Walmart Worker Rights Violations and Corporate Governance Reform

Foundation of the Study

This study examines the legislative and judicial climate that enables corporations like Walmart to engage in practices that violate workers' rights. The popular consensus is that Walmart, the largest retail store in the United States, displays an inordinate disregard for the human dignity and morale of its employees and, despite continual litigation, continues to blatantly violate the legal rights of its employees. Walmart faces charges of violating the Federal Fair Labor Standards Act by asking management to adjust time sheets so that overtime will not need to be paid and so that all employees will work under the hourly limit required by the union in order to obtain membership. Employees were insured, without their knowledge, against their own death by Walmart. The company was named beneficiary; following the death of an employee, the entire benefit amount was retained by the corporation. Not a single cent was offered to the family members of the deceased.

Walmart has deep pockets and little regard for lawsuits. The Human Rights Watch (2011) stated that Walmart employs strategies that are illegal, patently violating employees' rights. Walmart is alleged to purchase clothing and other cheap items from shops in foreign countries where few safeguards for workers exist. A television broadcast showed Walmart transacting business with a shop that employs children to make clothing (Sellers, 2005). Fair Labor Standards lawsuits have been filed in many states, some of which have been settled to avoid encouraging similar actions in other states. Many women employees of Walmart have filed complaints of sexual discrimination, citing instances of unequal pay, blocked opportunities for promotion, and grievance policies that lead to harsher treatment by superiors.

The Walmart grievance policy is tantamount to a policy for culling troublesome employees. Aggrieved employees have made their stories public, explaining that when employees do work up the nerve to complain, the outcome is never a good one for the employee. Figuratively, an employee's first grievance becomes the last complaint that will be heard at the retailing giant. Literally, as reported by many employees, filing a grievance results in a path of increased discrimination marked by a series of demotions, denials of promotional opportunity, and eventual termination.

On behalf of 1.6 million women who worked at Walmart from 1998 to 2001, Betty Dukes filed a class-action lawsuit — Betty Dukes v. Walmart Stores (2004) — that eventually made its way to the highest court in the United States. Walmart had been fighting the lawsuit since 1999. The Supreme Court was due to write a decision on the case in June of 2011 (Liptak, 2011). Betty Dukes's story highlights the difficulties that can befall female employees of the Walmart behemoth. But in a larger sense, her story exemplifies the corporate climate that enables executives and stockholders to focus inordinately on corporate profits and the building of stockholder wealth while sacrificing the public good and ignoring the employment laws of the land.

Background: The Betty Dukes Case

Betty Dukes is a 52-year-old African-American woman who was hired by Walmart in 1994 as a part-time cashier. She was, by all reports, an admirer of the Walmart enterprise and its founder's visionary spirit (Featherstone, 2004). After a year of employment, Dukes was promoted to a full-time position as customer service manager and granted a merit pay raise. In this new position, ostensibly under different supervisors, Dukes began to experience harsh discrimination and was denied training opportunities that would have enabled her to advance further — opportunities that were granted to her male peers. Once Dukes began to express complaints about the discrimination she was experiencing, the discrimination escalated to harassment. She was penalized for minor offenses that went unnoticed when performed by male co-workers (Luce, 2005).

As Dukes continued to press for equal treatment, she was denied promotion and demoted back to her job as a cashier. An appeal to the Walmart district office brought no relief. Dukes was humiliated by the demotion and lost significant wages due to fewer hours and lower hourly pay. The discrimination she experienced extended to other employees in her workplace; four new management positions were never posted but were filled by men (Featherstone, 2004). As of the 2004 publication of Featherstone's book, Betty Dukes worked as a greeter for Walmart, served as an associate minister at her Baptist Church, and was the lead plaintiff in the class-action suit filed against Walmart for sex-based discrimination (Featherstone, 2004).

Dukes's workplace discrimination problems entered a new phase when the Supreme Court was called upon to weigh the issues surrounding the case. The class-action suit posed several dilemmas to the Court. The plaintiff had to provide sufficient grounds for the Court to identify adequate commonality to satisfy the tests for a class-action suit (Liptak, 2011, March 29). The Court also needed to determine whether the social framework analysis proposed by the plaintiff — intended to show how Walmart's policies may have led to discrimination — was a viable approach applicable to the class-action suit (Liptak, 2011, March 27). The defendant's attorneys asserted that it was not an appropriate or well-researched application of the social framework; the plaintiff's attorneys argued that it was. Both sides enlisted the support of attorneys and social scientists with experience in the approach.

The Supreme Court was not tasked with determining whether Walmart had, in fact, discriminated against the women who worked for them (Liptak, 2011, March 29). Instead, the debate shifted to a new case, Walmart Stores v. Dukes, No. 10-277, in which the justices had to determine whether the hundreds of thousands of women workers could demonstrate that their experiences were sufficiently common to allow them to join together in a single lawsuit. In filing her case as a civil action, Betty Dukes opened a Pandora's box of judicial considerations playing out against a backdrop in which, in Justice Samuel A. Alito's words, potentially "every single company… typical of the entire American workforce… is in violation of Title VII" (Liptak, 2011, March 29) of the Civil Rights Act. As will be seen, this observation is, in fact, the driver for the research proposal in this paper.

