nothing strategy hold up? Tough to say in an election year. But even if we have to wait even longer for a minimum wage increase, it’s worth it to have blunted such an unprincipled and cynical ploy. Why should Paris Hilton gain more from this legislation than the low-income workers whose “simple” jobs she was seemingly incapable of doing?

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Some Good Things Are Blowing From the Windy City

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While Chicago may not be so windy these days, with the summer heat wave and all, there is some good news for workers blowing out of the Chicago area this week. Between the passage of a living wage ordinance for big-box workers, and an appeals court decision reinstating the case of a teen who was sexually harassed by her supervisor, some winds of change are coming out of the Windy City which could actually affect quite a few workers outside of Chi-town.

Last week, the Chicago City Council voted 35-14 to force mega-retailer big-box stores such as Wal-Mart to pay a living wage to their workers, of at least $10 an hour plus $3 in fringe benefits. (The minimum wage in Illinois is currently $6.50 an hour and the federal minimum is $5.15.) Wages would go up, starting July 1, 2007, to $9.25 an hour, plus $1.50 in benefits, for workers employed at least 10 hours a week in stores. (See Bloomberg article.) By the year 2010, companies with more than $1 billion in annual sales and stores of at least 90,000 square feet would be forced to comply with the proposed ordinance, if it is signed by the Mayor, Richard Daley. (See Los Angeles Times article.)

As you might imagine, Wal-Mart didn’t like this proposed law any more than it liked Maryland’s fair share bill. (See blog entry of July 25 for more information.) Wal-Mart’s Senior Vice President Michael Lewis said that the vote “sends a message that Chicago is closed for business, closed for development and closed for job creation….[and] imposes special interest mandates that will unfairly deny savings and job opportunities to those who need them most.” (See Bloomberg article.) Wal-Mart claims that its average hourly wage is almost $11 an hour in the Chicago area and that the lowest wage that will be paid at Chicago’s new West Side store will be $7.25 an hour. (See AP article.) Previously, a Wal-Mart spokesperson had threatened to leave the city if the measure passed, saying “We’d redirect our focus on our suburban strategy and see how we could better serve our city of Chicago residents from suburban Chicagoland.”

Groups supporting workers hailed the move. Chicago residents “can’t live off a minimum wage, especially if you have kids,” Juan Carrillo, 25, a member of activist group and living-wage supporter Association of Community Organizations for Reform Now (ACORN), said in an interview. “We’re not against big-box stores. We’re just looking for a living wage and benefits.” (See Bloomberg article.) “We’re very confident that retailers want and need to be in Chicago, and the question for the city is what kinds of jobs they will bring,” said Annette Bernhardt of the Brennan Center for Justice, which helped draft the Chicago bill and has done economic studies of its likely impact.

Will this kind of bill blow into some other cities? Experts think it’s the kind of measure that could catch on elsewhere. Said Paul Sonn of the Brennan Center, “Like Chicago, other cities are seeing growth in retail jobs, and are searching for solutions to make them living wage jobs…I think the Chicago model will be of great interest to [proponents of living wage ordinances in] other cities.” There will undoubtedly be some trepidation on the part of some city leaders, who fear the kind of litigation faced by the state of Maryland after passing its “fair share” law, and retailers affected by the Chicago law have already threatened to file suit. (See Chicago Sun-Times article.)

Although you have to wonder why don’t they save the millions in legal fees they’re sure to incur by challenging these laws, and just send a few bucks more an hour their workers’ way. It’s the principle of the thing, they’re sure to argue. But why is it more important to defend their right to pay workers low wages than it is to embrace the principle that their workers should be able to make enough money to afford the consumer goods these retailers are selling, even at such low prices? If those who work at Wal-Mart can’t even afford to shop there, and Wal-Mart’s wage practices encourage other retailers to pay their workers less in order to be competitive, and people who can spend more money start deciding to support retailers who pay a fair wage, then who’s left to shop at Wal-Mart?

It’s not clear whether Mayor Daley will sign this bill. He had signaled his opposition before it was passed, saying that would drive jobs and desperately needed development from some of the city’s poorest neighborhoods and lead giants like Wal-Mart to abandon the city. (See AP article.) If the voting holds up, the City Council has two more votes than is needed to override a veto, although the city council aldermen are certainly under tremendous lobbying pressure right now. (See New York Times article.) If you’d like to write Mayor Daley and encourage him to support the bill, you can do so here. Obviously, if you’re a Chicago-area resident and/or retail employee, your message will carry more weight, so be sure to tell your own story.

