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October 11, 2005

Wal-Mart Responsible for its Subcontractors

One part of the corporate shell game in the modern economy is companies like Wal-Mart hiring subcontractors, then turning a blind eye as workers are exploited and denied the minimum wage or other protections under the law. Companies like to argue they are not legally responsible for actions of those subcontractors.

Well on Friday, a federal judge certified a class action against Wal-Mart by undocumented workers across the country who had faced a rage of abuses while working for janitorial companies hired by Wal-Mart to clean its stores. "[Judge Joseph Greenaway] rejected Wal-Mart's assertion that since the janitors worked for contractors rather than Wal-Mart directly, Wal-Mart was not their employer."

Whether the employees of a subcontractor are also the employees of the part firm is always a fact-intensive inquiry in these kinds of cases, but it's heartening that the judge in this case is giving these workers the chance for relief in court.

The judge also affirmed that workers, no matter their legal status, have the full right to receive any wages illegally withheld. Many of these workers were deported after the federal raids on Wal-Mart that led up to these lawsuits, but they still have the right to those funds. And since Wal-Mart is accused of even deeper violations, including false imprisonment by locking employees up in stores at night, they may even be able to collect punitive damages against the company.

The most controversial part of the lawsuit was a RICO racketeering charge against Wal-Mart for conspiring to hire illegal workers. That charge didn't survive this round before the judge, but may be reintroduced again in a different form. Most immigrant advocates are a bit troubled by the idea of making immigration violations a predicate act for RICO conspiracy charges, so while such a charge could lead to triple damage charges against Wal-Mart, I'm not so unhappy with those charges losing at this point.

But the key success was sending a message to employers that using the legal game of hiring subcontractors won't save them from legal responsibility if they participate in abusing workers rights. We need more reforms to strengthen that responsibility under the law, but this decision will help.

Posted by Nathan at October 11, 2005 07:20 AM