Child Labor Advocates Call Wal-Mart Settlement Disastrous

Activists Outraged at Paltry Fines and Potential for Future Violations by Nation’s Largest Retailer

February 16, 2005
Contact: Carol McKay
 or Mark Fernando
202-835-3323
media@nclnet.org

WASHINGTON, D.C. — Child labor activists criticized the Labor Department’s (DOL) announcement of a disappointing settlement with Wal-Mart, the nation’s largest retailer, over child labor violations.

“Unfortunately, this is a paltry settlement that demonstrates DOL’s screwy enforcement policy,” said Darlene Adkins, coordinator of the Child Labor Coalition, a Washington-based activist group. “Consistently, DOL under-penalizes for child labor violations — even serious ones that involve hazardous work that is prohibited by law. This latest example weds special advance notice of future child labor investigations for violators with inadequate penalties. It is shocking.”

In the settlement, Wal-Mart agreed to pay $135,540 in civil money penalties to settle charges of 24 child labor violations. Some of the children were operating cardboard balers and chain saws, which are considered particularly hazardous jobs that Wal-Mart and other employers cannot legally permit anyone under age 18 to perform.

The average penalty brought against the retailer is only $5,647.50 per violation, about half of DOL’s maximum penalty of $11,000. With Wal-Mart’s $285 billion in annual sales, child labor advocates called the fines trivial. 

“A $135,540 penalty for a company this size has the same financial impact as a 40-cent penalty for a million-dollar company,” said Adkins. “DOL has sent a message, but it’s a disheartening one: violators of child labor laws shouldn’t have much to fear, even if caught.”

DOL regulations require that child labor penalties be based in part on history of prior violations and the failure to take reasonable precautions to avoid violations. These regulatory requirements seem to have been ignored, or at least given too little weight, in the $135,540 settlement agreement. 

Wal-Mart has a history of prior child labor violations. In 2000 Wal-Mart paid $205,650 to resolve a case involving 1,436 violations of Maine state child labor violations in 20 stores. Wal-Mart vowed to instruct managers about labor laws and work hard to prevent future violations.  Also in 2004, Wal-Mart conducted an internal audit of time cards in 128 stores covering a one-week period. The audit revealed 1,371 instances in which minors worked either during school hours or for too many hours in the day. In recent years, Wal-Mart has also been accused of other serious labor law violations — including employees forced to work off the clock, locking employees into stores overnight, and using undocumented workers.

In addition to the insignificant penalty, advocates say they are further disheartened by a component of the settlement that will give Wal-Mart an advantage in its efforts to avoid future discovery of child labor violations. According to a provision in the settlement, DOL is now required to give Wal-Mart 15 days advance warning before commencing investigations into child labor or other Fair Labor Standards Act (i.e., minimum wage and overtime) violations.

“If DOL were truly interested in preventing children from operating cardboard balers and chain saws and other prohibited hazardous machines, it would immediately investigate any reports of such activities without giving any employer any advance notice” said Adkins. “It is increasingly apparent that DOL’s loyalty lies with industry — not with the young workers they are charged with protecting.”

About the Child Labor Coalition

The Child Labor Coalition is a group of more than 40 organizations, representing consumers, labor unions, educators, human rights and labor rights groups, child advocacy groups, and religious and women’s groups.  It was established in 1989, and is co-chaired by the National Consumers League and the American Federation of Teachers.  It’s mission is to protect working youth and to promote legislation, programs, and initiatives to end child labor exploitation in the United States and abroad.