Inspector general faults Wal-Mart labor-law deal

WASHINGTON — There were serious breakdowns in a government settlement with Wal-Mart Stores over child-labor-law violations, including allowing attorneys for the world's largest retailer to write key parts of the deal, according to a Labor Department inspector-general report Monday.

The inspector general attributed the problems to inadequate management controls and guidelines.

As a result, Wal-Mart received "significant concessions" in the $135,540 settlement made public in February, the report said. Among them: The Labor Department was required to notify the retail giant 15 days in advance of opening an audit or investigation, something that's inconsistent with guidelines for the department's Wage and Hour Division.

Wal-Mart, the world's largest retail company, also could avoid formal citations or penalties if it brought facilities into compliance within 10 days of being notified about a violation.

The report said the Wal-Mart deal was "significantly different" from other agreements the Labor Department has made with companies and included far-reaching restrictions on the government's ability to assess monetary penalties.

"These breakdowns resulted in [the Wage and Hour Division] entering into an agreement that gave significant concessions to Wal-Mart ... in exchange for little commitment from the employer beyond what it was already doing or required to do by law," the report said.

The report said it found no evidence of violations of federal laws or regulations. Nor did inspectors find evidence of pressure from internal or external sources during development of the agreement.

Wal-Mart spokesman Marty Heiers emphasized those points. "We continue to believe that the agreement was the appropriate course of action," Heiers said. "Our goal is to make sure our stores are in full compliance and that our associates are fully informed of all policies, regulations and laws that apply to the employment of workers who are 16 and 17 years of age."

But the top Democrat on the House Education and Workforce Committee, who sought the investigation, criticized the deal. "The Bush Labor Department chose to do an unprecedented favor for Wal-Mart, despite the fact it is well known for violating labor laws, including child-labor laws," said Rep. George Miller of California.

The settlement involved alleged violations at 25 stores in Arkansas, Connecticut and New Hampshire between 1998 and 2002 that had to do with teenage workers who used hazardous equipment such as chain saws, paper balers or forklifts.

Child-labor laws prohibit anyone younger than 18 from operating hazardous equipment. Bentonville, Ark.-based Wal-Mart denied the allegations but agreed to pay the penalty.

In a letter responding to the report, Victoria A. Lipnic, the Labor Department's assistant secretary for employment standards, agreed that more controls were needed in negotiating settlement agreements, and she said the recommendations were being implemented.

Lipnic disputed the inspector general's criticism of the deal, saying it was successful in securing penalty payments and agreements from Wal-Mart to change its policies.