Lawyers for Wal-Mart were able to write their own settlement agreement with the federal government's Employment Standards Administration (ESA) after having been cited for allegations that the company violated child labor laws written in 1938, according to the Inspector General at the Labor Department. Wal-Mart lawyers dictated the terms of the settlement agreement and included provisions that require the federal government to notify the company 15 days in advance of any inspection or audit it plans to conduct of Wal-Mart facilities for "any potential violation" of child labor laws or any wage or labor dispute.

Although the agreement did not violate any laws, Wal-Mart was able to write terms that allow it to avoid paying civil money penalties in the future. The agreement also allows Wal-Mart to jointly write press releases with the Department of Labor over any similar types of labor investigations. "Breakdowns in the settlement agreement process resulted in the Wage and Hour Division (WHD) entering into an agreement that gave significant concessions to Wal-Mart," says the IG audit.

The Wal-Mart agreement contained "significant provisions that were principally authored by Wal-Mart attorneys and never challenged by the ESA's (WHD)," says the Inspector General. "The lack of a formal process for management review and approval [of the settlement agreement] resulted in inadequate review of key provisions of the Wal-Mart agreement."

The agreement signed by the two parties is also "significantly different" from all other similar types of agreements entered into by the Wage and Hour Division. "Specifically, the Wal-Mart agreement had the most far-reaching restrictions on WHD's authority to conduct investigations and assess civil money penalties," says the IG. "In our view, the Wal-Mart agreement may adversely impact WHD's authority to conduct future investigations and issue citations or penalty assessments and potentially restricts information from the public."