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Walmart & Contractor Settle $21M Wage Theft Suit, Days After Obama Praises Penny-Pinching Retailer

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Just days after President Obama praised Wal-Mart’s business practices in a speech at one of its California stores, more than 1,800 warehouse workers in the state have settled a major wage theft lawsuit against one of the retail giant’s largest contractors. On Wednesday, workers at three California warehouses used by Wal-Mart agreed to settle a wage theft lawsuit by accepting a $21 million settlement. The workers had sued Wal-Mart and Schneider Logistics, an outside company that owned and ran the warehouses. Schneider will pay the entire settlement. The lawsuit alleged that workers were often paid less than minimum wage, with no required breaks or overtime compensation. We speak with attorney Theresa Traber, who represented the warehouse workers, and Demos policy analyst Catherine Ruetschlin.

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This is a rush transcript. Copy may not be in its final form.

AMY GOODMAN: We end today’s show looking at Wal-Mart, the nation’s largest retailer.

PRESIDENT BARACK OBAMA: We know the shift to clean energy won’t happen overnight. We’ve got to make some tough choices along the way. And we know that if we do, it’s going to save us, ultimately, money and create jobs over the long term. That’s what Wal-Mart understands, and Wal-Mart’s pretty good at counting its pennies.

AMY GOODMAN: That was President Obama at Wal-Mart in Mountain View, California, Friday, giving a speech promoting solar power and energy efficiency. Outside, workers and union activists protested the president’s visit to Wal-Mart.

Well, Wal-Mart is back in the news this week. On Wednesday, workers at three California warehouses used by Wal-Mart agreed to settle a wage theft lawsuit by accepting a $21 million settlement. The workers had sued Wal-Mart and Schneider Logistics, an outside company that owned and ran the warehouses. Schneider will pay the entire settlement. The lawsuit alleged that workers were often paid less than minimum wage, with no required breaks or overtime compensation. In January, a federal judge ruled Wal-Mart would have to face trial as a potential joint employer, the first time a retailer would have had to stand trial for the actions of its warehouse contractors. Wal-Mart declined to join us on the program. Schneider Logistics did not respond to repeated requests for comment.

To talk about the implications of the settlement, we’re joined now by attorney Theresa Traber. She represented the warehouse workers. Still with us, Catherine Ruetschlin, policy analyst at Demos, last year co-authored the report, “A Higher Wage is Possible: How Walmart Can Invest in Its Workforce Without Costing Customers a Dime.”

So, Theresa Traber, explain this precedent-setting lawsuit against Wal-Mart and one of its contractors.

THERESA TRABER: Good morning, Amy. This is an industry where retail giants like Wal-Mart and huge logistic companies like Schneider use middlemen to hire workers in their warehouses to evade wage and hour laws. And we—in our lawsuit, our workers were directly employed by subcontractors, who contracted with Schneider Logistics, who contracted with Wal-Mart to run its warehouses. All the goods here that go through these three warehouses are Wal-Mart goods. They come from the ports of Los Angeles and Long Beach. They come on in containers to the warehouses. They’re unloaded by our plaintiff workers. They are loaded by our plaintiff workers onto trucks to go to regional stores and regional distribution centers of Wal-Mart. So, what we—

AMY GOODMAN: I want to—

THERESA TRABER: What we have here is a—

AMY GOODMAN: I want to turn to the words of one Wal-Mart warehouse worker. This is Raymond Castillo, who works in the Inland Empire area of southern California.

RAYMOND CASTILLO: In the Inland Empire, where unemployment is high, a job in a warehouse is one of the most common jobs. All day we move Wal-Mart merchandise, but we are temporary workers. We get paid minimum wage with no health benefits. We have no job security, and we are treated with very little respect. I help Wal-Mart profits, but I can barely pay my bills.

AMY GOODMAN: That’s the worker Raymond Castillo, who works at Inland Empire area of southern California. Theresa Traber, again, the—what this has led to, this landmark settlement that Wal-Mart, with a contractor, has to pay, though it looks like it’s the contractor that’s paying the full $21 million.

