Inspector General Report Finds Serious Breakdowns in Wal-Mart Settlement

Washington, D.C., There were serious breakdowns in a government settlement with Wal-Mart Stores Inc. over child labor violations, including allowing attorneys for the chain to write key parts of the deal, according to a Labor Department inspector general report issued on Monday. The inspector general attributed the problem to inadequate management controls and guidelines.

As a result, Wal-Mart received “significant concessions” in the $135,540 settlement, made public in February, the report said. Among them: The Labor Department was required to notify the retailer 15 days in advance of opening an audit or investigation, a policy that is inconsistent with guidelines for the department’s Wage and Hour Division.

The report said the Wal-Mart deal was “significantly different” from other agreements that the Labor Department has made with companies and included far-reaching restrictions on the government’s ability to assess monetary penalties.

“These breakdowns resulted in (the Wage and Hour Division) entering into an agreement that gave significant concessions to Wal-Mart … in exchange for little commitment from the employer beyond what it was already doing or required to do by law,” the report said.

At the same time, the report said it found no evidence of violation of federal laws or regulations. Nor did inspectors find evidence of pressure from internal or external sources during development of the agreement. Wal-Mart spokesman Marty Heiers emphasized those points.

“We continue to believe that the agreement was the appropriate course of action,” he said. “Our goal is to make sure our stores are in full compliance and that our associates are fully informed of all policies, regulations and laws that apply to the employment of workers who are 16 and 17 years of age. We don’t employ anyone under the age of 16.”

But the top Democrat on the House Education and Workforce Committee, Rep. George Miller of California, who sought the investigation, criticized the deal.

“The sweetheart deal put Wal-Mart employees at risk, undermined government effectiveness and further undermined public confidence that the government is acting on its behalf,” Miller said.

Miller and Rep. Rosa DeLauro, D-Conn., plan to introduce legislation Tuesday that would bar the Labor Department from agreeing to provide notice to companies before investigating any wage-and-hour complaints.