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    Wal-Mart to Run Checks on New Workers; Reports 'Record' 2Q Sales

    BENTONVILLE, Ark. - In a bid to "help preserve associate integrity," Wal-Mart Stores, Inc. said yesterday that it would institute a new policy of background checks for all new employees at Wal-Mart and Sam's Club locations, effective next month.

    BENTONVILLE, Ark. - In a bid to "help preserve associate integrity," Wal-Mart Stores, Inc. said yesterday that it would institute a new policy of background checks for all new employees at Wal-Mart and Sam's Club locations, effective next month. According to the retailer, the program will start in the Midwest and be rolled out nationwide over the next few months. The program's launch follows a year of pilot programs across the United States.

    Sue Oliver, s.v.p. of people for Wal-Mart's Stores Division, said in a statement: "By adding another level of security to our hiring practices, our associates can be assured that we are strengthening our efforts to try to intercept anyone who might otherwise damage [their] integrity. We also believe this will add yet another level of comfort for our customers."

    Oliver conceded that initiating a program in all 50 states was a complicated matter, since "[a] process that meets the requirements in one geographical area may actually violate a rule in another." However, she noted, "We have worked hard to create a process that, abiding by the regulations of their particular community, fairly screens all applicants."

    As permitted by local law, the program will check job applicants' backgrounds for various criminal offenses, and anyone discovered to have lied on his or her application will be rejected for employment, which is the policy at Wal-Mart. The company said it would institute background checks at other divisions soon.

    David L. Barron, a labor attorney practicing with Epstein Becker Green Wickliff & Hall, P.C., told Progressive Grocer: "Wal-Mart's new background check decision is one that will likely lead the way for many other retailers to follow suit. The biggest barrier in the retail industry has been the cost of these checks, in light of the large number of hires. Now costs have come down and technology has improved, making the decision an easier one."

    Similar observations were made by Daniel Butler, v.p. of retail operations for the Washington, D.C.-based National Retail Federation, who added that such implementations were "still an investment and still costly."

    Barron attributed Wal-Mart's decision to concerns about food safety. "Wal-Mart is now a large player in the nation's food chain and cannot afford to have an employee, whether terrorist or not, take actions that would injure a large number of people. Background checks are a prudent step to minimize liability if an event like this occurred."

    He pointed out, however, that terrorists with no arrest records or using assumed names could "beat the system." Butler said that retailers had always been interested in providing a safe environment for customers, and that determination had only grown since the events of 9/11.

    Barron concluded: "Background checks are only an additional tool, and not a substitute, for good hiring procedures. The best way to avoid hiring bad apples is common sense and sound judgment by those doing the hiring."

    Also yesterday, Wal-Mart posted record sales and earnings for the second quarter ended July 31. Net sales were $69.7 billion, an increase of 11.3 percent over the second quarter of fiscal 2004. Income from continuing operations for the quarter was $2.7 billion, an increase of 16.1 percent from $2.3 billion in the second quarter of fiscal 2004. Diluted earnings per share from continuing operations were 62 cents, up from 52 cents per share in the same prior-year quarter.

    Wal-Mart president and c.e.o. H. Lee Scott said in a statement: "I am pleased to report another quarter of record sales and earnings. This quarter earnings grew faster than sales, and we improved operating profits in all of our divisions. We consider this a solid performance in a difficult retail environment. Now at the halfway point, we are on track for another record year."

    In further Wal-Mart news, the Los Angeles City Council, by a vote of 12 to one, preliminarily approved a new law to keep Wal-Mart and other retailers from constructing so-called "big-box" supercenters (over 100,000 square feet) in the city of Los Angeles unless the companies can demonstrate that their stores would provide jobs and other economic benefits to the community. If the ordinance is confirmed by the council next week, it would likely become effective in September.

    -- Bridget Goldschmidt

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