Tag: retail

Virginia inspectors have levied $1.9 million in fines against Dollar Tree and Family Dollar in the past 10 years for health and safety violations, according to a VCIJ at WHRO analysis. Federal inspectors have forced the stores’ parent company to pay millions more. Now, worker advocates and activist investors have increased calls to improve store and warehouse conditions.

This story was originally published by Virginia Center for Investigative Journalism at WHRO.

A state inspector showed up at a Dollar Tree store in Manassas in July 2022 and found shipping boxes stacked more than 8 feet high, perilously dangling over workers’ heads in the back room. Mountains of other boxes, thrown into jumbled piles, blocked the rear exits, leaving no pathway out in case of a fire.

The inspector for the Virginia Occupational Safety and Health Program reported roaches crawling on the floor and dead in traps in multiple spots in the store, according to his write-up from that July 28 visit. Behind a cash register, rodents had chewed Hershey’s chocolate bars and left trails of droppings. Across the store floors, tiles had cracked and broken off, and the inspector learned that workers and customers tripped on them, he wrote in his report. The store bathroom had possible signs of mold and brown stains on its ceiling from water damage.

“Employees subject to disease transported by rodents and insects,” inspector Christopher D’Anna wrote in his report. “Inside the back room, the sides of the walkways were full of haphazardly stacked freight that was susceptible to falling on employees as they walk past.”

An assistant manager of the store, at 8315 Sudley Road, had called D’Anna’s office a day earlier to complain about the store conditions, prompting the inspection. The inspection resulted in seven citations against Dollar Tree, including failure to keep exit routes clear, a lack of an effective pest prevention program, and employees’ exposure to potential injury from unstable stacks of boxes. State regulators handed down nearly $400,000 in penalties — among the largest amounts imposed on the company in Virginia for a single store inspection in the past 10 years, according to state and federal health and safety data.

The problems recorded in Manassas, though, were hardly new or unusual for Dollar Tree, whose stores have drawn sanctions from safety inspectors nationwide. The Manassas store was just one of nearly 600 Dollar Tree and Family Dollar stores and warehouses cited for unsafe and hazardous conditions between 2014 and 2024, according to inspection data from across the country.

The hazards regulators have found at Dollar Tree stores have “become a recurring theme,” said Eric S. Harbin, a U.S. Occupational Safety and Health Administration regional administrator in Dallas, in a June 2023 statement about violations at Texas stores. “The safety conditions that exist at some of these stores create the potential for tragic consequences in an emergency.”

Advocates say the overstacked storage rooms, blocked safety exits and rodent and insect infestations create unsafe and unhealthy environments for many of the chain’s roughly 200,000 workers.

For 38 years, Dollar Tree has stood as a Virginia success story, sprouting from a handful of stores into a price-oriented powerhouse with about 16,000 Dollar Tree and Family Dollar stores in the United States and Canada. But with its explosive growth, becoming the second-largest dollar store chain, the company has acknowledged concerns about the conditions in its stores and distribution centers.

“We must improve our store and DC conditions, and we are in the process of doing so,” Dollar Tree’s CEO, Richard Dreiling, said during a March 2023 earnings call. “Frankly, stores and DCs were not being maintained up to our new leadership standards.”

Dollar Tree reported a net loss of nearly $1 billion for 2023, compared with a profit of $1.6 billion in 2022.

The company announced earlier this year it would close 1,000 stores, including 600 poorly performing Family Dollar stores. The company then announced in June that it would initiate a review of “strategic alternatives” for Family Dollar, and consider whether to sell the chain.

Through a company spokesperson, Dollar Tree declined three requests for an interview, and the company did not directly answer two pages of questions about store conditions, worker safety and pay, and corporate policy changes.

“From the health and safety of our teams, to the compensation and career growth of all our associates, we are making significant investments to continuously improve our associate experience,” Kate Kirkpatrick, a Dollar Tree spokesperson, wrote in an emailed statement. “We are committed to a safety-first culture that protects our teams with investments in technology, training and ongoing support.”

HISTORY OF VIOLATIONS

The Virginia Center for Investigative Journalism at WHRO has conducted extensive interviews with Dollar Tree employees, labor activists and shareholder groups, and obtained and reviewed hundreds of pages of documents from state and federal regulators through open-records requests. Analysis of the documents reveals hazardous conditions cited in 590 stores from January 2014 to April 2024.

Workplace safety regulations for private employers are enforced by OSHA in 29 states and the District of Columbia. Inspection departments in 21 states, including Virginia, enforce federal workplace safety rules for employers within their states.

Federal and state records show that Dollar Tree has a higher percentage of safety inspections that flag violations than retailers of similar size. Inspectors found infractions in 59% of Dollar Tree and Family Dollar stores they inspected between 2019 and 2023, according to an analysis of federal inspection records by VCIJ. By comparison, among stores inspected in the same five years, regulators cited violations at 49% of Dollar General stores, 42% of Kroger supermarkets and 28% of Walmart stores, according to the analysis.

