ANDREA FLEISCHER, NEW YORK TIMES:
It's 6 a.m. and the first shift is arriving at the nation's largest company, and largest private employer. Throughout the day nearly one million people will clock in and begin work at three thousand Wal-Marts and Sam's Clubs nationwide.
Part of the vast Wal-Mart network that will ring-up an estimated 220 billion dollars in sales this year. But some employees say profits have been made unfairly, and even illegally at the workers' expense.
CAROL TAYLOR, REGIONAL MANAGER, WAL-MART, ARKANSAS: Nat. Sound: This is our store number one.
NEW YORK TIMES reporter Steven Greenhouse has been invited to visit a new and expanded version of the store in Rogers, Arkansas where Wal-mart got its start more than 40 years ago. Our guide is Vice President and Regional Manager Carol Taylor.
CAROL TAYLOR: Okay, we're going to walk back here to the area behind the scenes.
Behind the scenes in the "Associates" area - Wal-Mart calls its employees "Associates."
CAROL TAYLOR: This is our heart right here. It talks about respect for the individual, and that's what we always go back to.
The walls are plastered with the guiding principles that helped Sam Walton build, from this one store, the nation's largest low-cost retailer.
STORE MANAGER: Good Morning associates. Please come over to men's wear for the morning meeting.
And just as it has from its humble beginnings, every shift at Wal-Mart begins with the legendary daily store meeting.
STORE MANAGER: Good Morning everybody.
EMPLOYEE GROUP: Good Morning Matt!
STORE MANAGER: Well great day in sales yesterday. It was a fantastic day.
With its pep rally atmosphere, the meeting brings associates and management together to share sales figures, introduce new products, and offer congratulations for a job well done.
STORE MANAGER: Great job, thank you Debbie.
It ends with the Wal-Mart cheer.
STORE MANAGER: Who's number one? (The customer, always)
But beneath this portrait of goodwill, there's a less rosy picture. Wal-Mart is fighting legal battles with scores of former employees in 25 states hourly workers who claim the company has cheated them out of hundreds of millions of dollars in overtime pay.
LIBERTY MORALES, FORMER WAL-MART EMPLOYEE: I would work ten or fifteen hours off the clock.
INTERVIEWER: You wouldn't get paid.
LIBERTY MORALES: No.
INTERVIEWER: But you'd be working.
LIBERTY MORALES: Yes
That's 10 or 15 unpaid hours, per week. Liberty Morales, a mother of three who worked at several Wal-Marts in Texas, says it happened almost like clock work. Just as she was about to reach the 40 hour limit when overtime kicks in, she'd get a call from management asking her to clock out. But she says, she knew she'd have to go back to work.
INTERVIEWER: They literally said clock out, and then go back to work?
LIBERTY MORALES: Well the manager would say, do me a favor, you know, um, just, you know, I'll try to find somebody to, to work over there and, and then, it would never happen, I would stay there up to four or five hours off the clock and, they would never find anybody there to, to take my place. And I knew that, if I were to leave, I would've-I wouldn't have a job when I got back.
Morales is among 40 current and former Wal-Mart and Sam's Club employees we spoke with who say managers often forced or pressured them to work over-time, and through lunches and breaks without pay.
LIBERTY MORALES: It would make me upset, mad. Um, that, I'd worked to-to support my family, and then they would take advantage of, you know, us employees like that.
Farris Cobb says he felt the same way, working as
an overnight supervisor for Wal-Mart's Sams Club division, at
stores in Florida and Texas.
FARRIS COBB, FORMER SAM'S CLUB EMPLOYEE:
A lotta times, even though I was supposed to get off,
say, like at six o'clock in the morning...I would be there because the
managers would make me wait till they got there, at eight.
STEVEN GREENHOUSE: Would they actually order you to work off the clock, or was it something you
did that they really didn't know about?
FARRIS COBB, No, they knew. They all knew. That's what they would tell
me that, um, you have to do this for the company.
