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Thread: Wal-Mart: "Dead Peasant" Policies and Child Labor!

  1. #1
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    I'm not allowed to bash Wal-Mart at home anymore, so bear with me while I get this rant of my chest!

    Wal-Mart is one of many large U.S. companies in recent years that have taken out policies on the lives of employees, ranging from executives to workers on the bottom rungs of the pay ladder, with the goal of collecting benefits when the employees die.

    Companies call the policies corporate-owned life insurance, or COLIs. Critics call them dead-peasant policies.

    "It was just a rather sneaky backdoor investment scheme," Fairley said. "The people had no way of knowing that was going on."
    her e's the link

    Wal-Mart agreed to pay $135,000 to settle federal child-labor charges. The 24 violations, which occurred at stores in Arkansas, Connecticut and New Hampshire, involved 85 teenage workers who used hazardous equipment such as a chain saw, paper balers and fork lifts. Child labor laws prohibit anyone under 18 from operating hazardous equipment.
    just a little bit more here

    Does anybody besides me see a sickening and deeply upsetting connection here?

  2. #2
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    Probably a business decision, they make more money violating the law than it costs them in fines.
    Called Risk Management I think.

  3. #3
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    I doubt it's illegal. All those leftist movie moguls bought/buy policies on their actors.

  4. #4
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    There's a difference. A studio has an insurable interest in the life and health of an actor on contract to that studio - even in such matters as Betty Grable's legs.

    "Key man" policies on senior executives are also common, where an individual's skills ate thought critical to a business.

    Whether a corporation has an insurable interest in the life of an ordinary employee beyond the cost of business interruption and the cost of replacement is very much more doubtful

  5. #5
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    I NEVER buy anything at Wal-mart. They're too predatory, too rapacious, the worst of modern capitalism.

  6. #6
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    The reason they were fined in NH is because a child was operating a chain saw!!!

  7. #7
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    Yeah but look at all the pennies we're saving! Where did I read they've had enough of American employees - they gripe too much - and are now recruiting immigrants?

  8. #8

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    The giant corporate sweatshop.

    The most recent Canadian Walmart story: A Walmart in the province of Quebec just recently ratified a union. Walmart responded by announcing the store will close... not because of the union of course, but because it's not making money.

    The union is a large canadian one, and is taking Walmart to court to prove their claim.

  9. #9
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    I'm not up on Canadian law, but it seems to me that Walmart can tell them to stuffit, they don't have to prove anything. Unless there were government incentives to open there.

  10. #10
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    Under American law, they're free to close but have to remain closed for a year and a day, in order to defeat the union. This is one of the reasons for building stores so close together.

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    In the jurisdiction in question, Quebec, you caní t close down simply because your employees have unionized. Wal-Mart claims it canít make money in a unionized environment, so it will close the store. However the union points to the fact that all of Wal-Mart's local competitors use unionized employees, and that those other retailers still manage to turn a profit. They also point out that Wal-Mart claims to be one of worlds the most efficient retailers, which no doubt it is, however it claims it wouldnít be able to complete against itís ( less efficient) unionized competitors. What Wal-Mart should have said, is that it canít make enough money in a unionized environment.

  12. #12
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    I was just talking to a friend about something similar to this and he told me that you can take out a life insurance policy on anyone. Anyone know if this is true? You'd think you'd have to show some kind of dependence.

    As far as walmart taking out life insurance on their employees, I don't think I have a problem with that. If their employees die, they take a financial hit. If it is cost effective for them to do so, they can take out a life insurance policy to cover the potential losses. It's basically the same decision you make when deciding to take out life insurance on your family (or yourself for your family). I know the place I work for would be set back quite a bit if I died. Aside from providing them with an incentive to "whack me", I could understand them taking out a policy (although I would like to know about it).

    On the other hand, if Walmart is really just trying to cash in on employees dying that's kind of creepy. But I don't think that would be a good business practice. Remember, they have to pay the premiums, and the actuarialists(?) account for stuff like that. In other words, I would think that with the number of employees Walmart has, the premiums they pay would exceed the payout they receive from insurance claims.

    I'd like to offer the opinion that this is just more people bitching about Walmart - not that I want to put myself in the position of defending Walmart.

  13. #13
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    The more I think about this, the more interesting it becomes to me.

    "Under the bill, employers would not be able to obtain insurance on employees who are not considered key personnel, such as owners or partners - anyone whose death would cause financial loss to the company."

    I disagree that the death of a rank and file employee would not cause financial loss. I doubt they are taking out billion dollar policies on stock boys - any idea of how big ($) they are? If it was not in Walmart's financial best interest to do so they wouldn't be taking out the policies since they have to justify paying the premiums. This implies that they would take a financial loss and that in itself is a gauge on whether or not the employee's death would cause financial loss. It seems to me that there is a market solution to this and it should not require legislation.