In announcements of citations against the company, federal regulators have admonished Dollar Tree for its “lengthy history” of failed safety inspections.

“One of the nation’s largest discount retailers continues to expose employees to the risk of injuries by flagrantly ignoring workplace safety regulations, this time with hazardous conditions found at two Ohio locations,” OSHA officials wrote in levying a $1.2 million fine against the company in August 2022.

OSHA has issued $22.7 million in penalties from federal inspections between 2017 and April 2024. Those penalties resulted from broken rules — requiring accessible exits in case of fire, work areas free of hazards, and clean and pest-free stores — created to protect workers’ well-being, inspectors found.

In Virginia, Dollar Tree’s home state, regulators identified 85 violations from 31 store and distribution center inspections, resulting in $1.9 million in fines over the past 10 years. In many of those cases, the company has settled with regulators to reduce its penalties by an average of 42%, while agreeing to fix the problems, according to a review of inspection documents.

In August, OSHA reached a settlement with Dollar Tree covering 10,277 stores and requiring the company to adhere to a more stringent schedule for reporting store improvements, enhance abatement measures and work under closer federal scrutiny. The company fixed problems at five U.S. stores, and the settlement reduced the penalties for violations at those locations from $2.1 million to $1.14 million.

Dollar Tree reported $30.6 billion in sales for 2023, an 8 percent increase from the previous year.

The federal agreement resolved outstanding violations from 35 other inspections that had resulted in $1.5 million in initial penalties for a range of unsafe and unhealthy conditions. The OSHA settlement includes stores in 29 states but does not apply to violations in Virginia and other states that handle their own health and safety enforcement of private businesses.

Shareholder groups also have pushed the company to make changes, including boosting worker pay and improving store operations. New leadership at Dollar Tree’s top levels has pledged to clean up stores, noting that the disarray hits the bottom line.

In an email response to a detailed list of questions about the company’s health and safety record, Kirkpatrick referred to several passages from its 2023 Environmental and Social Sustainability Update.

“Maintaining a safe working environment for our associates and a safe shopping environment for our customers and communities are top priorities,” reads the report, released in June of last year. “To that end, we have developed a proactive approach to safety in our stores and distribution centers.”

That new approach, according to the update, includes a checklist called “S.P.E.E.D.” — referring to stacked box height, pathways, extinguishers, electrical panels and doors — to ensure the latter four are unblocked and accessible. The company also launched a hotline for workers to confidentially report any unsafe conditions and assessed workplace violence incidents to identify high-risk stores and enhance security measures.

Labor advocates who have watched the company’s practices said it needs to do more to solve workplace problems.

“This is a systemic failure by the company to respond to crises in its stores,” said Frank Kearl, an attorney working with employees of low-price retailers in Louisiana, including Dollar Tree.

DOLLAR TREE’S ROOTS

Dollar Tree has its origins in a single variety store in a small Norfolk shopping plaza. In 1953, Kenneth Perry opened a shop that became K&K 5&10. His son, J. Douglas Perry, and son-in-law, Macon Brock, along with a third partner, Ray Compton, took K&K’s toy section and spun it off into its own chain in 1970. K&K Toys grew to 136 locations before it was sold in 1991.

By then, the founders had seen the value of a dollar. In 1986, they opened their first five Only $1.00 stores, including one in Chesapeake, later changing the chain’s name to Dollar Tree. By swallowing up several smaller dollar retailers, Dollar Tree branched from about 1,700 stores in 2000 to 5,000 by 2014.

Between 2010 and 2014, Dollar Tree was raking in money. Its sales climbed 46% and profits jumped 51% to $599.2 million.

In 2015, Dollar Tree completed the purchase of one of its bigger rivals, Family Dollar, for about $9 billion. The acquisition more than doubled Dollar Tree’s size, from 6,000 stores to nearly 14,000.

Dollar Tree acquired stores that had languished under the previous ownership. In recent years, crime and violence at Family Dollar stores, which tend to be smaller and sit in poorer urban neighborhoods, have drawn increased attention. Incidences of armed robbery, assault and homicide at Family Dollars and similar discount chains have prompted some cities to pass legislation limiting where such stores can be built.

In late February,  Dollar Tree pleaded guilty to a single federal criminal charge and agreed to pay $41.7 million for keeping food and consumer products in unsanitary conditions in a Family Dollar warehouse in West Memphis, Ark. Inspectors had found a rat infestation, including live rats and decaying carcasses where workers packed food, medicines and hygiene products for distribution to more than 400 stores.

The company shut down the warehouse and plans to open a refurbished facility.

