Connecticut Questions Federal Wal-Mart Deal

Connecticut's governor ordered inspections of Wal-Mart stores as the state's attorney general accused the U.S. Labor Department of cutting a "sweetheart deal" with the retailing giant on child labor law violations.

"The teams will be enforcing compliance with child labor laws and making certain that all the rules are being adhered to," Gov. M. Jodi Rell said in a statement today.

The Labor Department published a press release on Monday, announcing it had fined Wal-Mart $135,540 for violating child labor laws in Connecticut, Arkansas and New Hampshire. The department said it had conducted 25 investigations involving 85 workers between the ages of 16 and 17 who allegedly performed prohibited activities such as operating forklifts, using chain saws and operating or unloading paper balers. In one case, a minor was allegedly using a chain saw to cut Christmas trees.

State officials are upset because the agreement between the Labor Department and Wal-Mart gives the company the right to collaborate with the government on any public statements about the fine. The settlement agreement also stipulates that the Labor Department will give Wal-Mart 15 days advance notice before any follow-up investigations by the Labor Department's Wage and Hour Division during the next 12 months.

The actual settlement was signed Jan. 11, more than a month before the public announcement.

"There was no press release, no public announcement, they concealed the whole settlement until the department was compelled to reveal it," said Connecticut Attorney General Richard Blumenthal.

A Labor Department official said the delay resulted from an agreement that Wal-Mart would pay the fee before any announcement was released to the public. The official said Wal-Mart had 30 days to pay the penalty after it signed the agreement Jan. 11. The company paid $135,540 on Feb. 11, exactly 30 days later. Wal-Mart spokesman Gus Whitcomb said the penalty was paid in late January.

As for the Wal-Mart's right to consult on the public statement, paragraph eight of the settlement agreement reads, "Prior to the execution of this agreement, the WHD [Wage Hour Division] and Wal-Mart will develop the terms of any joint or separate statement(s) issued by either party announcing this Agreement to the media and/or the public."

A Labor Department official said today that the government did not consult with Wal-Mart before releasing Monday's statement, and the inclusion of language specifying Wal-Mart's right to help develop a public statement may have been inadvertent.

The inspector general for the Department of Labor confirms that it is conducting an ongoing review of how the agreement was reached and refused any further comment.

What's not mentioned in the press release from the Labor Department is that the violations allegedly occurred between 1998 and 2002. But Blumenthal told ABC News that the first time anyone in his state learned of the ongoing investigation was in a report in The New York Times last weekend.

"We have no idea how the investigation started, why it took four years to conclude, who were the children in involved, what they were doing, what were the dates. All key details have been concealed by federal government," Blumenthal said. "It's plainly a sweetheart deal."

Blumenthal has filed two Freedom of Information Act requests with the Department of Labor seeking more information about the alleged violations in his state. According to the Labor Department, there were 21 investigations conduction in Connecticut, three in Arkansas, one in New Hampshire.

Additionally, he has also contacted attorneys general in other states and is trying to enlist them in his effort to explore exactly what happened.

Wal-Mart's Gus Whitcomb said the company reached an agreement with the Department of Labor without admitting wrongdoing, and the company has since adopted enhanced training and procedures. In response to the news of the follow-up investigations announced in Connecticut, Whitcomb said the "issues have been resolved with the Department of Labor agreement. But if the state proceeds, then we will cooperate with them."