Wal-Mart Settles Labor Suit for $11 Mln
By Elizabeth Lazarowitz
NEW YORK (Reuters) - Wal-Mart Stores Inc. (NYSE:WMT - news) on Friday said it would pay a record $11 million to settle a civil probe by U.S. authorities into allegations it knowingly hired floor-cleaning contractors who employed illegal aliens.
The world's largest retailer said the government will not pursue any criminal charges against Wal-Mart or any of its employees.
The deal resolves a more than four-year-long Department of Justice investigation into the employment practices of the company's former floor-cleaning contractors.
"This case breaks new ground ... because this a record dollar amount for a civil immigration settlement" and because Wal-Mart has to set up an internal compliance program, said Michael Garcia, a Department of Homeland Security official.
Wal-Mart agreed to establish a way to verify that its independent contractors are taking reasonable steps to comply with immigration laws, and to provide training for store managers to prevent the hiring of illegal workers.
"Our compliance program did not include all the procedures necessary to identify independent floor cleaning contractors who did not comply with federal immigration laws," Tom Mars, Wal-Mart's general counsel, said in the statement.
The $11 million deal is about four times larger than any other single payment received by the government in an illegal alien employment case, federal officials said.
"It is a lot of money, but we think that the amount is designed to get attention, and to remind businesses everywhere that they have a duty to ensure their outside contractors are following federal immigration laws," Wal-Mart spokeswoman Mona Williams said on a conference call.
In a U.S. Securities and Exchange Commission (news - web sites) filing last September, Wal-Mart said any money paid to resolve the matter would have no material impact on its financial condition or results.
Bentonville, Arkansas-based Wal-Mart has annual sales of $256 billion, equivalent to the gross domestic product of Austria. In February alone, its total sales were $22.37 billion.
The agreement with the government includes a statement that "Wal-Mart did not have knowledge, at the time the independent contractors initially were hired, that the independent contractors knowingly hired, recruited or employed" undocumented workers, Wal-Mart said.
Wal-Mart said floor cleaning at its U.S. stores will be done by Wal-Mart associates and that it is trying to build stronger internal controls into its contractor review process.
Among its initiatives are ensuring company officers approve store-level contracts over $10,000, strengthening contract language, requiring written agreements for all maintenance contracts, and implementing a document management system that will allow it to police contracts more closely.
Federal authorities also announced that 12 corporations that provided contract janitorial services to Wal-Mart between 1998 and 2002 have agreed to forfeit $4 million to the United States and agreed to enter corporate guilty pleas to criminal immigration charges.
The probe by a federal grand jury in Pennsylvania began after a series of raids in 2003. U.S. agents rounded up about 250 illegal immigrants working at about 60 Wal-Mart stores in 21 states. The workers were hired by private contractors used by Wal-Mart to clean the stores.
Earlier government investigations prompted a 2001 raid at Wal-Mart's stores in Pennsylvania, New York, Ohio and Missouri that resulted in the arrest of about 100 illegal aliens.
Wal-Mart has faced a barrage of criticism for its employment practices in recent years. This February, the company lost a $7.5 million discrimination lawsuit filed by a former worker who suffers from cerebral palsy.
Wal-Mart's shares edged down 73 cents, or 1.4 percent, to $51.60 shortly before the close on the New York Stock Exchange (news - web sites). (Additional reporting by Jeremy Pelofsky and Brad Dorfman)
By Elizabeth Lazarowitz
NEW YORK (Reuters) - Wal-Mart Stores Inc. (NYSE:WMT - news) on Friday said it would pay a record $11 million to settle a civil probe by U.S. authorities into allegations it knowingly hired floor-cleaning contractors who employed illegal aliens.
The world's largest retailer said the government will not pursue any criminal charges against Wal-Mart or any of its employees.
The deal resolves a more than four-year-long Department of Justice investigation into the employment practices of the company's former floor-cleaning contractors.
"This case breaks new ground ... because this a record dollar amount for a civil immigration settlement" and because Wal-Mart has to set up an internal compliance program, said Michael Garcia, a Department of Homeland Security official.
Wal-Mart agreed to establish a way to verify that its independent contractors are taking reasonable steps to comply with immigration laws, and to provide training for store managers to prevent the hiring of illegal workers.
"Our compliance program did not include all the procedures necessary to identify independent floor cleaning contractors who did not comply with federal immigration laws," Tom Mars, Wal-Mart's general counsel, said in the statement.
The $11 million deal is about four times larger than any other single payment received by the government in an illegal alien employment case, federal officials said.
"It is a lot of money, but we think that the amount is designed to get attention, and to remind businesses everywhere that they have a duty to ensure their outside contractors are following federal immigration laws," Wal-Mart spokeswoman Mona Williams said on a conference call.
In a U.S. Securities and Exchange Commission (news - web sites) filing last September, Wal-Mart said any money paid to resolve the matter would have no material impact on its financial condition or results.
Bentonville, Arkansas-based Wal-Mart has annual sales of $256 billion, equivalent to the gross domestic product of Austria. In February alone, its total sales were $22.37 billion.
The agreement with the government includes a statement that "Wal-Mart did not have knowledge, at the time the independent contractors initially were hired, that the independent contractors knowingly hired, recruited or employed" undocumented workers, Wal-Mart said.
Wal-Mart said floor cleaning at its U.S. stores will be done by Wal-Mart associates and that it is trying to build stronger internal controls into its contractor review process.
Among its initiatives are ensuring company officers approve store-level contracts over $10,000, strengthening contract language, requiring written agreements for all maintenance contracts, and implementing a document management system that will allow it to police contracts more closely.
Federal authorities also announced that 12 corporations that provided contract janitorial services to Wal-Mart between 1998 and 2002 have agreed to forfeit $4 million to the United States and agreed to enter corporate guilty pleas to criminal immigration charges.
The probe by a federal grand jury in Pennsylvania began after a series of raids in 2003. U.S. agents rounded up about 250 illegal immigrants working at about 60 Wal-Mart stores in 21 states. The workers were hired by private contractors used by Wal-Mart to clean the stores.
Earlier government investigations prompted a 2001 raid at Wal-Mart's stores in Pennsylvania, New York, Ohio and Missouri that resulted in the arrest of about 100 illegal aliens.
Wal-Mart has faced a barrage of criticism for its employment practices in recent years. This February, the company lost a $7.5 million discrimination lawsuit filed by a former worker who suffers from cerebral palsy.
Wal-Mart's shares edged down 73 cents, or 1.4 percent, to $51.60 shortly before the close on the New York Stock Exchange (news - web sites). (Additional reporting by Jeremy Pelofsky and Brad Dorfman)
