California Warehouse Worker Lawsuit Targets Wal-Mart

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By JIM MORRIS and ADITHYA SAMBAMURTHY, Center for Public Integrity, MIRA LOMA, Calif.– Lawyers alleging wage theft from mostly immigrant Latino contract workers at a Southern California warehouse complex took steps to add Wal-Mart as a defendant in an ongoing federal lawsuit.

The move is expected to draw the nation’s largest retailer into a case in which it had, heretofore, been tangentially involved – and raises questions about the human cost of Wal-Mart’s tightly controlled supply chain, which relies heavily on contractors and subcontractors.

Wal-Mart trailers parked at Schneider Logistics' facility in Mira Loma, Calif.

Wal-Mart trailers parked at Schneider Logistics’ facility in Mira Loma, Calif.

“Wal-Mart employs a network of contractors and subcontractors who have habitually broken the law to keep their labor costs low and profit margins high,” Michael Rubin, a lawyer for the workers, contended in a written statement to the Center for Public Integrity and the Center for Investigative Reporting. “We believe Wal-Mart knows exactly what is happening and is ultimately responsible for stealing millions of dollars from the low-wage warehouse workers who move Wal-Mart merchandise.”

A court document [3] filed 30 November 2012 in Los Angeles claims, “Recent discovery has established that Wal-Mart bears ultimate responsibility for the violations of state and federal law committed against plaintiff warehouse workers,” who “perform hard physical labor for long hours with little pay under hot, hazardous, and dust-filled conditions, unloading and loading trucks destined for Wal-Mart stores and distribution centers throughout the United States.”

The class-action lawsuit, filed in October 2011, accuses the owner of the Mira Loma warehouse complex, Schneider Logistics Transloading and Distribution, and two staffing agencies of cheating contract workers out of pay.

In an email, Wal-Mart spokesman Dan Fogleman said, “We disagree with [Rubin’s] characterization. While we have a set of quality standards that must be met, the third party service providers we utilize are responsible for running their day-today business. They manage their people completely independent of us.”

In a statement earlier this month, Fogleman said “some workers at third party logistics facilities that we use have raised some concerns about their work environment.

“Even though the workers aren’t employed by us, we take these types of allegations very seriously,” the statement said. “The fact is, we hold our service providers to high standards and want to ensure that workers throughout our supply chain are treated with dignity and respect.”

Wal-Mart officials planned to begin audits of warehouses such as Schneider “within days,” according to the statement. “In the meantime, company representatives have made multiple visits – including some that were unannounced – to the facilities where the bulk of the concerns have been raised.”

The lawsuit alleges that Schneider and staffing agencies Premier Warehousing Ventures LLC and Impact Logistics Inc. conspired to “cover up the extent of their wrongdoing by failing to keep mandatory payroll records, falsifying records of hours worked and compensation owed, and concealing, denying and/or misrepresenting to the workers the amount of their earnings and on what basis these earnings were calculated.”

The staffing agencies have agreed to pay a collective $450,000 in fines and back wages to settle citations issued by California labor officials, who raided the warehouse the same month the lawsuit was filed last year. Schneider, which was not cited by the state, said in a statement that it “played no role in determining the rate or method of pay” that led to the violations.

By adding Wal-Mart – the warehouse’s only customer – to the lawsuit, lawyers for the workers are seeking to prove that the company pressured Schneider to hold down costs by underpaying subcontractors. As many as 1,800 workers in Southern California could receive back pay and damages as a result of the case, and the impacts could be felt in other warehouse centers as well.

Schneider employee David Acosta, among the more than 200 plaintiffs in the lawsuit, questions whether Wal-mart could have been oblivious to the problems in Mira Loma – which he and other workers describe as long, unpredictable hours and unpaid wages.

“Wal-Mart is responsible,” Acosta said in an interview. “They want to wipe their hands clean of the situation. But they make or break contractors.”

One Wal-Mart employee has an office in the Schneider warehouse and participates in daily operational meetings and audits, court documents allege.

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