The violations led to a class-action lawsuit by consumers claiming they were subjected to potential harm when they bought products from stores served by the warehouse. Dollar Tree settled that suit by offering $25 Family Dollar gift cards to those with eligible claims.

The federal misdemeanor, fine and class-action settlements were a factor in the company’s disappointing 2023 earnings. Still, Dreiling, the Dollar Tree CEO, has pledged to shareholders that the company will keep growing. In late May, the company acquired 170 stores from the bankrupt 99 Cents Only chain, planning to rename them as Dollar Trees.

In the U.S., there are now about as many Dollar Tree and Family Dollar stores as Starbucks.

GRINDING FOR THE DOLLAR

Dilsy Villalobos, 21, started working as a cashier for a Family Dollar in Manassas in November 2022 and was recently promoted to assistant manager. She now earns $15.40 per hour and works about 27 hours a week — part time, with no health insurance.

“For now, I’m just making enough to pay my bills. I’m not making any extra,” said Villalobos, who lives in Manassas with her mother and three siblings and helps with the house expenses. “I have to pay rent, electricity, food, transportation and my basic needs.”

She runs the store when her manager isn’t there but otherwise unloads shipping boxes, stocks shelves and runs the cash register, as her co-workers do. Villalobos, who is studying graphic design at Northern Virginia Community College, works eight-hour days unless she has class in the mornings, when she cuts her hours to six. She often has to close the store at 10 p.m., staying until 10:30 p.m. to tally the cash registers and clean before locking up and heading home. Then, she does schoolwork.

The company limits the number of employee hours that her manager can put on the payroll, Villalobos said. She and other employees said managers told them that they cannot hire additional people to help with the workload unless they reduce other employees’ hours.

Dollar Tree did not respond to specific questions about employee hours, wages and classifications.

On Thursdays, when new product shipments arrive, Villalobos starts at 6 a.m. unloading the boxes with a co-worker — as many as 800 at a time. Family Dollar stores typically have a smaller footprint than Dollar Trees, where trucks deliver as many as 1,700 boxes a week to some stores.

Other workers share similar stories. “You’d lose an entire day of work just doing that truck for that one day,” said Kenny Arbuthnot, 25, who started working for Dollar Tree in New Orleans in 2021 as a stocker for $9 an hour and has since become an assistant manager earning about $16 an hour.

In the back room of his New Orleans store, lines mark how high workers can stack boxes — no more than 8 feet — but they routinely surpass the limit, Arbuthnot said. Products show up even if the store has plenty of goods, he said, forcing workers to leave unemptied boxes in the aisles.

“It gets in customers’ way. It gets in our way,” he said. “We would trip over them a lot.”

Dollar Tree employees and safety inspectors describe problems with excessive inventory across the company’s stores — piles of boxes blocking exits, aisles, fire extinguishers and electrical panels, creating multiple safety risks.

Asked about specific inventory and access problems, Dollar Tree referred VCIJ to the company’s S.P.E.E.D. safety protocol.

An inspector for the Prince William County fire marshal’s office visited the Sudley Road store in Manassas the day after D’Anna’s inspection. In the report, obtained through a Freedom of Information Act request, the inspector noted “unorderly piles” of boxes in the back room and unsecured helium tanks, used to inflate party balloons Dollar Tree sells. “The storage piles of freight are obstructing the means of egress,” the inspector wrote.

Five months later, the fire marshal’s office received another complaint about blocked exits and excessive boxes at that Dollar Tree store, documents show.

“Their back rooms are notorious,” said Debbie Benoit, a former Dollar Tree assistant manager in Northern Virginia. “They send too much freight. They don’t give people enough hours. The stores are understaffed.”

One of the causes of disarray, according to employees, is Dollar Tree’s strict limit on employee work hours per store. Two-thirds of its U.S. workforce is part time and works on average less than 30 hours per week, according to Dollar Tree corporate filings.

And the trucks keep coming.

A store manager in Roanoke told an inspector that “she had brought up the issue with corporate management and requested additional hours to hire a stocker but was not currently staffed sufficiently to keep up with incoming shipments,” according to the inspection report, which did not publicly disclose the names of store employees.

“It’s a billion-dollar company,” Arbuthnot said. “They should be able to afford to pay people to work more hours.”

WHO’S WATCHING THE STORES?

Working conditions at retailers like Dollar Tree are regulated by federal or state health and safety inspectors, as well as local fire marshals.

Virginia’s health and safety team, which is part of the state Department of Labor and Industry, has 38 safety inspectors monitoring for general physical hazards in the workplace and 21 health inspectors who focus on environmental stresses that may cause sickness, impaired health and well-being, or significant discomfort for workers or people interacting with that employer.

“We do feel we have adequate resources,” said Jay Withrow, a senior fellow for the Virginia Occupational Safety and Health Program who served as its director of legal services for 39 years. “We have one of the better state programs in the country.”