The second piece of good news to blow out of Chicago last week was the 7th Circuit Court of Appeals decision in Doe v. Oberweis Dairy. In that case, a teen who had brought a sexual harassment lawsuit against her employer after she was targeted by her 25-year-old supervisor in an ice cream shop, was allowed to proceed with her lawsuit after it had been thrown out by a lower court. Although the supervisor was prosecuted, convicted, and sentenced for sleeping with his 16-year-old employee, the employer had argued that it wasn’t liable for her sexual harassment claim, saying that the sex was consensual and occurred outside the workplace. The lower court judge agreed, saying that the conduct did not meet the “severe and pervasive” standard required to prevail in a sexual harassment case.

The 7th Circuit, in an insightful opinion written by Judge Richard Posner, soundly rejected both arguments. As Jane Doe was a minor, and her supervisor’s conduct amounted to statutory rape, Illinois law presumes that she cannot consent to sexual intercourse. The Court’s opinion holds that courts should look to the state’s age of consent law to determine whether a minor could consent to the sexual activity involved, and if not, it should not be considered consensual for purposes of the sexual harassment case, either. It only makes sense that if a supervisor’s conduct is so egregious as to constitute a crime where consent is no defense, the supervisor shouldn’t be off the hook in a civil case by being allowed to make that defense.

As for the company’s second defense — that the sex happened away from work — the opinion quickly disposed of that argument as well. The most egregious forms of sexual harassment — those that constitute forcible rape or sexual assault — may not happen on the employer’s premises, and we certainly don’t want a standard that says that all a preying supervisor or co-employee has to do is lure their target off the premises, and they’re home scot-free. Here’s what Judge Posner had to say about that: “The sexual act need not be committed in the workplace, however, to have consequences there….at the very least the harassment must…be an episode in a relationship that began and grew in the workplace.” Here, since “[t]he relationship began with flirtatious talk and erotic touching in the workplace and continued there for nine months before Nayman and Doe had sex,” it was sufficient to count as workplace sexual harassment. (See Doe opinion at 17-18.)

As our recent report, Summertime, and the Working Isn’t Easy, highlighted, the sexual harassment of teenagers is a significant problem, and one of which everyone close to a teen worker should be aware. As EEOC Chair Cari M. Dominguez has pointed out, “Discrimination happens to employees of all ages, but offenders sometimes single out teen workers because they think they won’t know any better.” Adding to the problem is that teen workers often don’t know that they are being harassed or that is it illegal, and don’t know what they should do about it. Even if young workers do know they are being harassed, many don’t report it because they think it could cost them their jobs. Jane Doe presented evidence that she was disturbed by her supervisor’s attentions in the workplace but did not feel free to resist them for fear of losing her job (and it was her first job) — unfortunately, her case is not atypical.

As a result of the Doe v. Oberweis Dairy decision, more teens will have the ability to fight back when they have been harassed, and more employers will realize the importance of making sure their supervisors do not prey on the young workers they supervise. Doe’s supervisor, Matt Neyman, had preyed on several other young victims before Doe’s time, previously sleeping with two of the young women he supervised, one of whom was a minor. Companies will find that having a supervisor who works his way from one young woman to the next is a major liability, costing far more than a shift supervisor’s salary in damages and legal fees.

While going through this kind of litigation was obviously very harrowing for Jane Doe (luckily a pseudonym has preserved her identity), her courage will result in a better workplace for many other young women in their first summer jobs. However, we can publicly thank Jane Doe’s attorney, H. Candace Gorman of Chicago, who has fought this fight on Jane Doe’s behalf for several years now.

The winds of change can be fickle. Next week, Chicago could become as cold and harsh to workers as most of its winters are. But right now, we can enjoy the refreshing breeze while it lasts.

More Information:

(If you’re not an Illinois resident, please e-mail Mayor Daley here.)

Brennan Center for Justice: Chicago’s Retail Living Wage Law

ACORN: Living Wage Campaign; Living Wage Resource Center

WF Report: Summertime, and the Working Isn’t Easy: Teens and Harassment: Just Horsing Around, or Serious Business?

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