Wal-Mart Stores Inc. (WMT), the world's largest retailer, escaped criminal charges when it agreed to pay $11 million, a record fine in a civil immigration case, to end a federal probe into its use of illegal immigrants as janitors.
Additionally, 12 businesses that provided contract janitor services to Wal-Mart will pay $4 million in fines and plead guilty to criminal immigration charges, officials said.
Wal-Mart's shares edged down 73 cents, or 1.4 percent, to $51.60 on the New York Stock Exchange (search).
The deal resolves a more than four-year-long Department of Justice (search) investigation into the employment practices of the company's former floor-cleaning contractors.
"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," said Michael J. Garcia, assistant secretary for U.S. Immigration and Customs Enforcement (search).
"We plan to use this settlement as a model for future cases and efforts in worksite enforcement," he said.
Wal-Mart received a target letter from a grand jury in Pennsylvania and was the subject of an October 2003 raid spanning 21 states and 60 stores. The raids led to the arrest of 245 allegedly illegal immigrants.
Wal-Mart, which has 1.2 million domestic workers, had pledged its cooperation in the investigation.
"We are satisfied that this is being settled as a civil matter," Wal-Mart spokeswoman Mona Williams said. "Despite a long, thorough and high-profile investigation, the government has not charged anyone at Wal-Mart with wrongdoing."
No longer does Wal-Mart employ outside contractors to clean its floors. Companies that do contract work for other chores will have stricter rules to follow to win those contracts, and upper management will have to approve contracts of more than $10,000, Williams said.
"It is a lot of money, but I think that is because it is designed to get attention and remind businesses everywhere that they have a duty to ensure their outside contractors are following federal immigration laws."
In two separate investigations, authorities uncovered the cases of an estimated 345 illegal immigrants contracted as janitors at Wal-Mart stores. Many of the workers worked seven days or nights a week without overtime pay or injury compensation, attorneys said. Those who worked nights were often locked in the store until the morning.
Wal-Mart Stores, based in Bentonville, Ark., had sales last year of $288.19 billion.
In 2001, authorities arrested an estimated 100 illegal immigrants at Wal-Mart stores in Pennsylvania, New York, Ohio and Missouri. Last year, on Oct. 23, federal agents raided 60 Wal-Mart stores in 21 states, netting 245 immigrants who were placed in deportation proceedings. ICE said the workers came from 18 different nations, including 90 from Mexico, 35 from the Czech Republic, 22 from Mongolia and 20 from Brazil.
Officials said at the time of the raids the investigation involved wiretaps that revealed Wal-Mart executives were aware that the subcontractors used illegal workers. Once the raid began, Wal-Mart told its executives to preserve documents. Federal agents didn't wait and moved in on part of the company's Bentonville headquarters, taking boxes from the office of a midlevel executive.
An employer can face civil and criminal penalties for knowingly hiring illegal immigrants or failing to comply with certain employee record-keeping regulations. But the settlement spared Wal-Mart of any criminal charges, though it still faces a civil suit on behalf of the immigrants that is pending in New Jersey.
The federal settlement also directs Wal-Mart to train all current and future store managers to prevent employing, hiring or recruiting illegal immigrants, and to comply with ongoing investigations of cleaning contractors previously used by the company.
Reuters and the Associated Press contributed to this report.