Wal-Mart Agrees to $11 Million Settlement in Illegal Foreign Janitors' Class Action Lawsuit Holding Wal-Mart Liable for Its Contract Janitorial Firms' Violations of Federal Immigration and Labor Laws. (Zavala et.al. v. Walmart Stores, Inc. , U.S. D.Ct. D. N.J.) settled March 18, 2005).
The illegal immigrant janitors were employed by Wal-Mart's contract janitorial services companies. Wal-Mart was liable as a joint employer with 12 contract janitorial services firms. The janitorial firms were charged with criminal violations and were fined $4 million.
The Woes of WAL-MART: A Lesson In Independent Contractor Practices And Immigration Law (Non)Compliance
News headlines over the last 18 months have been sprinkled with reports of the federal government raiding and prosecuting employers for violations of the immigration laws. The government is looking beyond the mere labels of "independent contractor" to see if the employer had knowledge of its contractors' practices. In this type of environment, prudent employers who do not want to be the target of a federal investigation or prosecution will review their immigration law compliance efforts and make sure that they, and their executives, are not aware of violations by their contractors.
"Operation Rollback"
On October 23, 2003, federal officers from the Department of Homeland Security's Bureau of Immigration and Customs Enforcement (known as "ICE"; formerly known as the Immigration and Naturalization Service or "INS") entered 61 Wal-Mart® stores in 21 states nationwide and arrested more than 250 illegal immigrants. This plan of action was dubbed "Operation Rollback" undoubtedly as a pun on Wal-Mart's advertising emphasizing its rollback of prices. According to a press release posted on ICE's website on the day of the raids, the arrests were "part of an ongoing investigation into the illegal employment of unauthorized workers in this country."
According to law enforcement, these raids grew out of prior investigations in 1998 and 2001 concerning cleaning contractors at Wal-Mart retail stores. As for Wal-Mart, it has consistently maintained that the workers were employed by independent contractors that it hired to do cleaning services. However, the U.S. Attorney's Office issued a target letter to the retail giant that alleged that the company violated federal immigration laws, and a grand jury was convened in early December to consider the case against Wal-Mart. U.S. Attorneys and company representatives have remained closed-mouthed regarding the details of the grand jury meeting as required under federal rules surrounding grand jury secrecy. Whether or not Wal-Mart ultimately faces immigration-related charges or fines will likely turn upon whether Wal-Mart officials "knowingly employed" illegal immigrants. However, Wal-Mart officials have pledged their cooperation with federal prosecutors in the investigation.
RICO Charges
On November 10, some of the arrested immigrant janitorial workers filed a federal racketeering class action lawsuit against Wal-Mart in a New Jersey federal court, alleging that Wal-Mart violated the Racketeering Influenced and Corrupt Organizations (RICO) Act. According to the allegations in the complaint, all of the plaintiffs were undocumented aliens who worked for a contract cleaning service hired by Wal-Mart. All of these workers claim they were paid weekly compensation of $350-500 in cash, worked at least 60 hours per week, and were obligated to work 7 days a week. They also claim they received no overtime compensation, workers' compensation, or other benefits, nor did they have taxes or Social Security (FICA) withheld from their earnings.
The workers' complaint includes claims that Wal-Mart (a) engaged in federal "racketeering activity," including mail fraud, wire fraud, and bringing in and harboring aliens; (b) engaged in a federal racketeering conspiracy "for the purpose of defrauding and injuring the plaintiffs"; (c) conspired to violate the workers' civil rights by failing to pay them minimum wage, overtime, and by failing to provide them with workers' compensation and Social Security coverage; (d) failed to pay minimum wage and overtime under the Fair Labor Standards Act, and (e) committed other violations under New Jersey Wage and Hour Law and Anti-Discrimination Law.
The basis of the claims against Wal-Mart is that the company, as a joint employer of the workers, "engaged in and profited from a nationwide fraudulent scheme designed to defraud the United States government." In the lawsuit, it is alleged that Wal-Mart "routinely makes use of the labor of undocumented immigrants" and that these workers "present a ready pool of easily exploited labor."
What can you learn from Wal-Mart's plight?
ICE's raid on Wal-Mart and pending legal action against other large employers in the country indicate the federal government is increasing its immigration law enforcement activities. Employers should no longer turn a blind eye to their contractor's employment practices, and should make sure their own house is in order lest they be the next headline.