Friday, Jul 6, 2012 3:12 PM UTC

Wal-Mart’s dirty partners

Does the retail giant turn a blind eye to subcontractors that abuse their employees?

Wal-Mart’s low prices come at a high cost. You can measure it in environmental impact, crowded-out competitors or its employees’ miserly benefits. Or you can consider Wal-Mart’s other army: workers employed by Wal-Mart’s contractors and subcontractors, whose labor makes Wal-Mart possible and whose working conditions are shaped by the company’s lust for savings. As Wal-Mart celebrates its fiftieth anniversary, some of them are raising alarms.

Take C.J.’s Seafood, which provided seafood sold at Wal-Mart subsidiary Sam’s Club. Last month, some C.J.’s workers in Louisiana – non-union temporary guest workers from Mexico – went on strike. They charged the company with violating wage laws and locking them inside the plant. The National Guestworker Alliance helped workers organize and bring a complaint to the Workers Rights Consortium, a labor-monitoring organization. The WRC found that employees worked up to 24 consecutive hours, were paid less than 60 percent of minimum wage and lived in vermin-infested trailers on company property. One worker told the WRC, “It was forced work. They would come to the trailers and make us go back to work … We were screamed at and had to go to work. I felt like a slave.” According to the WRC, workers’ complaints to management were met with threats of deportation or violence.

In an emailed statement, WRC Executive Director Scott Nova called the conditions “among the worst we have encountered.” A week before the WRC issued its report, a Wal-Mart spokesperson told The Daily Beast that the company had completed its own investigation and was “unable to substantiate claims of forced labor or human trafficking at CJ Seafood.”

But last week, Wal-Mart announced it had suspended its contract with C.J.’s. Company spokesperson Lorenzo Lopez told Salon that whether the contract was resumed would depend on the results of investigations. “As it relates to the National Guestworker Alliance and their representatives,” Lopez said, “we see this as a union-funded and union-backed report that has little to do with solving real issues.”  The NGA released a report tallying federal labor law citations at a dozen U.S. Wal-Mart suppliers employing guest workers.

There’s more where that came from. Last fall, workers at three warehouses in Mira Loma, California, brought wage-theft allegations to a state labor agency. Each works for a subcontractor hired by a contractor, Schneider Logistics, which works for Wal-Mart. “They didn’t want us to take any breaks, any water breaks, or even to go to the bathroom,” Jose Tejeda told reporters in February. “You couldn’t say that you were sick … We would work 12 hours a day. We wouldn’t get paid overtime.” If workers complained, said Tejeda, management would punish them with additional unpaid shifts.

After workers sued for unpaid wages and government investigators raided warehouses, workers say a subcontractor announced it would lay off all of its staff there. According to workers, 100 percent of the product moved in those warehouses was for Wal-Mart, and Wal-Mart managers were on the property on a daily basis.

With support from Warehouse Workers United, an organization backed by the union federation Change to Win, workers sued on the grounds that they were being retaliated against. In a rare move, a judge issued a restraining order barring the layoffs. In addition, said CTW attorney Janet Herold, “the court found that Schneider is a joint employer along with the temp agency.” She called getting Schneider named as a defendant “a first step in breaking down this fissured industry.”

The next rung up the ladder would be Wal-Mart itself. The lawsuit is in the discovery phase, which WWU says may provide enough evidence for Wal-Mart also to be added as a defendant.

Wal-Mart’s Lopez said that legal process is “going to take its course.” He blamed the negative attention to Wal-Mart’s suppliers on unions, for whom the retail giant has represented a crucial target and an ongoing challenge. “From our standpoint,” said Lopez, “we know that we have the standards in place that suppliers are required to meet, and if they don’t, we have a process in place to make sure that they do.” Lopez added that “one thing … we will not tolerate is when there are issues with forced labor, and things of that nature … Third party logistics is commonly used in the retail industry.”

But critics charge that Wal-Mart turns a blind eye to abusive contractors, and they say conditions throughout the supply chain are being hurt by Wal-Mart’s influence. Last month, the National Employment Law Project released a report arguing that Wal-Mart’s squeezing of its suppliers breeds illegal working conditions for U.S. contractor and subcontractor employees. “The difference with Wal-Mart is that it has set in motion this bidding system,” co-author Catherine Ruckelshaus told Salon. “Each year, contractors who seek to win a Wal-Mart bid have to find places to cut their costs … now they’ve gotten to the point with their subcontractors that the workers’ pay and working conditions is the only place that they can cut.”

Wal-Mart sent Salon a four-page document accusing NELP of issuing a “frivolous report designed to distort Wal-Mart’s role in the supply chain and malign the company’s business practices.” Wal-Mart’s document contrasts “Myths” from NELP’s report with “Facts” from elsewhere – though on inspection, Wal-Mart’s “Facts” generally don’t directly contradict NELP’s supposed “Myths.” (For example, Wal-Mart notes that NELP said “Wal-Mart is intimately involved in the daily operations of the Schneider operations.” Wal-Mart says in response that it “does not have any direct contact with Schneider’s subcontractors.”)

In February, TribLocal reported that workers at an Illinois warehouse that contracts with Wal-Mart filed a federal lawsuit against Schneider and a staffing agency, alleging that 65 workers were laid off in retaliation for a prior lawsuit over wage law violations. In May, a worker’s center released a survey of New Jersey warehouse and logistics workers handling goods for Wal-Mart and other retailers; nearly half made less than minimum wage once their employers deducted transportation costs from their paychecks, despite a state law designed to address such deductions. “Wal-Mart can force warehouses to give us better working conditions,” warehouse worker Alberto Gendete told reporters.

Issues in Wal-Mart’s supply chain also extend abroad. In April, the Bangkok Post reported that thousands of pineapple workers in Thailand went on strike to protest the failure of their employer, Vita Food, to raise their wages after a new minimum-wage law was passed. On Sunday the paper reported that Vita Food is also accused of complicity in debt-bondage, which the UN considers “modern-day slavery.” A Wal-Mart official told the Bangkok Post that Wal-Mart had “stopped its supplier from using Vita Foods in 2011.” But the Post reported that data from CTW indicated that “roughly two-thirds of Vita’s exports over the past year” were for an exclusive Wal-Mart brand. Wal-Mart also denied to the Bangkok Post that it had ever used Phatthana Seafood, a company whose Cambodian migrant workers said they’d gone on strike over wage issues; the Post noted that the Cambodia Daily and CTW “have allegedly linked Wal-Mart and the company through shrimp shipment records.” A Human Rights Watch official told the Post, “Wal-Mart’s track record is much more spotty than it should be.”

Rather than taking responsibility for the conditions it’s wrought, said Ruckelshaus, “they’re trying to pass the blame, and pass the buck, down the chain.”

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