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Focus: Distribution/Materials Handling

Feature Article from Our Distribution and Materials Handling Subject Area - See All

From SCDigest's On-Target E-Magazine

Oct. 19 , 2011

Logistics News: New Allegations of Abusive DC Conditions in Import DCs in LA Area Run by Schneider Logistics for Walmart

Temporary Agency Impact Logistics Providing Staffing to DC Fined $500,000; Monkey Business with Piece Rate Pay, Very Hot Operating Conditions


SCDigest Editorial Staff

Just a few weeks ago, found itself embroiled in a mini-scandal when workers in an Allentown, PA distribution center went to the media with claims of brutally hot working conditions and labor standards that were impossible to meet.

Amazon issued an apology of sorts, and said it had spent $2.4 million "urgently" installing new air conditioning systems at the Allentown DC and three others. (See in Hot Corner after Reports of Sweltering DCs, "Urgently" Buys $2.4 Million in Air Conditioners.)

SCDigest Says:

A spokeswoman for Schneider said in a statement on the California investigation that "We believe that we are in full compliance with applicable laws and regulations. We expect our vendors to fulfill their responsibilities as well.
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Now, on the heels of that incident, a small group of workers at a Walmart import DC being run by Schneider Logistics have filed a class action lawsuit for what workers say are abusive conditions.

A small group of workers at the DC in the Inland Empire area not far from the Port of Los Angeles allege in the suit that they are often not receiving pay for all the hours they have worked or the proper "piece rate" pay, are required to work in dangerously hot conditions, and are threatened with termination if they complain to superiors. The trigger for the action appears to be an investigation by the California Labor Commission finding unsatisfactory conditions in several of the area's DCs, resulting in a large fine to one staffing agency for improperly documenting the basis for its workers wages.

The suit was brought against Schneider and three agencies who supply temporary labor to the facility. Walmart has not been named in the suit.

The suit alleges that workers at the DC "spend their workdays performing strenuous, unskilled physical labor in an environment where the temperature often exceeds 90 degrees."

It further charges that when workers questioned their paychecks relative to not being paid for all hours they had worked or number of pieces they had moved, DC managers "routinely responded with threats of retaliation and actual retaliation, including by sending the inquiring workers home without pay, refusing to give them work the next day ... and imposing other forms of discipline on them."

The workers actually held a press conference Tuesday in downtown Riverside, where Guadalupe Palma, the regional director of Warehouse Workers United, announced the lawsuit. Warehouse Workers United advocates on behalf of Inland warehouse employees.

“We are here to expose the dirty little secrets taking place inside of these buildings by large corporations like Walmart, Schneider and the staffing agencies that abuse these workers day in and day out,” Palma said, according to a Lost Angeles area radio station. “Unfortunately we know that these types of conditions are not uncommon in the warehouse industry."

As with the DC, there appears to be some fire behind this smoke.

Last week the California Labor Commissioner said that after an inspection of distribution centers in Riverside County, investigators uncovered numerous labor law violations. It said the distribution centers were operated by Schneider Logistics and had over 200 employees. Many of those employees were hired by temporary staffing agencies such as Premier Warehousing Ventures and Impact Logistics.

(Distribution/Materials Handling Story Continues Below)


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The California Department of Industrial Relations’ Division of Labor Standards Enforcement was said to have uncovered multiple potential violations.

Impact Logistics was issued a $499,000 citation for failure to provide itemized wage statements to employees. It was also issued a Notice to Discontinue labor law violations for failure to maintain time records. Premier Warehousing Ventures was issued a Notice to Discontinue reporting time violations and other violations.
“Our investigation is ongoing,” said California Labor Commissioner Julie Su. “We will assess all wages owed to the workers and work with the employers to ensure compliance going forward.”

“Warehouse workers do some of the most backbreaking jobs in our economy. Their work is often hidden from public view and there is constant pressure to work faster, which can lead to abuse. In this case, workers were paid piece rate to unload containers. Piece rate workers must receive at least minimum wage and overtime for all hours worked,” Su added. “California law also requires that all employees receive wage statements that explain the basis for their paycheck. This is to help workers identify if they've been cheated out of their hard-earned wages. Proper wage statements were not provided to these workers.”

“There have been times when we’ve worked up to 16 hours a day and we don’t even earn a minimum wage,” said Juan Chavez, one of the workers in the class action suit, said at the press conference, through a translator. Another issue, he said, is that there is no way to tell how the amount on his pay stub was calculated. "We don’t know how that amount has been arrived at too tally our wages,” he said.

This pay issue could be very interesting, as almost surely records would eventually allow a valid comparison of the pieces moved and hours worked versus what the workers were actually paid.

In fact, Tennessee-based Impact Logistics touts the piece rate program in its promotional pieces.

“Our trained and qualified associates are paid on a performance pay scale based upon work completed,” says the narrator in a company video, heard over Bachman Turner Overdrive's classic "Takin’ Care of Business." “The result is highly motivated, fairly compensated, loyal associates working in your operation,” the video adds.

Impact’s chief operating officer Brett Veach says the company is cooperating with the audit.

Dan Fogleman, a Walmart spokesman, told Huffington Post last week that the company is "not involved in this matter." He added, "The contracts we have in place with third parties require that they follow the law, and that’s something we fully expect."

A spokeswoman for Schneider said in a statement on the California investigation that "We believe that we are in full compliance with applicable laws and regulations. We expect our vendors to fulfill their responsibilities as well."

Earlier this summer, Warehouse Workers United had alleged abusive conditions in many Inland Empire DCs, and asked the California OSHA office to investigate conditions there.

With these two recent incidents, companies across the country should take a look at their DC operating conditions and the practices of their staffing agencies and third parties to ensure satisfactory working conditions and legal compliance.

What do you think of this latest incident of what appears to be abusive conditions in a major DC? How common is abuse by warehouse staffing agencies - if at all? Let us know your thoughts in the Feedback section below.

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