business news in context, analysis with attitude

The Inspector General of the US Department of Labor has issued a report saying that there were “serious breakdowns” in the negotiated settlement with Wal-Mart earlier this year over child labor law violations.

The settlement required Wal-Mart to pay a fine of $135,540 (though not to admit guilt) – but required the Labor Department to give Wal-Mart 15 days notice before starting any new investigation or audit of its policies, and gave Wal-Mart 15 days to fix any violations before it could actually be charged with anything.

The new report says that these “significant concessions” resulted from a lack of oversight within the department, and said that this settlement was “significantly different” from agreements made with other companies in similar circumstances.

"These breakdowns resulted in (the Labor Department) 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. However, the report said that no laws were violated by either side when the agreement was reached.

"We continue to believe that the agreement was the appropriate course of action," Wal-Mart spokesman Marty Heiers said in a statement. "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.”

Rep. George Miller (D-California) and Rep. Rosa DeLauro (D-Connecticut) reportedly will introduce legislation that would in the future prevent the Labor Department from making such agreements in the future.
KC's View:
When this story broke we said that the settlement was a joke, and we’ll stand by that statement now.

In the long run, it doesn’t even do Wal-Mart much good, because it creates the illusion that the world’s biggest retailer gets special treatment. And at a time when the company is trying to improve its image, that isn’t a helpful impression for people to have.

By the way, the amount of the fine - $135,540 – struck us for a different reason this time around.

Wonder how that figure compares to the dollar amount that former vice chairman Tom Coughlin has been accused of defrauding the company?

Just curious.