Wal-Mart Faces Lawsuit Over Lost Wages

Wal-Mart employs a network of contractors and subcontractors who have habitually broken the law to keep their labor costs low and profit margins high.

-Attorney Michael Rubin

A lawyer for workers who allege they were cheated out of wages at a warehouse that serves Wal-Mart in Southern California said the company was notified Thursday that it will be included in a lawsuit seeking back pay and damages, reports California Watch.

The inclusion of Wal-Mart in the ongoing federal suit would draw the nation’s largest retailer into a case that raises questions about the human cost of the company’s tightly controlled supply chain, which relies heavily on contractors and subcontractors.

The class-action lawsuit, filed in October 2011, accuses Schneider Logistics Transloading and Distribution – owner of a warehouse complex in Mira Loma, east of Los Angeles – and two staffing agencies of shorting mostly immigrant Latino contract workers on pay.

In an email Thursday, Wal-Mart spokesman Dan Fogleman disputed the allegation that the company was responsible for the mistreatment of the warehouse workers.

“We disagree with the characterization,” Fogelman said. “Walmart is Schneider’s customer. We have a set of business needs that we pay them to meet, just like any company might hire an accounting firm to do taxes or an advertising firm to help launch a new product.

“While we have a set of quality standards that must be met, the third party service providers we utilize are responsible for running their day-to-day business,” he said. “They manage their people completely independent of us.”

In a statement earlier this month, however, Fogelman said Wal-Mart was aware of reported problems at warehouses that serve the company.

Fogelman said that Wal-Mart had started inspecting facilities where concerns had been raised and would begin audits of warehouses such as Schneider “within days.”

According to the lawsuit filed by the workers, Schneider and staffing agencies Premier Warehousing Ventures and Impact Logistics conspired to “cover up the extent of their wrongdoing by failing to keep mandatory payroll records, falsifying records of hours worked and compensation owed, and concealing, denying and/or misrepresenting to the workers the amount of their earnings and on what basis these earnings were calculated.”

The staffing agencies have agreed to pay a collective $450,000 in fines and back wages to settle citations issued by California labor officials, who raided the warehouse the same month the lawsuit was filed last year. Schneider, which was not cited by the state, said in a statement that it “played no role in determining the rate or method of pay” that led to the violations.

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