This month Wal-Mart (WMT) found itself on the defending end of another massive employee class action suit in California when a California judge certified a class of 10,000 employees who think Wal-Mart broke the law when it refused to provide suitable seating for its cashiers who requested it. Another day, another Wal-Mart class action employee lawsuit.
Wal-Mart's response to this latest class action certification was not that it provided appropriate seating within parameters of existing laws. Instead the response from Wal-Mart's legal team was that the class shouldn't have been certified at all, and instead, each cashier should have to file and fight an individual lawsuit. Logically it seems that Wal-Mart would prefer to just fight one lawsuit instead of fielding 10,000 individual claims. But probably legal actions work just like coupons for the world's largest retail chain. When you make the "deal" available to the masses, you're gambling that only a small percentage will actually take you up on the offer.
Publicly Wal-Mart is not denying that it has consciously chosen to deny seating to its cashiers. Reportedly Wal-Mart's argument against providing seating is that cashiers need to be able to move around to look inside carts, stock shelves, and greet customers.
So to follow that argument through to the end, Wal-Mart believes that if its cashiers are given an opportunity to sit down at any time during their work shift, that the cashiers will then lose their ability to ever stand up again. As if the cashiers are going to say, "No, I won't go stock those shelves or greet those customers because since I have a stool, my job is to now sit on my stool for my entire shift." Flimsy argument, I would say, Wal-Mart.
The point of contention in this case seems to be a confusion between the Americans With Disabilities Act (ADA) and California state law. ADA legislation mandates that "reasonable accommodation" be made to employees with "disabilities." Of course, with the increase in the number of employee lawsuits filed related to ADA legislation, the definition of a "disability" seems to be getting looser by the day and by the lawsuit.
However, California state law about seating in a retail environment is much broader and not necessarily connected to "disabilities" at all. Very simply and without qualifications, The California Industrial Welfare Commission Wage Order 7 says this...
"1. All working employees shall be provided with suitable seats when the nature of the work reasonably permits the use of seats.
2. When employees are not engaged in the active duties of their employment and the nature of the work requires standing, an adequate number of suitable seats shall be placed in reasonable proximity to the work area and employees shall be permitted to use such seats when it does not interfere with the performance of their duties."
So, disability or not, California says retail employees should be provided the opportunity to sit down at any time that it doesn't interfere with their work. Why? Because California says so. Wal-Mart is taking the position that it shouldn't have to comply with the California Industrial Welfare Commission's rules. Why? Because Wal-Mart says so.
The appropriate name for the legal battle should be The State With the Biggest Population in the U.S. vs. The Corporation With the Biggest Revenue in the U.S. Speaking of annual revenue, California's annual revenue of $97 billion is less than the $113 billion that Wal-Mart collects at its cash registers every quarter. So the state of California is the legal David to the goliath Wal-Mart.
To avoid this legal battle altogether, Wal-Mart could probably have purchased 10,000 stools from its third world supply chain for about $1 each. But instead Wal-Mart decided that its opinion about suitable seating took precedence over the opinion of California agencies and lawmakers. The threat of a $100 fine per employee per pay period since 2007 didn't scare Wal-Mart. It's just another game of Legal Chicken that Wal-Mart is known for playing around the world.
It will be interesting to see if Wal-Mart is able to once again bully its way around the legal playground in California enough to wear the class action legal team down, avoid substantive penalties, or force the state of California to change its requirements regarding employee seating altogether. It's really a battle of People vs. Money, so it's probably pretty easy to predict the way things will go.
In addition to the suitable seating lawsuit, the perpetually busy Wal-Mart legal team is currently defending itself against an individual employee lawsuit filed recently for malicious prosecution and against a suit filed by a group of warehouse workers claiming poor working conditions and safety violations. A judge ruled last week that even though Wal-Mart does not directly employ the warehouse workers, the company could still be named as part of the lawsuit because it owns and/or leases the warehouse facilities where the bad working conditions allegedly exist.
Wal-Mart is also on the legal offensive with employees, filing lawsuits against groups that are daring to protest against Wal-Mart's working conditions and employment policies. A suit against the United Food and Commercial Workers International Union (UCFW) in March, and a separate suit filed this month against OUR Walmart group organizers both seek injunctions to stop protest activities from happening in and around Wal-Mart stores and at the upcoming Wal-Mart shareholders' meetings. Wal-Mart leaders don't really address the issues fueling the protests are valid. They just want the courts to help them shut the protestors up. That seems right.
And then there's the tragic Bangladesh factories where employees burned to death while creating the garments that would stock Wal-Mart shelves. The Bangladesh tragedy is not a legal battle as much as it is a moral debate. Wal-Mart's stance is that they weren't Wal-Mart's employees, so what happened at the factory is neither Wal-Mart's fault nor responsibility. So... the official ethical position from the world's largest retail chain is... What happens in Bangladesh stays in Bangladesh? It's so curious that Wal-Mart has never earned a spot on the Most Ethical Retail Companies list.
Certainly Wal-Mart is not the only major U.S. retail chain that is being taken to court by its employees. Just this month, the Wet Seal (WTSL) chain agreed to pay $5.5 million to settle a racial discrimination lawsuit that had been filed by three of its former black managers. A wage-and-hour lawsuit against Russell Stover was also filed this month by current and former Russell Stover employees who claim they have been misclassified as "exempt" employees and should be paid overtime. Rite Aid (RAD) already settled an employee lawsuit earlier this year similar to the Russell Stover suit after assistant store managers claimed they were misclassified as "exempt" and were due overtime pay.
Retailers large and small must pay attention to employee legal actions large and small because each legal battle sets a precedent for every retail company in the world doing business in the U.S. But because Wal-Mart is the defendant more often than any other retail company, the Wal-Mart legal team has the most influence in defining labor laws for the entire U.S. retail industry. In essence, with every lawsuit that Wal-Mart defends, the entire U.S. retail industry is being aligned behind the ethics, human resources philosophy, and employment practices that Wal-Mart is willing to fight for.
Depending on what you believe to be true about how Wal-Mart regards its employees (and the factory workers employed by its suppliers) this could be a terrifying thought for the future of retail employment in the U.S.
There are two sides to every court case and certainly not every employee lawsuit filed against Wal-Mart has merit. But the sheer number of employee lawsuits filed against Wal-Mart makes you wonder if it wouldn't be more productive for the retailer to reallocate at least a portion of its legal budget to positive employment practices. Isn't it at least a little bit embarrassing to the leaders of Wal-Mart to count the number of people who feel justified in seeking legal revenge because of what what they experienced while working behind a Wal-Mart nametag?