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The Mechanics
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Labor & Worker Rights Thu Dec 10 2009

Wage Theft: SelectRemedy Warehouse Workers

The Big Blue from Bentonville relies on its supply chain for its enormous profitability. The company constructs enormous regional distribution centers and automate their inventory system (in part using RFID technology) to load trucks with exactly the products that a store is selling, and their trucks are dispatched at regular times on regular routes, replenishing supplies steadily and precisely, allowing the individual stores to eliminate storage space in favor of floor space. It's an impressive system, designed by Chief Information Officer Linda Dillman, the unheralded genius behind the company's ridiculous profits.

The other, more important element behind the Bentonville Monster's profitability is their ability to maintain a razor thin margin across a huge breadth of volume. The profit per unit sold is small--but the amount sold is enormous. Obviously, having an innovative supply chain is a critical part of this. The other part is pulling out all stops to keep labor costs down.

The company pulls this off by applying intense pressure on store managers to keep labor costs down by setting unrealistic downward expectations of labor costs. While they expect sales to increase, they expect labor costs to decrease--which any small businessperson could tell you is the opposite of reality. As a result, store managers feel pressured to do things like force workers to work off the clock, through their breaks, and split their checks to avoid overtime payments. Reports of cashiers wetting themselves for lack of bathroom breaks or going into diabetic shock as a result of blood pressure dips pop up in lawsuits all over the country. The indignity of at-will employment.

The situation is similar at the warehouses and distribution centers that are arguably even more important to WM's business model. Today at 11:30, a group of workers at Big Blue's Elwood, Illinois (southwest of Joliet) warehouse announced a class action lawsuit against SelectRemedy, a temporary labor contractor that provides labor for the warehouse operation there. SelectRemedy, in serving this business model, is being accused of paycheck splitting, the tactic of creating artificial pay periods in order to avoid overtime payments.

Well, what else is poor ol' Biggest Retailer on the Planet supposed to do? They need to maintain those profit margins, or else...their profits will be slightly smaller.

"[They are] the richest company in the world, but the people who distribute their products are treated like slaves," says Ruben Bautista, a plaintiff in the suit, in a statement.

The language may be a bit strong, but the anger is understandable. This is a retailer that abused Vlasic pickles and shattered Rubbermaid. What would they do to a supplier that owed them money?

SelectRemedy did not respond to an email requesting comment.

The suit is being coordinated by Working Hands Legal Clinic, Chicago Workers Collaborative and Warehouse Workers for Justice.

See Mechanics' previous coverage of the wage theft issue here.

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Just saying / December 10, 2009 12:57 PM

How is this a case study on wage theft if it is merely an allegation being filed within a court of law?

It seems to be a misrepresentation, don't you think? Putting the cart before the horse...

Ramsin / December 10, 2009 1:59 PM

Fair point. Edited to change.

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