RUSSELL LLOYD, ATTORNEY: This corporation is balancing to a certain extent its success, which is great, on the back of its hourly workers.
Russell Lloyd, a former judge, represents Farris Cobb, Liberty Morales and 19 others in class action lawsuits filed in six states throughout the South.
Each of these individuals has been pencil whipped. A little here, a little
there, no claim is more than - worth more than two, three, four thousand dollars.
But Lloyd calculates that for just one store in Texas with 250 employees, saving one hour of overtime per person per week quickly adds up.
RUSSELL LLOYD: That's 250 hours a week. That's a thousand hours a month. In one
store. That's roughly twelve thousand hours a year, he's getting free labor. Out of that
one store, and there's three hundred and some odd stores in Texas.
That kind of arithmetic for the state of Texas alone, could mean 30 million dollars in savings in one year.
Off the clock work is strictly prohibited by federal and state law. Cole Peterson, Executive Vice President of Wal-Mart's People Division says it's prohibited at Wal-Mart, too.
COLE PETERSON, EXECUTIVE V.P. PEOPLE DIVISION, WAL-MART: We have very clear policies regarding wage and hour guidelines
that say that we expect associates to be paid for, ah, all of the time that they work.
As Carol Taylor pointed out during our tour, those guidelines are clearly posted by each time clock.
CAROL TAYLOR: It says here "we appreciate your dedication, but do not volunteer for off duty time to work."
And to drive the point home even further, Taylor introduced us to employees like Loretta Hartgrave, a 26-year veteran of Wal-Mart.
ANDREA FLEISCHER: So have you ever worked off the clock?
LORETTA HARTGRAVE, WAL-MART EMPLOYEE: No, I've never worked off the clock and it's not right for an assistant to ask you to work off the clock because when you walk in, you're working, you need to be on the time clock, you need to stay on the time clock till you leave.
COLEMAN PETERSON: We know that there can be allegations but we would say like
any organization, if there are violations of that policy, then we hold managers
accountable to that and we will respond with disciplinary action up to and
STEVEN GREENHOUSE: How often have managers been disciplined for having people work off the clock?
COLEMAN PETERSON: I'm not sure I can, I can respond to that. Carol, do you have a sense for that?
CAROL TAYLOR: I, I can tell you my experience is that - I can't tell you
exactly in my area but, um, I can tell you that it has been, um, taken care of on any issues
that's, that's been brought up to us.
But in fact three years ago Wal-Mart paid 400 thousand dollars to settle a case alleging off-the-clock work in a store in New Mexico. And less than two years ago, in public reports not disputed by Wal-Mart, the corporation paid around 50 million dollars to settle a class action suit in Colorado.
ROBERT ECKERT, FORMER WAL-MART ASSISTANT MANAGER: Wal-Mart has a strict policy against working off the clock, but there is a lot of working off the clock that goes on.
Robert Eckert should know, based on his experience as a former Assistant Manager at stores in California. Eckert is not suing Wal-Mart.
He and other managers say corporate headquarters in Bentonville, Arkansas has a "zero tolerance policy" towards overtime pay. And that policy, they say, along with skimpy budgets and low staffing levels, makes it nearly impossible for managers to run stores without some off-the-clock work.
ROBERT ECKERT: This kind of activity has to be expected based on the pressures and formulas that are being given to the assistant managers. The job they're being asked to get done with the staffing they have available. Uh, that's, that's a lot of pressure, and a lot of opportunity to manipulate the, the system.
JON LEHMAN, FORMER WAL-MART MANAGER: If you miss your payroll two times, three times, you may not have a job. You'll
Jon Lehman, a former manager who left Wal-mart on good terms after 17 years, says following one simple rule was the key to survival.
JON LEHMAN: Absolutely no overtime. I don't even want to hear it. If you have overtime, you're gonna be back in here on Saturday morning and we're gonna be getting papers
out. We're gonna coach you. We're gonna write you up. I mean, that's what it comes down to. Their jobs are on the line if they have overtime.
