Legal News

The Wal-Mart Labor Settlement: A Preemptive Strike Against Unionization?

By Dan Slater

Wal-Mart’s agreement yesterday to pay a whopping $640 million to settle the vast majority of 76 suits alleging that it routinely underpaid its employees is being viewed by many as just one step — albeit a large one — in a push to overhaul Wal-Mart’s image.

The company, for instance, is in the process of remodeling most of its U.S. stores and, notes the WSJ, has adopted a soft, sunny new logo (pictured, right). In a statement regarding the settlement, Wal-Mart’s GC, Tom Mars said: “Many of these lawsuits were filed years ago and are not representative of the company we are today.”

But there may be something else going on. Remember the Employee Free Choice Act? Last month, the day after Barack Obama won the presidency, the Law Blog spoke to Littler Mendelson’s Jay Sumner, a D.C.-based labor partner, who helped us speculate on what designs the President-elect may have for the American workplace. When we asked Sumner what employment-law-related change we might expect to see under the new administration, he said there could be a softening on unions as Obama is a proponent of several pieces of legislation — i.e. the Employee Free Choice Act — that make it easier to organize.

To wit, the Journal today writes:

Paul M. Secunda, an associate professor at Marquette University Law School, suggested Wal-Mart wanted to settle the lawsuits not just to avoid potentially more costly defeats in the courtroom, but to resolve issues that might be used to argue for passage of the Employee Free Choice Act. The legislation, expected to be considered by Congress next year, is fiercely opposed by Wal-Mart because the company worries it will make it easier for workers to unionize.

Secunda said: “This is part of their overall strategy to get their labor house in order, and compared to what unionization might cost them, I think they probably realized it was a small price to pay.”

In other labor news, yesterday a National Labor Relations Board judge ruled that Starbucks had illegally fired three baristas and otherwise violated federal labor laws in seeking to beat back unionization efforts at several of its Manhattan cafes. Here’s the NYT story.

The NLRB judge, Mindy E. Landow, also found that Starbucks had broken the law by issuing negative job evaluations to union supporters and prohibiting employees from discussing the union even though the employees were allowed to discuss other subjects not related to work.

“While we respect the N.L.R.B. process, we’re disappointed with the decision, and we intend to appeal it to the next stage in the process,” Tara Darrow, a spokeswoman for Starbucks, told the Times. Darrow said the company was proud of its tradition of communicating with its employees directly, and not through a union.

Full post as published by Law Blog - WSJ.com on December 24, 2008 (boomark / email).