March 19, 2005 in Business

Wal-Mart fined in immigrant case

Associated Press
Associated Press photo

Wal-Mart must pay $11 million to settle federal probe into its use of illegal immigrants to clean floors at stores in 21 states.
(Full-size photo)

LITTLE ROCK — Wal-Mart Stores Inc. escaped criminal charges but agreed Friday to pay $11 million, a record fine in a civil immigration case, to end a federal probe into its use of illegal immigrants to clean floors at stores in 21 states.

A dozen contractors who actually hired the laborers for work inside stores for the world’s largest retailer agreed to plead guilty to criminal immigration charges and together pay an additional $4 million in fines.

“This case breaks new ground not only because this is a record dollar amount for a civil immigration settlement, but because this settlement requires Wal-Mart to create an internal program to ensure future compliance with immigration laws by Wal-Mart contractors and by Wal-Mart itself,” said Michael J. Garcia, assistant secretary for U.S. Immigration and Customs Enforcement.

“We plan to use this settlement as a model for future cases and efforts in worksite enforcement,” he said.

Wal-Mart received a target letter from a grand jury in Pennsylvania and was the subject of an October 2003 raid spanning 21 states and 60 stores. The raids led to the arrest of 245 allegedly illegal immigrants.

Wal-Mart, which has 1.2 million domestic workers, had pledged its cooperation in the investigation.

“We are satisfied that this is being settled as a civil matter,” Wal-Mart spokeswoman Mona Williams told The Associated Press from the company’s Bentonville headquarters. “Despite a long, thorough and high-profile investigation, the government has not charged anyone at Wal-Mart with wrongdoing.”

Federal officials said the fine money would go to the Treasury Forfeiture Fund and will be spent on “promoting future law enforcement programs and activities in this field by U.S. Immigration and Customs Enforcement.”

Williams said the government can spend the money for training and initiatives that “help make sure service companies or anyone else can’t prey on undocumented workers.”

“We think the money will be well spent,” Williams said.

Williams, in a conference call later, made reference to Wal-Mart’s “ongoing partnership with the government” and said the company is making a number of changes.

No longer does Wal-Mart employ outside contractors to clean its floors. Companies that do contract work for other chores will have stricter rules to follow to win those contracts, and upper management will have to approve contracts of more than $10,000, Williams said.

“We’ve put stronger internal controls in place so hopefully nothing like this would happen again,” Williams said.

The probe began in 1998 and ended with the big raids on Oct. 23, 2003.

Among those arrested in the raids were eight people who worked for Wal-Mart itself. Williams said the eight had been hired from floor cleaning companies as Wal-Mart began to clean its floors with its own workers. Williams said those workers had documents that appeared to be valid and said the law prevented the company from challenging those documents.

Williams said no executives or mid-level managers knew the contractors had hired illegal immigrants, a statement reflected in the consent decree.

Workers picked up in the October raids came from 18 different nations, including 90 from Mexico, 35 from the Czech Republic, 22 from Mongolia and 20 from Brazil, officials said. In all, two separate investigations resulted in arrests of 352 illegal immigrants contracted as janitors at Wal-Mart stores. Officials say a third of the workers have been deported to their home countries. Lawyers for some of the workers claim they worked as many as seven days a week, were not paid overtime and did not receive injury compensation.

An employer can face civil and criminal penalties for knowingly hiring illegal immigrants or failing to comply with certain employee record-keeping regulations.

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