THERESA TRABER: Yes. Under the settlement, which is a settlement between Schneider, Wal-Mart and the workers, Schneider is ostensibly paying the entire $21 million to the workers. However, we don’t know whether or not Wal-Mart is contributing to this settlement behind the scenes. What we do know is that the negotiated settlement settles all the claims, not only against Schneider, but also against Wal-Mart, and that both of those defendants in the case reserve their right to go after the subcontractors for any money that they paid in the context of settling this case.

AMY GOODMAN: What would it look like if Wal-Mart were in the dock?

THERESA TRABER: What do you mean?

AMY GOODMAN: I mean, if this had not been settled?

THERESA TRABER: Well, you know, Wal-Mart and Schneider both filed major motions in the fall of 2013 trying to get the court to dismiss them from the lawsuit, claiming that they could not be held as the employers of the subcontractor’s workers. And there was substantial evidence that was put in front of the court about the level of control that Wal-Mart and Schneider exercised over these workers’ day-to-day lives. In January of this year, Judge Christina Snyder, the judge in the case, ruled that both of them, both Schneider and Wal-Mart, had to stand trial to determine whether or not they could be held liable for all of the wage theft, all of the wage and hour violations, because of their joint employment status.

AMY GOODMAN: Do you think, in fact—do you think, in fact, Theresa Traber, that Wal-Mart is not paying?

THERESA TRABER: I can’t really speculate about that. I do know that it’s a three-corner deal, that it is not a deal just between the workers and Schneider, that Wal-Mart was a participant and a signatory on the settlement, the memorandum of understanding. They have to answer for that. From our point of view, the workers are going to be—are going to receive an excellent settlement, full compensation for their claims. And we are very pleased with this settlement, whoever pays it.

AMY GOODMAN: I wanted to go to Catherine Ruetschlin. The six Wal-Mart heirs are worth as much as the bottom 41 percent of American households put together. And this from The New York Times May 10th: Wal-Mart U.S. CEO William Simon gets a one-and-a-half-million-dollar bonus for missing expectations, while a worker gets zero.

CATHERINE RUETSCHLIN: That’s right. And I think that this settlement, coming on the heels of Obama’s visit, really highlights the problems associated with this narrow conception of sustainability as primarily a problem of physical capital allocation, when in fact your human capital allocation, how you treat your workforce, not just in terms of pay, but also in terms of scheduling and benefits and healthcare and things like that, really has an impact on the firm. You know, for Wal-Mart, they depend on this level of price competition all along their supply chain, but want to keep an arm’s length distance from the actual outcome. So this isn’t that different from wage theft cases against McDonald’s and Domino’s that have been going on over the last several months in the United States, where those firms have been implicated as—you know, as joint employers, as well, resulting in wage abuses and, in fact, law-breaking behavior. What the firms aren’t acknowledging is that they’re actually opening themselves up to a series of material risks associated with these practices, legal risks but also, you know, damage to their brand and things like that. So, you know, really, the idea that compensating your workers at the bottom has a payoff for the firm is—and that that’s a part of having a sustainable economy and sustainable investment, is really kind of blown wide open in this case.

AMY GOODMAN: And finally, Catherine, what do you think is most important to understand about Wal-Mart?

CATHERINE RUETSCHLIN: Oh, wow. Well, I think the most important thing to understand about Wal-Mart is that it’s the biggest employer in the United States, and the decisions that it makes spill over into the decisions made by firms all across the country and, in fact, the world. So their pay practices, their scheduling practices, these aren’t issues just for Wal-Mart workers and their families, but for the entire labor force and how we move our economy forward.

AMY GOODMAN: I want to thank you both for being with us. Catherine Ruetschlin, policy analyst at Demos, we’re going to link your report. And Theresa Traber, leading labor lawyer, who represented warehouse workers in this historic settlement.

That does it for our broadcast. We have a job opening for three part-time video news production fellows. Candidates should have video shooting and editing experience. Visit democracynow.org for more details.

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