And still more startling even when employees clock in over time hours those hours don't always show up on their paychecks.
FARRIS COBB: A lotta times they would come in and, uh, just erase your hours.
Farris Cobb says that sometimes left his two-week paycheck short, four to 800 dollars.
ANDREA FLEISCHER: So you're saying Sam's Club managers doctored time cards, fraudulently played around with time cards?
FARRIS COBB: Oh, every day. They-they did that on a constant basis every day.
Dorothy English agrees, and she worked in the payroll department.
DOROTHY ENGLISH, FORMER WAL-MART EMPLOYEE: Nine times out of 10 they did not get paid for their overtime.
English says she's the one who actually altered the time records in the Louisiana Wal-mart where she worked, and she says she did it on orders from management.
DOROTHY ENGLISH: They will adjust those hours in that computer. It's the system. It's Wal-Mart's system that does this. People like me who went in there and did exactly what they told me to do.
English says she was shortchanged too, and is part of the class action suing Wal-Mart for back pay.
Her store managers deny they ever doctored time records. But other managers say it happened in many stores. And Jon Lehman knows first hand.
JON LEHMAN: I had the, the payroll clerk on Saturday morning come in
with me at 6:30 and I instructed her, "Hey, if somebody didn't get their, their
lunch, dock 'em for a, you know, for an hour for lunch. If they didn't get their
breaks, dock 'em for a break." You know, I gave direction to do that and I was
following the direction that was given to me.
This is the way that people, that store managers bring their payroll in. And all my friends were doing it, too. All my other store manager buddies in the district.
ROBERT ECKERT: There wasn't one store that I worked in that this wasn't a common question, a common issue that came up.
Wal-mart insists it happens rarely.
COLE PETERSON: That is clearly a violation of Wal-Mart policy as well
as wage and hour laws and we can assure that where we have knowledge of
that, that it is immediately addressed.
ANDREA FLEISCHER: Some managers we've interviewed said that there are huge
pressures on them to hold down costs//to somehow cut corners, maybe to get people to
work off the clock?
COLE PETERSON: All, all businesses today are challenged with expense control. That is no excuse for violation of wage and hour laws or violations of Wal-Mart policy.
So where are the government regulators? The Department of Labor's Wage and Hour division says it has no plans to get involved but is "monitoring the lawsuits against Wal-Mart very carefully."
WAL-MART'S WAR ON WORKERS VIDEO: It's a war on the workers, and it's time we started calling the shots.
But Wal-Mart isn't just feeling the heat from lawsuits. It's also under attack by organized labor, which is trying to unionize store by store.
WAL-MART'S WAR ON WORKERS VIDEO: War on Workers Video: And it's time we started calling the shots.
Both sides have a lot at stake. For the United Food and Commercial Worker's Union, organizing Wal-Marts and Sam's Clubs is an opportunity to win a foothold at the massive corporation where, thus far, unions have been shut out. For Wal-Mart, staying union free is central to keeping its competitive edge.
And it's the message every new associate hears on this Wal-mart video.
WAL-MART VIDEO: Wal-mart, You've Picked a Great Place to Work:
SUPERVISOR (IN VIDEO): Here at Wal-Mart we have a great group of associates who take pride in how they work and where they work. They don't want a union.
JULIE, (IN VIDEO): Why? SUPERVISOR (IN VIDEO): Because they know a union would mess it up.
LORETTA HARTGRAVE: I do not feel like Wal-mart needs a union. We have a very good open door policy. We can talk to our management anytime we want.
ANDREA FLEISCHER: Has Wal-mart ever told you anything about unions, whether they're good, whether they're bad?
LORETTA HARTGRAVE: No, they have never told us if it's good or bad. They leave it up to the people to make our own decisions.
But that's not the experience 73-year-old Sidney Smith says he had when he joined fellow butchers at the Jacksonville, Texas Wal-Mart and signed a card to vote the union in.
