Last month a group of warehouse workers in California gained a major victory for fair and equitable working conditions. Schneider Logistics, a distribution subcontractor, agreed to pay $21 million in wage and hour violations dating back to 2001. The case also has implications for corporations who outsource their warehousing functions to a third party.
Schneider operates three warehouses in Mira Loma, CA that are contracted by national retail giant Wal-Mart. In October 2011, the California Department of Labor Standards Enforcement conducted a raid on the facilities. More than $1 million in civil fines were issued for inadequate recordkeeping. That same month, a group of six workers brought suit against Schneider to recover unpaid wages along with penalties and damages. It was later elevated to the status of a class-action lawsuit.
At issue were allegations that “lumpers”, workers who manually load and unload shipping containers, were often forced to work off the clock and denied overtime pay as required by law. Wal-Mart sought to be removed as a defendant, stating that they didn’t technically employ the workers. The judge ruled otherwise, stating that they could be held accountable since they had personnel on site setting productivity metrics and other standards.
While Wal-Mart outsources the warehouses to Schneider, they in turn outsource staffing to two other subcontractors who reached a separate settlement earlier. The outcome is seen as a message to companies who try to deflect responsibility for working conditions onto multiple layers of subcontractors.
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