Ethical Issues Surrounding Walmart

Ethical issues surrounding Wal-Mart Ronald L. Reeves Columbia Southern University Ethical issues surrounding Wal-Mart Sam Walton, founded Wal-Mart over forty years ago, where it started as a five-and-ten store in Bentonville, Arkansas (Stanwick & Stanwick, 2009). Since then it has become one of the largest retail stores in the world, with an estimated annual sales of close to $300 billion (Stanwick & Stanwick, 2009). His business philosophy was to provide low prices to its customers everyday (Stanwick & Stanwick, 2009).

With such tremendous success in profits and growth, it has also brought many challenges relating to ethical issues in regards to; off-the-clock-work, sexual discrimination, health benefits, the role of unions, use of illegal aliens, and issues relating to child and labor laws. It is the intent of this case study to identify the ethical issues Wal-Mart has faced, as well as, discuss four questions of thought. Off-the-Clock-Work

From 2000 to 2007, Wal-Mart has been in court facing numerous law suits, in which they have paid out millions of dollars, for violation of laws surrounding non-payment of overtime compensation to its employees (Stanwick & Stanwick, 2009). Several employees claimed that managers required them to work off the clock by requiring them to work after punching out their time card (Stanwick & Stanwick, 2009). If the employee refused to work after their shift and off the clock, then they would be threatened with termination of employment.

One of the many complaints include the use of “lock-ins” (Stanwick & Stanwick, 2009). According to Stanwick and Stanwick (2009) they stated, “Managers would lock the doors after the store had closed and would force the workers to stay in the store until all the work had been completed” (p. 410). Employees were also told that if they could not complete their assigned work in their eight hour shift, that they would have to remain at work, off the clock, until their work was complete.

It was evident that the mangers had no respect or appreciation for the employees, who should have been valued as stakeholders that contributed to the success of the store. Sexual Discrimination In 2001, Wal-Mart faced a lawsuit with regards to sexual discrimination for not promoting women to managerial positions and for not paying them a wage equivalent to what the male employees were making (Stanwick & Stanwick, 2009). Some of the facts that supported the lawsuit include; 65% of the hourly employees and 33% of the managers were women, and on average women received 6. % less in wages than their male counterparts received (Stanwick & Stanwick, 2009). One example of discrimination included a female employe being told that a man was promoted over her, who was qualified, because the man had to support his family (Stanwick & Stanwick, 2009). Another example of discrimination was when a women was told that a man was paid more becauase according to the Bible, Adam came before Eve. The managers involved in these and other sexual discrimination cases included in this lawsuit made poor ethical decsions by discriminating against its female employees.

Health Benefits Stanwick and Stanwick (2009) mentioned, “In 2003 Wal-Mart’s policy of lower costs in every part of its operation was highlighted based on the type of health benefits that it offered to its employees” (p. 413). New employees had to wait six months before being eligible for the health care benefit, and retirees were not allowed to keep their benefit (Stanwick & Stanwick, 2009). Wal-Mart’s payout for employee healthcare benefits in 2002, were 40% lower than the average that all companies in the U. S. ere paying and 30% less than their competive retailers (Stanwick & Stanwick, 2009). In an effort to keep health care costs down, Wal-Mart recommended to the board of directors that it should hire more part time employees and try to discourage unhealthy employees by requiring all employee’s responsibilities to include some type of physical activity (Stanwick & Stanwick, 2009). It is evident that Wal-Mart’s board of directors and upper management were more concerned with profit than the welfare of the employees. The Role of the Unions

In an effort to keep low prices for its customers, Wal-Mart kept its labor cost low (Stanwick & Stanwick, 2009). There has been a constant battle between Wal-Mart and its employees, who wanted to create a union. The purpose of the union was to ensure that employees, who were members of the union, would receive a wage that was competitive to others in the workforce. Stanwick and Stanwick (2009) stated, “In 2002 a comparison of wages for unionized workers and Wal-Mart employees showed that unionized Kroger employees would get four to five dollars an hour more than the Wal-Mart employees” (pgs. 15-416). It was discovered that Wal-Mart would discourage employees from forming unions, by firing those that promoted it (Stanwick & Stanwick, 2009). Of the contrary, the Wal-Marts in China were allowed to have unions, as they received pressure from the All-China Federation of Trade Unions which is belived to be apart of Chinese Communist Government (Stanwick & Stanwick, 2009). Use of Illegal Aliens In an efforet to keep their costs low everyday for its customers, Wal-Mart used a campaign slogan of “Roll Back the Prices,” but agian it came at the sacrifices of its employees.

Wal-Mart outsourced to third party contractors to hire janitors to clean its stores afterhours (Stanwick & Stanwick, 2009). To keep cost down, these third party contractors, with Wal-Mart’s knowledge, hired illegal aliens to clean the stores afterhours (Stanwick & Stanwick, 2009). This was discovered after federal agents, from the Immigration Servive, raided sixty Wal-Mart stores in an operations called “Operation Rollback,” in 2003 (Stanwick & Stanwick, 2009).