SIDNEY SMITH, FORMER WAL-MART EMPLOYEE:
Everybody in the market that, signed the card was uh, they picked on you. They, they found little faults that they never, ever dreamed of before.
Then Smith says, on Labor Day, he was called to a meeting with his supervisor, assistant manager, store manager, and, as he puts it, "a representative from Bentonville," and fired from his 15 thousand dollar a year job for allegedly stealing a banana.
SIDNEY SMITH: I said, stole a banana? I've never stole nothing from you
people. Said, well what about that box of bananas that you bought? Didn't you eat one
of them before you paid for them?
I said, yes, sir. But that was just a half
a banana, and the other half was in the box.
Well, we gonna have to terminate you
anyway, for stealing. And that's what they, that's how they got rid of Sidney Smith. Just
They was looking for ways to fire all of us
that signed cards. Because they didn't want no union in that store.
ANDREA FLEISCHER: Why would Wal-Mart fire a 73 year old, just for supporting a union?
EXECUTIVE V.P. PEOPLE DIVISION, WAL-MART: First, you have to know that it's illegal to fire anyone
for supporting a union and in this particular case, ah, that certainly did not
happen and those are just simply not the facts of the case.
ANDREA FLEISCHER: Wal-Mart settled that case for seven thousand dollars. If the facts were
wrong, (you know), why would Wal-Mart agree to pay this man that amount of money?
EXECUTIVE V.P. PEOPLE DIVISION, WAL-MART: Ah, the termination for, ah, grazing is a, a well understood and well accepted policy within the retail area.
Jon Lehman, who is now one of several former Wal-Mart managers working for the union, says what happened to Sidney Smith sounds like something right out of the "Managers Tool Box To Remaining Union Free" - a confidential document that Lehman says is given to every Wal-Mart manager with a toll free number direct to corporate headquarters.
JON LEHMAN: And that brought the jet in with the labor relations guys in there
And they interview all the managers, they interview the associates.
They start talking about anti-union, "We don't need a union." They start showing videos. They start going through personnel files looking for dirt on any associate that is, is a union supporter, so that they can get 'em out legitimately.
Lehman says, that for Wal-Mart managers, keeping the union out is a matter of survival.
JON LEHMAN: If you get a union in your store - you know, store managers, you're gonna lose your store. So, your livelihood's on the line. You know, you're making a good income, so you're gonna do whatever you've gotta do to keep the union out.
But there are limits. Federal laws intended to keep union organizing and elections fair. And Leonard Page, who was once the chief enforcer of those laws, says while he was in charge, there were concerns Wal-Mart had crossed the line during unionizing drives in several states. Allegations of illegal spying, threats and dismissals prompted him to consider issuing an unusual national complaint placing the blame on Wal-Mart's corporate headquarters in Bentonville.
LEONARD PAGE, FORMER GENERAL COUNSEL NATIONAL LABOR RELATIONS BOARD: There were 5 or 6 different organizing drives at different stores that showed a common pattern of illegal conduct. It appeared to involve, ah, rather high officials of Wal-Mart stationed in Bentonville.
But before Page, a Clinton appointee, could finish his investigation, the administration changed. The Bush team named a new top lawyer at the National Labor Relations Board who's taken a different tack. A board spokesman says there's "An insufficient basis to seek a nationwide order against Wal-Mart."
But the NLRB has filed 40 separate and specific complaints against Wal-Mart over the last four years, accusing managers in dozens of its stores of using illegal tactics.
ANDREA FLEISCHER: What's your response to all these complaints brought by the
EXECUTIVE V.P. PEOPLE DIVISION, WAL-MART: We want to point out that not one single allegation was substantiated in terms of Wal-Mart having terminated someone for union activities. Some of the others are presently being reviewed by Wal-Mart because we are considering appeal.
Of the forty complaints brought by the NLRB against Wal-Mart the company settled seven, and in ten others was found guilty of dozens of violations. More than 20 complaints are still pending before the board.
But for now at least, not a single store in the Wal-mart empire has a union, and it continues to hum on as the nations' number one company.