California warehouse workers can sue Walmart over alleged abuse of “permatemps”

A federal judge in California recently held that workers suing Wal-Mart Stores, Inc. and one of its warehouse operators, can go forward with their case to trial on the question of whether Walmart and the warehouse operator are liable as “joint employers” for alleged violations of hundreds of Southern California warehouse workers’ rights.

In making her determination to allow the workers to sue Walmart, the judge focused on the “economic realities” of the workplace and evidence showing that Walmart and its subcontractor, Schneider Logistics Trans-Loading and Distribution, controlled the terms and conditions of work performed by warehouse workers—who were officially employed by labor service subcontractors as, what is increasingly referred to as, “permatemps.”

The workers in the case filed a proposed class action in 2011 alleging violations of federal and state wage and hour law, including violations of the minimum wage, overtime pay, and wage statements.

Workers also claimed they were forced to work under unbearably hot and dusty conditions, performing heavy physical labor—often without breaks—inside metal containers in the sun, on shifts that lasted more than 12 hours.  Even though the workers are, officially, not employed by Walmart, the workers alleged that Walmart controls every detail of its warehouse workers’ jobs and strictly monitors compliance.  In other words, the workers argue that they basically function as Walmart employees, and that Walmart should not be able to avoid responsibility by putting blame on the underfunded subcontractors it uses to staff its warehouses.

Walmart argued it should not be a defendant in the case.  The judge disagreed, pointing out that Walmart owned or leased the warehouses in question, set strict productivity standards the workers were required to meet, controlled workers’ schedules, including a move to an alternative workweek, and controlled the rate and method of the workers’ pay by pressuring Schneider to minimize its costs and pay subcontractors on a per-container basis.

If Walmart is found to be a “joint employer,” it will be liable for the labor violations the workers have proved.  This ruling is a milestone in the effort of workers’ advocates to push liability for poor wages and working conditions up the retail supply chain, to the big-name retailer at the top—here, Walmart.  The case is:Carrillo v. Schneider Logistics Trans-Loading & Distrib., C.D. Cal., No. 11-cv-8557.

By Lisl Duncan | January 24, 2014

Legal Developments