Corporate Accountability and WorkPlace

More Big Trouble for WalMart's Exploitative Profit Model

The company's strategy of domestic outsourcing appears to be crumbling under legal scrutiny.

The courts have apparently figured out WalMart’s super sneaky strategy of domestic outsourcing (contracting out parts its U.S.-based supply chain to other companies to skirt responsibility for labor infractions), which could produce a host of legal troubles for the nation’s largest company.

A federal judge has ruled that WalMart can be included in the impending warehouse workers’ class-action lawsuit about a plethora of alleged labor abuses, which occurred in a WalMart warehouse in Southern California.

The workers have long voiced concerns and outrage over alleged violation of labor laws in these warehouses, which run the gamut from unsafe conditions, dangerous equipment and below-minimum-wage pay. In the fall, these warehouse workers—along with those outside Joliet, Illinois, orchestrated a series of strikes, which kicked off the wave of national and international protests and employee walkouts.

The warehouse workers in Southern California brought a class-action lawsuit against Schneider Logistics, the contract company that runs the warehouse where 1,800 people work. The warehouse packs and ships goods to WalMart retail stores across the United States, but because the warehouse is not run directly by the retail giant, it was unclear whether the company could be named directly in the suit.

A federal judge has now decided that WalMart can be named as defendant in the suit, a clear victory for the workers.

"It has become increasingly clear that the ultimate liability for workplace violations rests squarely on the shoulders of Wal-Mart, and not just on the contractors and subcontractors that act as a buffer," Michael Rubin, an attorney for the workers, told the LA Times earlier this fall.

This decision, coupled with the wave of strikes in the U.S. and in nearly a dozen countries abroad, has begun to threaten WalMart’s policy of domestic outsourcing and contracting, which has been a cornerstone of its business plan. In a separate issue, the company’s international dealings have come under fire after a policy of widespread corruption and bribery in Mexico was revealed earlier this winter.

The impending class-action lawsuit will be yet another problem that WalMart will have to deal with in the coming months. How it will be fit into executives’ busy schedule remains to be seen; the company recently declined an invitation to the White House for a discussion on gun violence, citing scheduling conflicts.

Laura Gottesdiener is a freelance journalist and the author of "A Dream Foreclosed: Black America and the Fight for a Place to Call Home," forthcoming from Zuccotti Park Press.

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