As a result of the raid, more than 250 illegal aliens were arrested, and Wal-Mart faced thiteen felony indictments and paid $5 million dollars in fines (Stanwick & Stanwick, 2009). Some of the illegal aliens also filed lawsuits that claimed they were forced to work every night and did not receive compensation for overtime (Stanwick & Stanwick, 2009). This was not only a violation of federal law, it also showed a lack of the citizenship principle where every employee should respect the law (Stanwick & Stanwick, 2009).

Child and other Labor Laws From 2000-2005, Wal-Mart was faced with fines and lawsuits pertaining to violations of child and labor laws. It was identified by audits, that employees under the age of eighteen were working past midnight, working during school hours, and working more than eight hours a day (Stanwick & Stanwick, 2009). Discovered were employees under the age of eighteen operating machinery that was dangerous, which included chainsaws and cardboard balers (Stanwick & Stanwick, 2009).

Also, exposed were employees who were not taking their breaks or given time off for a meal period (Stanwick & Stanwick, 2009). Questions for Thought 1. Are the ethical issues Wal-Mart faces really any different from other large retailers? I don’t think the ethical issues facing Wal-Mart are any different than that of its competitors. I do believe though that since Wal-Mart is considered the largest retailer and it promises to keep the lowest prices everyday for its customers that they are misusing the reliability principle of taking care of its employees.

Stanwick and Stanwick (2009) stated, “Traditional violations of the reliability principle would include breaching a promise or contract or not fulfilling a promised action” (p. 9). An example of this is when Wal-Mart managers did not pay their employees for working overtime. 2. Wal-Mart officials have stated that they don’t feel women are interested in management positions at the company. Do you agree or disagree? I disagree. Based on the case study, it seems to me that women are discouraged from seeking positions in management through sexual discrimination.

If women were not oppressed by comments such as a man needing the promotion over a qualified woman because he needed to support his family, or that a man works at Wal-Mart for a career and women do not, then they may feel more competitive for managerial positions (Stanwick & Stanwick, 2009). Wal-Mart’s managers in this case demonstrated a failure in the dignity principle by not respecting all of its employees (Stanwick & Stanwick, 2009). 3. Wal-Mart is continually criticized for its health care policy. Is this really and ethical issue?

Why or why not? I do not think that Wal-Mart’s health care policy is unethical and meets the requirement of the fairness principle. Of the four types of fairness’s: reciprocal, distributive, fair competition, and procedural fairness, they demonstrate the distributive fairness (Stanwick & Stanwick, 2009). They do provide both part time and full time employees with a choice to enroll in its health care policy and at different levels of coverage (Stanwick & Stanwick, 2009). The also have provided a health savings account for its employees.

Stanwick and Stanwick (2009) stated, “In a Wal-Mart survey of 220,000 employees, it was found that 90% were covered using Wal-Mart’s health insurance” (p. 415). The 10% that did not have their insurance were either covered under their spouse’s insurance, insured by Medicaid, or through a military health insurance plan (Stanwick & Stanwick, 2009). 4. Should Wal-Mart be concerned about unionization of stores since allowing unionization of workers in China? Wal-Mart should be concerned about unionization in stores outside of China, as they have allowed it in China.

This is a double standard that is not fair to the other Wal-Mart employees throughout the world. The case study identified that employees who were in favor of a union were either discouraged or terminated (Stanwick & Stanwick, 2009). The National Labor Relations Board, ordered Wal-Mart in 2003 to negotiate with former employees of the meat market, whom formed a union, to bring back the meat department that was originally closed when the employees formed a union (Stanwick & Stanwick, 2009).

This thought encompasses the values of the fairness principle, with regards to the reciprocal fairness (Stanwick & Stanwick, 2009). Wal-Mart should address the thought of a union fairly as the employees seek a way to have competitive wages. Conclusion While Wal-Mart is considered to be one of the highest grossing retailers in the world, which strives to offer the lowest prices everyday to its customers, it has done so by adversely affecting their employees.

The management’s efforts to keep prices down resulted in poor ethical choices which resulted in employees being forced to work beyond their normal working hours and not be compensated for their overtime. In addition, many employees were forced to work during their breaks or denied mealtime breaks, in which they were not compensated for either. Sexual discrimination was also an issue, as women were discouraged or discriminated against for seeking management level positions.

Although Wal-Mart did offer health benefits to its employees, they were questionable and came at a high cost for low paid employees. Wal-Mart also set a double standard by allowing its stores in China to have a union, while it discouraged or terminated employees in other parts of the world who were in favor of developing a union. Child labor laws were another issue for Wal-Mart, as they required employees under the age of eighteen to work late at night, working during school hours, working more than eight hours a day, and operating dangerous equipment in some of its stores.

The results of their unethical acts and violations of federal laws, has caused Wal-Mart to review its policies and identify ways to improve its ethical principles concerning the treatment of its employees. Stanwick and Stanwick (2009) mentioned, “The managers at Wal-Mart agreed to meet with the ten rank-and-file workers every week from each of its 4,000 stores to get employee feedback” (p. 419). This program that Wal-Mart created is called “Associates out Front” (Stanwick & Stanwick, 2009). Reference Stanwick, P. A. , & Stanwick, S. D. (2009). Understanding business ethics. Upper Saddle River, NJ: Pearson-Prentice Hall.