With 1.2 million employees -- the nation's largest employer -- Wal-Mart is, in the words of historian Nelson Lichtenstein, a "template firm" for U.S. companies -- and thus has received much media scrutiny for its employment practices. Here is a closer look at the issue of Wal-Mart and unions, and a roundup of some of the charges that have been made in court against the retailer and the company's defense. Plus more on Wal-Mart's plans for becoming a "a leader in employment practices."
Wal-Mart vs. the Unions
In October 2003, some 70,000 union employees of the nation's three largest grocery chains went on strike in Southern California over their employers' plans to cut wages and benefits. The three chains -- Kroger, Safeway and Albertson's -- determined they could no longer be competitive in the Southern California market if they had to pay their employees as generously as they had in the past. Why? Because Wal-Mart, the biggest grocer in America, was coming to town. Though Wal-Mart had a presence in California for years, it had recently announced plans to introduce 40 Wal-Mart Supercenters -- 200,000 square-foot retail and grocery stores -- to the area. "The supermarkets themselves were terrified that they would be undercut -- severely undercut -- by Wal-Mart," says Edna Bonacich, a sociology professor at the University of California, Riverside, "and that it would drive them out of business."
In 2003, Wal-Mart paid its hourly associates an average of $9.64 per hour -- almost $10 less than the average hourly wage the California supermarket workers were receiving1. "We don't necessarily pay the exact amount that they do in terms of dollar per hour," Wal-Mart Vice President Bob McAdam tells FRONTLINE. "But we have a competitive package of benefits and pay that we believe is what's attracting people to work for our company." That "competitive package" includes profit sharing and 401(k) programs, the opportunity to purchase stock and to move up the corporate ladder. "[Critics] don't always value the promotion opportunities that come with a job at Wal-Mart that might not be available for people with unionized job," McAdam argues. "Last year we promoted 9,000 of our hourly associates to management position."
Wal-Mart's arguments against unions originated with its founder, Sam Walton, who wrote in his 1992 autobiography: "I have always felt strongly that we don't need unions at Wal-Mart… . The partnership we have at Wal-Mart -- which includes profit sharing, incentive bonuses, discount stock purchase plans, and a genuine effort to involve the associates in the business so we can pull together -- works better for both sides than any situation I know of involving unions." Wal-Mart's official stance on unions, available on the Wal-Mart corporate Web site, is: "At Wal-Mart, we respect the individual rights of our associates and encourage them to express their ideas, comments and concerns. Because we believe in maintaining an environment of open communication, we do not believe there is a need for third party representation."
Wal-Mart has repeatedly stated that their store is "pro-associate" rather than anti-union, but union organizers claim Wal-Mart intimidates employees who discuss unionizing, threatens to close stores where union are making gains, and restricts union access to its employees. In 1999, Wal-Mart sought a trepassing injunction against the United Food and Commerical Workers union (UFCW) after its members entered 120 stores nationwide to distribute union information to Wal-Mart associates. In 2002, an Arkansas circuit court judge in Benton County, where the retailer is headquartered, granted Wal-Mart's request, restricting the union's organizing activities not just in Arkansas, but across the country. Though the Arkansas Supreme Court overturned the lower court's decision in 2003, objecting that the circuit court had over-stepped its bounds, it did not rule on the trespassing issue and remanded it to the lower court for reconsideration.
The Los Angeles Times reports that at the first sign of union activity, Wal-Mart managers are supposed to call a hotline, prompting a visit from a special team from Wal-Mart headquarters. Wal-Mart spokeswoman, Mona Williams, told the Times that such teams do exist, but says their purpose is merely to help managers respond effectively and legally to union efforts. Judges have ruled in cases across the country that Wal-Mart has illegally influenced employees seeking to unionize.
Jon Lehman, a former Wal-Mart manager, tells FRONTLINE how he dealt with the union issue when he worked for the company. "I used to stand up in front of my workers and lie to them," he says. "I used to say the talking points, that the union's a cult: 'You don't want to join a union. It's a cult. Why pay someone to speak for you? You can speak for yourself.'" Lehman, who left Wal-Mart on good terms, though disillusioned by the company's treatment of its employees, now works for the UFCW trying to unionize Wal-Mart employees. "What I didn't tell the workers was that 'If you have a union contact you might get better pay,'" he laments. "You might be able to negotiate with your employer to have your healthcare completely paid for." Lehman explains, "I left [Wal-Mart] to go to work for the UFCW because I wanted to bring that back to them. I wanted to bring the truth back to Wal-Mart workers."