    "No policy could be taken out on rank-and-file workers unless they gave written consent."

    This goes back to what my friend told me (if true). This should hold true for anyone taking out a policy on anyone else who isn't in the family (e.g., I want to know if forum member #4567 has a policy on me - no offense to #4567, whoever you are).

    "The six families who were part of the lawsuit argued that Walmart never told workers about the life insurance policies, something the company disputed."

    Other than this being creepy, how is the employee being expoited? How does the employee suffer any loss? It's a deal between the insurance company and Walmart. Even in ugliest light, they are making a bet on whether or not the employee is going to die. My family is doing the same thing with me.

    "It was just a rather sneaky backdoor investment scheme," Fairley said.

    Out of all the investment opportunities availible to Walmart, playing life insurance lottery is the best one for them? Is walmart really making more money with its employees dying than living? This is something else. Can Walmart and the insurance companies both make money on this? (remember, actuarialists aren't one of the most overpaid professions for nothing).

  14. #14
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    Originally posted by Victor:
    Under American law, they're free to close but have to remain closed for a year and a day, in order to defeat the union.
    All any business has to do to fend off a union is refuse to hire union workers. Absent a collectve bargaining agreement, no union can force itself on any business.

    JT
    Member AFM-CIO

    [ 02-24-2005, 11:39 PM: Message edited by: High C ]

  15. #15
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    In English law, a policy placed where there is no insurable interest is void for illegality as being contrary to the Gaming Act - because, indeed, it is a mere bet. A corporation does have an insurable interest in the losses that it might sustain on the death of an ordinary worker, but these are seldom great. Applying the normal principles of insurance buying, an orgainisation with very many workers is better off self insuring this modest risk rather than dollar swapping with an underwriter and effectively paying the underwriter's administrative costs.

    So, at first glance, Walmart look, not greedy, but inept.

    However, in Japan it is normal for corporations to place not only life, but also personal accident cover on the lives of their workers and to pay the policy proceeds over to the worker or to his/her dependants in the event of death or injury or even illness, regardless of fault.

    This is why Japan is such a litigation-free society.

  16. #16
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    What if current employees decide to join...even join enmass ?

  17. #17
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    Originally posted by PeterSibley:
    What if current employees decide to join...even join enmass ?
    Employees are free to join any club or association they like, outside of work. But the terms of their jobs were set when they were hired, and cannot be changed after the fact unless the employer agrees to renegotiate those terms. The mere act of joining a union means nothing by itself.

    In cases where a workforce has something of a monopoly on the needed labor or skill, they may have the muscle to force an agreement. They can threaten to withdraw their services from the employer enmasse unless they enter into collective bargaining.

    It all depends on the supply/demand of labor. With unskilled work such as at Wal Mart, it's generally easy to replace those workers, so they have little power to force Wal Mart to accept a union agreement, unless unemployment is very low in a given area.

    It's a very different story with highly skilled professions. Workers with unique abilities are much harder to replace, and therefore have greater ability to makes demands of an employer.

    Supply/Demand

  18. #18
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    High C,

    A few of questions.
    In the USA is labour law strickly a federal matter, or do some of the states have different labour laws?
    If a work area is unionized, does everyone who works there have to be members of the union?
    Once a workplace is unionized, does the employer have to negotiate with union or can they by pass the union and negotiate directly with each employee?

  19. #19
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    Originally posted by GregW:
    High C,

    A few of questions.
    In the USA is labour law strickly a federal matter, or do some of the states have different labour laws?
    If a work area is unionized, does everyone who works there have to be members of the union?
    Once a workplace is unionized, does the employer have to negotiate with union or can they by pass the union and negotiate directly with each employee?
    Greg, let me start by saying that I'm no labor lawyer! But I am a union member, and have some understanding of the broad issues.

    The answer to your first question is "both". There are both Federal labor laws, and state laws to consider. (doesn't that help complicate things? )

    Some US state are what's called "right to work" states. This means, simply, that no one can be required to join a union to hold a job. That theoretically union members and nonmembers can work side by side on the job. As a practical matter, though, this rarely works out. As you can imagine, tensions can be high in such a case, as union members who pay dues and do the hard work of agreement bargaining come to resent those who piggyback onto their efforts.

    Labor law is complex and somewhat varied by state, but one constant is that there is still a free market throughout the nation. No employer can be forced by law to do business with a union. There are exceptions in the public sector, which frankly blow my mind, but private business can take it or leave it, as the realities of the supply/demand market dictate.

    Once a given workplace is unionized, terms are negotiated between the employer and the union for ALL members. Individual members do not have the opportunity to negotiate their own deal. Everyone takes whatever the union and the employer work out. If they don;t like the terms, their only option is to quit.

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