Wage Theft Allegations At Walmart Subcontractor Lead To Big Settlement

Warehouse workers in Walmart’s supply chain who say the logistics company they worked for was systematically stealing their wages are getting a $4.7 million settlement check.

A group of nearly 600 workers sued California-based Schneider Logistics for docking their paychecks illegally and for failing to pay overtime. Schneider Logistics allegedly forced workers to sign legal forms affirming that they were voluntarily forgoing meal breaks, even though some of the workers did not understand the forms and were not provided with Spanish-language copies of the documents.

Schneider Logistics is a subcontractor that “effectively runs the facilities for Walmart, but staffs them in part through temporary labor firms,” according to the Huffington Post. Allegations of labor law violations are common at Walmart itself, and federal labor regulators announced last month that they will prosecute the company for several such violations. The company has been hit with another wave of strikes in nine different states in recent weeks as workers agitate for better treatment and livable wages.


Walmart was not a party in the lawsuit that led to the new settlement, and a spokesperson noted that the company recently began a program of independent audits for its third-party logistics contractors that is aimed at curbing abuses of the sort alleged in the Schneider case.

But like other retail giants, Walmart’s business model depends upon cutting labor costs at warehouses. The most basic way to cut those costs is to run workers ragged, and news reports in recent years have brought attention to the brutal conditions in these retail sweatshops. But another way to reduce logistics labor costs is to break the law and engage in wage theft of the type allegedly employed by Schneider.

California, home to the so-called “Inland Empire” of warehouses that are a key link in American commerce, has a lousy track record when it comes to successfully enforcing wage theft laws. From 2008 to 2011, employers stole $390 million worth of pay that workers earned. Just half was ever recovered, and even when workers were able to prove wage theft and win a legal judgment in their favor they rarely saw a dime of what they were owed: 83 percent of successful wage theft claims failed to produce money for the wronged workers.

Wage theft steals more money than all store robberies and bank heists combined. Crackdowns on wage theft in liberal bastions like New York City and Chicago may seem unremarkable, but Houston recently passed one of the strictest wage theft laws in the country, suggesting that efforts to constrain the kinds of abuses that allegedly underlie the Schneider settlement are spreading.

At the federal level, however, violating labor laws still seems to be good business. A new report from Senate Democrats found 32 different corporate giants that won federal contracts despite being among the worst wage and hour violators in the country from 2007 to 2012.