A few Wal-Mart employees have succeeded in unionizing. A Wal-Mart store in Jonquierre, Canada, where there are different labor laws, was unionized last August, but it may close its doors before union members have a chance to negotiate their first contract. A Wal-Mart spokesman told The New York Times in October 2004 that the store has lost money since its opening and that "things have gotten worse in recent months." He attributes the store's poor performance to staff division over unionizing. And in 2000, 10 butchers at a Wal-Mart Supercenter in Jacksonville, Texas, voted to join a union. Less than a month later, according to the Chicago Tribune, Wal-Mart switched to prepackaged meats, eliminating jobs for butchers from its stores nationwide.
As for the Southern California supermarket strike against Kroger, Safeway, and Albertson's, it lasted four months before a settlement was reached on Feb. 29, 2004. The union ratified a new contract with the grocery chains that would cut wages and benefits for new workers. Most observers saw the agreement as a win for the grocers, who were being forced to compete with the impending arrival of Wal-Mart. "Basically, the strike, I think, was a disaster for the supermarket workers, who were forced to make serious concessions," says Bonacich. "[They] are now on a two-tier system, where new workers coming in don't have the same benefits as older workers."
Wal-Mart in the courts
Wal-Mart recently has received a great deal of attention for being the target of employee lawsuits. In 2001, six female former employees filed a lawsuit in federal court in San Francisco alleging Wal-Mart systematically denied promotions and equal pay to its female employees. The suit charges that although two-thirds of all hourly wage employees at Wal-Mart are female, women account for only one-third of managers and only 15 percent of senior managers. In June 2004, a federal judge, in a procedural move, gave the lawsuit class-action status on behalf of 1.6 million past and current female employees, making it the largest discrimination lawsuit in American history. Wal-Mart is currently appealing the class-action status of the lawsuit. Pending appeal, the company is not making any statements on the specifics of the case, but Wal-Mart spokeswoman Mona Williams issued a statement following the judge's decision. "Let's keep in mind that today's ruling has absolutely nothing to do with the merits of the case," she said. "Judge Jenkins is simply saying he thinks it meets the legal requirements to move forward as a class action. …While we cannot comment on the specifics of the litigation, we can say we continue to evaluate our employment practices."
Published news reports have drawn attention to questions of whether Wal-Mart is properly paying overtime to its employees. One lawsuit, decided in Oregon in 2002, found that 400 employees were routinely permitted to work overtime without compensation from 1994 to 1999. Similar cases are still pending in Minnesota, California and Indiana, and Wal-Mart has settled similar suits in Colorado and New Mexico for undisclosed amounts. Wal-Mart says that it prohibits off-the-clock work and blames problems on a small group of managers among its 3500 stores.
In October 2003, U.S. Department of Immigration officials raided 61 Wal-Mart stores in 21 states, where they arrested 250 illegal immigrants working at Wal-Mart stores and confiscated several boxes of documents from Wal-Mart headquarters in Bentonville, Ark. Though most of the illegal workers were employed by third-party contractors, federal officials say they have evidence that Wal-Mart employees knew the immigrants were working illegally. The company is currently the subject of a grand jury investigation about the case, and in September 2004, it disclosed to investors in an SEC filing that it had entered into settlement talks with the government. Nine of the immigrant employees have filed a class-action suit against the company, alleging Wal-Mart knowingly hired illegal workers and conspired with the contractors to pay them low wages. Wal-Mart spokeswoman Mona Williams told the Financial Times that the company is concerned about the allegations of abuse. "We would never condone such treatment and we are sorry that it happened," she said. Williams added, "If anyone at Wal-Mart has broken the law … we will make sure that the person will no longer work for our company."
Becoming a Leader in Employment Practices
Recently, Wal-Mart has been drawing public attention to its efforts to improve its employment practices. It has aired a series of commercials across the country, that show the life-saving health benefits employees and their families have received at the company's expense. And in recent months, Wal-Mart has published letters to the editor in more than a dozen California papers to "set the record straight" about the benefits of working for the company. The letter, available on the Wal-Mart corporate Web site, touts the company's healthcare plan, its opportunities for promotion, and the large number of applications it receives for each of its available positions, among other things.
In 2003, Wal-Mart CEO Lee Scott pledged that his company will become a leader in employment practices, and at the 2004 Wal-Mart shareholders meeting, he addressed how the company was meeting that goal: In 2003, the company created an Office of Diversity to focus on "implementing programs that develop pools of qualified and diverse candidates," and adopted a new job classification system to determine pay and promotions that it hopes will avoid questions of gender discrimination. Wal-Mart has also formed a corporate compliance team to oversee "the company's obligations to associates in terms of pay, working hours, and time for breaks," and has plans to install new cash registers that will shut off if an employee is working beyond his or her scheduled hours. Scott told the more than 18,000 assembled for the annual event: "With more than 1.3 million associates, and plans to create many, many more jobs, it is our responsibility to make sure we offer an attractive place to work, and continue to focus on fairness and equal access to pay and promotions."