Date of publication: September 14, 2005
Source: New York Times
By STEVEN GREENHOUSE
A labor rights group filed a class-action lawsuit yesterday against Wal-Mart Stores in which apparel workers in Bangladesh, China and other countries assert that Wal-Mart violated its contractual obligations by not enforcing its code of conduct for overseas contractors.
The lawsuit, filed in state court in Los Angeles, makes the novel argument that Wal-Mart's code of conduct created contractual obligations between it and thousands of workers employed by contractors who were supposed to comply with the code.
In the lawsuit brought by the International Labor Rights Fund, workers from Bangladesh, China, Indonesia, Nicaragua and Swaziland assert that the codes of conduct were violated in dozens of ways. They said they were often paid less than the minimum wage and did not receive time-and-a-half for overtime, and some said they were beaten by managers and were locked in their factories.
"Based on its vast economic power, Wal-Mart, based on its code of conduct, can and does control the working conditions of its supplier factories," the lawsuit states. "It could use its power and position to prevent its producers from profiting from the inhumane treatment of plaintiffs."
Beth Keck, a Wal-Mart spokeswoman, said the company was studying the lawsuit. "It's really too early for us to go into any kind of detail about this complaint," Ms. Keck said. "It involves a number of countries, suppliers and factories. We will be looking into this and taking it very seriously."
Wal-Mart executives say that they have the world's largest overseas monitoring program, with more than 5,000 factories inspected by 200 full-time inspectors who visit 30 factories a day. The executives say that when inspectors find violations, they give factories several months to fix any problems before another inspection.
Last year, according to the company's ethical standards report, Wal-Mart cut off 1,200 factories for at least 90 days because serious violations were found in the second visit. Another 108 factories were permanently banned, primarily because of child-labor violations.
In the lawsuit, two male workers for Wal-Mart contractors in Shenzhen, China, asserted that they were not paid the minimum wage, not permitted to take holidays off and were forced to work overtime. They said the contractors withheld the first three months of all workers' pay, almost making them indentured servants because the company refused to pay the money if they quit.
An apparel worker in Dhaka, Bangladesh, said that she was locked into the factory and did not have a day off in her first six months. She said that she was told if she refused to work the required overtime, she would be fired. Another worker said her supervisor attacked her "by slapping her face so hard that her nose began bleeding simply because she was unable to meet" her "high quota."
The complaint tells the stories of 16 plaintiffs, but lists them as John and Jane Does, saying they need to be protected against reprisal.
Several said they were fired or suspended for backing unions.
The lawsuit accuses Wal-Mart of breach of contract for wage violations, forced labor and denying workers the right to associate freely. It also accuses the company of negligence, unjust enrichment and fraudulent and deceptive practices in violating California's business code.
Terry Collingsworth, executive director of the International Labor Rights Fund, a Washington-based advocacy group, asserted that filing the lawsuit in California was appropriate because Wal-Mart had violated that state's laws. He said that if the plaintiffs had filed the lawsuit in their home countries, they would have faced arrest, physical attacks and hostile judicial systems that favored corporations.
He faulted Wal-Mart's monitoring system, contending that fewer than 10 percent of its inspections were unannounced. He said company managers often coach workers on what to tell the inspectors.
Wal-Mart executives say that they are working to improve the monitoring and that more inspections will be unannounced.
"With our growth, the challenge of ethical sourcing has become increasingly complex," H. Lee Scott Jr., Wal-Mart's chief executive, wrote in the company's 2004 Report on Standards for Suppliers. "But we have a qualified ethical standards team dedicated to verifying that factories are in compliance with local labor laws and/or Wal-Mart standards, whichever are more stringent."
An Indonesian plaintiff who said she made jackets for Wal-Mart's private-label George line complained of unpaid work hours and unpaid overtime, saying that she often worked from 7 a.m. until 8 or 10 p.m.
Mondays through Fridays. She said she also had to work on Saturdays from 7:30 a.m. until 3 or 4 p.m.
Another Indonesian worker said, "Wal-Mart production quotas were far higher than quotas from previous buyers, and her supervisor regularly yelled at her and her colleagues if the work was not performed quickly enough."
An apparel worker in Matsapha, Swaziland, said he sometimes had to work from 7 a.m. to 11 p.m. and once worked all night. "He was threatened with immediate dismissal if he did not work overtime, and the factory doors were locked to ensure he did not leave," the lawsuit asserted.
Mr. Scott wrote in the ethical standards report, "It is important to recognize the reality that however strong the programs we develop, violations of our standards will occur." He added that it was a point of pride with Wal-Mart when violations were discovered, action was taken.
The plaintiffs include four unionized California supermarket workers who say that they suffered cuts in pay and benefits because of competition from Wal-Mart's low prices. They argue that those prices are attributable in part to violations of the chain's suppliers' code of conduct.