Congressional Investigation into Bush Administration’s
Sweetheart Deal With Wal-Mart On 
Labor Violations Called For

CONGRESSMAN GEORGE MILLER
US Congress Committee on Education and the Workforce, Ranking Member
14feb2004

[More on Wal-Mart | Also see Report]

So-called ‘compliance agreement’ gives preferential treatment to major Republican donor

WASHINGTON, DC -- After disclosure of a secret agreement between the U.S. Department of Labor (DOL) and Wal-Mart giving the giant retailer the authority to conduct its own investigations of employee wage and hour complaints, Representative George Miller (D-California) today requested an investigation by the DOL’s Inspector General to determine whether the arrangement represents a sweetheart deal between the Bush Administration and one of the nation’s most frequent violators of labor laws.

Under the arrangement, disclosed by The New York Times on Saturday, Wal-Mart will be allowed 15 days to investigate and rectify employee complaints before DOL conducts any investigation. Upon receiving a complaint about a potential violation of wage and hour laws, DOL’s field offices around the country are now instructed to notify the DOL office in Little Rock, Arkansas, which will then notify Wal-Mart’s headquarters in Bentonville, Arkansas of the complaint. The Department will not launch its own investigation during that time and it remains unclear under what circumstance it would launch an investigation after the 15 day period ends.

Miller said that such an arrangement could allow the giant employer to cover up evidence of a violation and would discourage aggrieved employees who might fear retribution from the company. Miller also sent a letter to Labor Secretary Elaine Chao today asking for more information about the arrangement.

“I am very concerned about this secret arrangement between Wal-Mart and the Bush Administration,” said Miller, the senior Democrat on the House Education and the Workforce Committee. “This is a company that has been accused of a lengthy list of labor violations. Wal-Mart does not have the credibility to serve as an impartial investigator of accusations of labor violations against itself. I intend to find out how this arrangement was reached and, if appropriate, I will consider asking Congress to rescind the agreement if it cannot be justified.

“Once again, it looks like the Bush Administration is doing a favor for a powerful friend and contributor at the expense of workers who do their jobs and still cannot get fair treatment in the workplace.”

According to the Times report, DOL entered into the “compliance agreement” with Wal-Mart after settling a case with the retailer for $135,000 over violations of child labor law in three states involving the use of dangerous heavy machinery by minors. Compliance agreements are meant to prevent similar violations by the employer from recurring, not to give employers advance notification of future violations.

Miller said it was also unusual for the Department to keep secret the fact that a compliance agreement that had been signed. This agreement, reached on January 6, 2005, only became public because of a reporter’s query to the Department. Miller said it was unclear whether Wal-Mart was required to notify its employees of the new arrangement. He said it was possible that employees had continued to file complaints with DOL without knowing that those complaints would be forwarded to Wal-Mart headquarters without an investigation.

Wal-Mart is a major contributor to the Republican Party. In the 2004 election cycle, Wal-Mart donated $2.1 million to candidates and campaigns – more than any other retailer. Eighty percent of those donations went to Republicans, according to OpenSecrets.org. Wal-Mart’s closeness to Republicans was further demonstrated in May 2004, when Vice President Dick Cheney said, “The story of Wal-Mart exemplifies some of the very best qualities in our country – hard work, the spirit of enterprise, fair dealing, and integrity.”

In fact, Wal-Mart has a long history of labor violations, from failing to pay workers for overtime hours, discriminating against women employees, violating child labor laws, and locking workers into stores at night. Last year, Miller’s staff prepared a report that detailed Wal-Mart’s egregious labor practices, and the costs to taxpayers who pick up medical, educational and other costs associated with the company’s well-known low wage policy.

