WASHINGTON — Wal-Mart Stores Inc. agreed to pay the government $11 million to settle charges that it used hundreds of illegal immigrants to clean many of its stores, but an investigation concluded that the retailing giant didn't know the janitors were undocumented, two federal agencies announced Friday.
Wal-Mart escaped criminal prosecution in the case. But the 12 independent contractors who hired the illegal workers agreed to plead guilty to criminal charges and pay a $4-million fine.
The five-year investigation found that Wal-Mart had retained undocumented workers through independent contractors to clean nearly 1,000 stores, according to court documents released along with terms of the settlement.
In addition to forfeiting the $11 million, Wal-Mart -- whose revenue last year topped $288 billion -- agreed to end practices that lead to the hiring of undocumented workers, to verify that its contractors complied with immigration laws, and to educate its managers about legal hiring practices.
The agreement with the departments of Justice and Homeland Security stemmed from a case targeting Wal-Mart contractors that was referred to federal authorities in 1998 by the attorney general of Pennsylvania.
In October 2003, the federal government raided 60 Wal-Mart stores in 21 states, arresting 245 undocumented janitors.
Many of the workers were deported. They came from Europe, Central America, South America and Asia, said officials at the Bureau of Immigration and Customs Enforcement, part of Homeland Security.
At the time of the raid, the government said it was specifically investigating whether Wal-Mart executives were aware of the practice of employing illegal immigrants and were allowing contractors to proceed as part of a strategy to reduce its labor costs.
Wal-Mart, which trumpets its low prices, has been accused by labor activists and others of unfair labor practices. Employees have accused the company of forcing them to work overtime without pay, a charge Wal-Mart denies.
Thomas A. Marino -- the U.S. attorney for the middle district of Pennsylvania, who prosecuted the case -- said Friday he was confident that there was no criminal activity on the part of Wal-Mart and believed the company did not know of the violations.
"The law allows us to prosecute the individual employers who employed the illegal immigrants. Wal-Mart was not the employer. Wal-Mart reached an agreement with an independent contractor and the contractor hired these individuals," Marino said.
Michael J. Garcia, the assistant secretary of the Bureau of Immigration and Customs Enforcement, characterized the settlement as a "model for future cases."
"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," Garcia said.
Wal-Mart said it now used its employees to clean all of its U.S. stores, which include Sam's Clubs and Neighborhood Markets.
"Today we are acknowledging that our compliance program did not include all the procedures necessary to identify independent floor cleaning contractors who did not comply with federal immigration laws," Wal-Mart's general counsel, Tom Mars, said in a written statement.
The lawyer for Christopher S. Walters, the owner of the 12 cleaning contractors charged, declined to comment on the settlement.
"The real issue here is that Wal-Mart and a lot of big retailers hide behind these rogue contractors," said Stephen Lerner, director of the building service division of the Service Employees International Union. "The real question not answered here is how do these workers receive payment for the overtime, subminimum wage and being locked in stores overnight?"
Lilia Garcia, the executive director of the Maintenance Cooperation Trust Fund, a union-funded group that investigated wage violations concerning janitors working for California supermarkets, said the settlement showed that the government was "soft on business" and was "not serious in addressing the problem."
Wal-Mart faces a civil suit in New Jersey seeking reparations for workers who said they were underpaid.
"Now Wal-Mart is free of criminal concerns and can focus on reparations for the people who worked in their stores," said James L. Linsey, the lead lawyer for the plaintiffs in the suit.