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Wal-Mart Memo May Raise Litigation Risk

Employee-rights lawyers say the retailer could face additional discrimination claims.

October 28, 2005|Molly Selvin and Lisa Girion | Times Staff Writers

Lawyers for employers and employees agree: A leaked Wal-Mart memo proposing ways to cut healthcare costs could mean big legal trouble for the world's largest retailer.

Even if the company accepts none of the questionable suggestions it contains, the memo will furnish plaintiffs' attorneys with evidence to argue that Wal-Mart Stores Inc. discriminates against some workers, said Jeffrey Winikow, a Century City employee-rights lawyer. "The memo is a cesspool of legal violations."

The memo -- acquired and publicized this week by Wal-Mart Watch, a nonprofit group allied with labor unions -- virtually guarantees that the retailer, which already is fighting class-action lawsuits over its hiring and promotion practices, will face a slew of new discrimination claims, Winikow said.

Writing to Wal-Mart's board of directors in advance of their meeting next month, Executive Vice President of Benefits Susan Chambers proposed that benefits be redesigned to attract a "healthier, more productive workforce," potentially saving $670 million by 2011.

Chambers suggested offering savings on healthy foods and other benefits that appealed to healthy workers. She also said all jobs could be redefined "to include some physical activity (e.g. all cashiers do some cart gathering.)"

"These moves would also dissuade unhealthy people from coming to work at Wal-Mart," she wrote.

Employment rules that discriminate against workers on the basis of age or a permanent physical disability run afoul of federal and state laws, whether the discrimination is intentional or not. The laws usually require employers to make reasonable accommodations for a worker's physical disabilities, including chronic medical conditions such as diabetes or heart disease.

Wal-Mart spokeswoman Sarah Clark said the company's intent "was not to dissuade unhealthy people to apply for jobs at Wal-Mart.... It was to provide programs to our associates that help them live longer or healthier lives."

Lawyers point out that not all discrimination is illegal. For example, cities may require firefighters to be strong enough to rescue an injured person.

But if an employer adds unrelated activities to a job for the goal of screening out protected classes, that could be a problem, said Brad Seligman, an Oakland-based lawyer representing women in a class-action gender bias suit against Wal-Mart.

Seligman said plaintiffs' lawyers might have a hard time convincing a judge that the memo was relevant in a lawsuit if the company does not implement the recommendations.

But Winikow pointed to a 2000 age-discrimination case in which an employee of Nestle claimed that he was terminated based on comments and a memo from executives at the company's Swiss headquarters favoring younger managers. A Los Angeles jury awarded the man $5 million in damages even though his California supervisors denied that the policy was adopted in the United States.

Colleen Regan, a Santa Monica lawyer who represents employers, agreed that even if Wal-Mart's memo was just brainstorming, the statements "could be admissible evidence that, in fact, Wal-Mart had a policy of preferring younger, healthier workers over older, less healthy workers."

An official with California's Department of Fair Employment and Housing, which enforces state anti-discrimination laws, called the memo "very alarming."

Janie Hickok Siess, assistant deputy director of program and policy development at the agency, said Wal-Mart couldn't suddenly require an older cashier with a heart condition -- who had performed well -- to round up shopping carts and then fire her if she failed to perform.

The company must reasonably accommodate that employee, she said, unless Wal-Mart could prove it would otherwise be a hardship for the company.

Wal-Mart's memo sounds familiar to Los Angeles worker-rights lawyer Rene Barge. She remembers being contacted by a group of older women who had done office work for years at a department store chain.

The women told Barge that the chain had implemented a policy requiring that all employees be trained to perform duties on the sales floor -- one of several cost-cutting moves she believed was designed to shed older, more expensive workers.

When the supervisors began ordering the women to stock shelves and ring up sales, Barge said, they quit or were fired.


Times staff writer Abigail Goldman contributed to this report.

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