The Court showed itself to be largely pro-business (Times Topics, Justice Kennedy, Justice Roberts, Justice Scalia, 2011), save for a few recent rulings in favor of plaintiffs suing for employment discrimination (Liptak, 2011). Several of the justices took issue with the way the defense portrayed Walmart's employment policies, noting that those policies could not simultaneously be subjectively discretionary and exemplify a corporate culture that permeates and dictates managerial policy across the corporation's many stores and affiliated supplier and distributor relationships (Featherstone, 2004). Yet new Walmart managers receive handouts guiding them on how to select, motivate, and inspire employees while holding the line against unionization (Featherstone, 2004).

The justices were sensitive to the ramifications of their decisions for other American businesses. Substantive discord arose from the fact that the parties originally harmed were individuals working for an immense international corporation, yet the justices seemed preoccupied not only with the impact on the defendant in this case but with other corporations that could potentially find themselves similarly named in a lawsuit (Liptak, 2011, March 29). In taking this stance, the Court could very well protect the status quo — in which women are routinely the target of severe discrimination (McGeehan, 2004; DealBook, "suit," 2010; DealBook, "3 women," 2010) — and create a chilling effect on other female claimants who have experienced discrimination. The Court, which was the most conservative in living memory (Times Topics, 2011), would, by whatever action it took, create precedent.

The issues related to the violation of workers' rights at Walmart are not new to this country. In fact, they hark back to a not-so-distant past when American workers learned the hard way that if they were to be safe in their work environments, earn living wages, and be free of workplace discrimination, they would need to unionize. The relationship between workplace safety and collective bargaining may best be put in perspective by recalling the Triangle Shirtwaist Factory Fire in New York State (Estrin, 2011).

On March 25, 1911, 146 young women were burned to death or died jumping from a multi-story building to escape a fire in which the exit doors and stairwell doors had been locked by managers — an event that would prove to be the fourth-highest industrial loss of life in an industrial accident in U.S. history (Remembering, Cornell Web exhibit, 2010). This tragedy subsequently led to legislation protecting factory workers and the establishment of the International Ladies' Garment Workers' Union. While many manufacturing burdens have since been passed to foreign manufacturers running sweatshops, the welfare of U.S. workers remains firmly dependent on employment-related decisions made and implemented on domestic soil.

The same mean-spirited attitude toward women workers that contributed to the Triangle factory fire — the same disregard for health and safety that caused managers to lock exit and stairwell doors, and the same willingness to sacrifice workers to improve profitability — is evident in the culture and operations of the giant Walmart enterprise. But more than a handful of young women sewing garments in a sweatshop are caught up in the Walmart debacle. More than one million workers are employed at Walmart, the majority of whom are women (Gary, 2011; Jay, 2011).

Women Workers' Rights Issues at Walmart

Part and parcel of the workers' rights violations at Walmart is the patent discrimination against women workers. "In 1999, women constituted 72% of Walmart's hourly employees, but only 33% of its managerial employees" (Bhatnagar, 2004). Employee grievances of any type at Walmart appear to result in punitive managerial actions, up to and including dismissal. Grievances related to sexual discrimination in wages and promotions are treated particularly harshly, such that a female employee at Walmart who files a grievance may find herself locked into a spiral of wage-diminishing demotions and a complete loss of opportunity for promotion. Discrimination against women at Walmart is so common and so blatantly executed that a class-action suit has been brought against the company. In fact, numerous lawsuits have been filed against Walmart charging sexual discrimination and violations of Equal Employment Opportunity law.

According to the Berkeley Women's Law Journal (2004), Walmart paid its employees about one-third less than what similarly situated unionized employees earn. On average, a Walmart employee earned $8.00 per hour, with an average take-home paycheck of approximately $256.00, equating to a yearly salary of $13,312.00 (Brownstein, 2005). The poverty level in America at that time was $14,630.00. An hourly pay violation charge under the Federal Fair Labor Standards Act accuses Walmart of working its employees overtime and then bringing in management to adjust the time sheets.

Critics of Walmart say that the health care plans offered to employees are "skimpy" (Jay, 2011) and that employees may have to pay deductibles of $2,000 or more annually to obtain health care services. Given that a salaried employee at Walmart may earn just $23,000 to $25,000 per year, this deductible is prohibitively high (Jay, 2011). Brownstein (2005) wrote that Walmart's quest to reduce labor costs was the catalyst for requiring employees to pay 20 percent of their weekly salary for health coverage. Over the preceding 12 years at the time of writing, Walmart had raised the cost of premiums for its employees by 200% (Brownstein, 2005).

The company founded on Sam Walton's old-fashioned values of putting people first (Kennon, 2011) seems to be at a crossroads: does it continue down the road that has put it in this position, or does management take a hard look at where the company is headed?