One week after the child labor settlement with the Department, Wal-Mart launched what it called an “unprecedented communications initiative” to improve its image, with a full-page ad in 100 newspapers across the country.

source: http://www.house.gov/apps/list/press/ed31_democrats/rel21405.html 9mar2005

Miller’s Request for an Inspector General Investigation

COMMITTEE ON EDUCATION
AND THE WORKFORCE
U.S. HOUSE OF REPRESENTATIVES
2181 RAYBURN HOUSE OFFICE BUILDING
WASHINGTON, DC 20515-6100

February 14, 2005

Inspector General Gordon S. Heddell
Office of the Inspector General
U. S. Department of Labor
200 Constitution Avenue, N.W.
Washington, DC 20210

Dear Mr. Heddell:

I request that your office begin an immediate investigation into the negotiation and formulation of the Department of Labor's recently disclosed compliance agreement with Wal-Mart.

As reported in the New York Times, the Department of Labor entered into an agreement with Wal-Mart in early January, settling 24 violations of child labor laws. It is reported that, under this agreement, the Department of Labor will give Wal-Mart 15 days' notice of any wage and hour complaint before conducting an investigation. While Assistant Secretary Victoria Lipnic asserts that the advance notice provision applies only to child labor allegations, a former "top wage official" told the New York Times, "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."

The New York Times article reports that the notice will be given "before the department investigates any other `wage and hour' accusations, like failure to pay minimum wage or overtime." Additionally, a January 10, 2005, e-mail from the director of the Little Rock, Arkansas, Wage and Hour office does not limit the advance notice to child labor violations, saying: "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."

The compliance agreement was kept secret for a full month and was only disclosed when the Department of Labor was questioned by a New York Times reporter. The Department made no

public announcement of this extraordinary and wide-ranging agreement. Most importantly, it appears that Wal-Mart employees were not informed of the agreement prior to this New York Times article and were given no notice that, if they sought assistance from the Department of Labor for wage and hour violations by their employer, the Department of Labor would direct those complaints to Wal-Mart corporate headquarters in Arkansas for review.

In short, the terms of and secrecy surrounding the compliance agreement with Wal-Mart raises serious questions about the propriety of this deal. Has the Department of Labor provided preferential treatment to the nation's largest private sector employer with an infamous labor record? Why was the deal kept secret for so long?

I ask that your office conduct a complete and thorough review of the negotiation and formulation of this compliance agreement and the circumstances surrounding it. This review should include:

1. What was the rationale for keeping the agreement secret for a full month after the new case handling procedures - including the channeling of employees' complaints to Wal-Mart's main office - apparently had been implemented?
2. What were the circumstances leading to the negotiation of this settlement on these terms and how was it negotiated?
3. What is the scope of the 15 days' advance notice provision, and what is the justification of that scope?
4. When were Wal-Mart employees notified of the new case handling procedures? If they were not notified upon implementation of those procedures, why not?
5. What precisely are the case handling procedures involved in the 15 days' advance notice provision? How do those procedures ensure that the employer does not "cover up" violations before a full investigation can be conducted?
6. How is Wal-Mart employee confidentiality protected in the handling of cases under the 15 days' advance notice provision? How effective are those protections, if any?
7. How does the Wal-Mart compliance agreement and the way in which it was reached compare to either the prosecution of similarly situated companies with similar labor records by the Department or compliance agreements with similarly situated companies with similar labor records?

1. Who negotiated the Wal-Mart agreement for both the Department of Labor and Wal-Mart? Who approved the agreement? Who offered any advance notice provisions? What were those offers? Was anyone outside of the Department of Labor, other than Wal-Mart officials and representatives, involved in the negotiation, formulation, or suggestion of this compliance agreement in any way? If so, who and in what way?
2. What contact, if any, has the Department of Labor or any other United States government employees, officials, or agents had with Wal-Mart concerning the disclosure, publication, or other dissemination of this settlement or its terms?

I ask that you meet with my staff to discuss this matter further. Your immediate attention to this investigation is appreciated.

Sincerely
GEORGE MILLER
Senior Democratic Member

source: http://edworkforce.house.gov/democrats/igletter1.pdf 9mar2005