For companies like Dollar Tree, most inspections are initiated by employee or customer complaints, Withrow said.

Between 2014 and 2023, inspectors made 42 visits to Dollar Tree and Family Dollar stores in Virginia, according to the OSHA database, which includes state and federal inspections. Inspectors found health and safety violations in 31 of their store and warehouse visits in Dollar Tree’s home state, almost three-quarters of the cases. The records show recurring violations — excessive boxes, blocked exits and fire hazards.

The company had 428 stores in Virginia as of February 2019, when it last listed store totals by state in its corporate filings. Kirkpatrick, the Dollar Tree spokesperson, did not respond to a question about the current number of stores in the commonwealth.

After the July 2022 inspection of the Sudley Road store in Manassas, the state took six months to issue its citations to the company, which then fixed the problems. Two weeks later, Dollar Tree alerted health and safety officials that it would contest the penalties.

Virginia regulators negotiated a settlement with the company, dropping the initial penalties from $399,320 to $239,592, a 40% cut. The settlement was finalized in August, 13 months after the initial inspection.

For companies that are repeat offenders with persistent violations, Withrow said, penalties can add up to significant financial detriment, even for a company as large as Dollar Tree. “That’s enough to get the attention of even a big national corporation,” he said in a recent interview.

Federal settlements like Dollar Tree’s agreement in August can compel change across a company culture, Withrow added, particularly if media coverage draws attention to practices that harm workers. “I think that’s their hope.”

Federal regulators have flagged health and safety violations at Dollar Tree locations for nearly a decade. In 2015, OSHA and the company agreed to settle penalties for infractions stemming from 13 inspections. At that time, Dollar Tree promised in its settlement to initiate specific practices to fix the same types of problems — blocked exits, hazardously stacked materials, inaccessible electrical equipment and excessive merchandise. The agreement covered 2,400 of Dollar Tree’s stores at the time, leaving the company with an $825,000 fine. That year, the company made $15.5 billion in sales and earned a profit of $282.4 million.

Last year’s federal settlement with Dollar Tree set up new guidelines for the company to address many of the same violations found eight years earlier.

“The intent of the corporate-wide settlement agreement is to improve working conditions, safety performance, and safety management across the corporate entity,” U.S. Department of Labor spokesperson Frances Alonzo wrote in an email.

After reaching that federal settlement, the company said it was planning improvements. “Our company is in the midst of a business transformation, and at the heart of it all is our continued focus on safety for our more than 200,000 associates,” Mike Creedon, Dollar Tree’s chief operating officer, said in a statement. “We are implementing substantial safety policies, procedures, and training, all intended to safeguard the wellbeing of our associates.”

CORPORATE SHIFT

Inside its shiny headquarters in Chesapeake, Dollar Tree’s executives have acknowledged the clutter and chaos of its chains at the ground level. In 2022, an activist investor forced an overhaul of Dollar Tree’s board and installed a new executive team, making Dreiling chairman and CEO.

Dreiling warned investors last year about the consequences of the Arkansas warehouse’s rat problem: “If there is a decline in consumer confidence in our products or brands, our reputation may be adversely affected and we may experience additional lost sales, which could have a material adverse impact on our business and results of operations.”

Kirkpatrick said in November that the company had spent $360 million in the past year to boost wages and had made more than 60,000 internal promotions. “We want our people to build careers with us,” she wrote in an email. “The wellbeing of our associates is our highest priority.”

In June last year, at Dollar Tree’s annual meeting, its shareholders approved a 2022 compensation package for Dreiling, including stock options tied to the value of the company’s shares, worth $136.5 million. His compensation for 2023, with incentives not including the stock options, is $3.36 million.

One activist shareholder group, United Church Funds, demanded that Dollar Tree recognize the financial disparities between its top-paid executive and its low-wage workers. “Many retailers have raised their minimum wage well above legal minimums, but Dollar Tree has not,” United Church Funds wrote in a proposed shareholder resolution last year.

Dollar Tree, in its 2024 proxy statement filed in April, calculated its median employee pay at $15,599 annually, just above the federal poverty level of $15,060 for a single-person household. Among full-time employees alone, the documents show, the median pay is $36,703 a year, equivalent to an assistant manager’s pay.

“We were hearing from the employees and managers that their wages were certainly not living wages and that health and safety issues were a challenge,” Matthew Illian, director of responsible investing for United Church Funds, said in an interview. “Often, they felt like they were putting their own safety at risk in being in many of the stores. And they felt like they weren’t getting the attention of management that they wanted.”

Arbuthnot, the Dollar Tree worker in New Orleans, traveled to Chesapeake to speak at the annual meeting last year in support of the United Church Funds proposal. “I don’t make enough to make ends meet,” he told shareholders. “If Dollar Tree can afford to raise the pay of the CEO and executives, I believe it could do a better job of paying its workforce who serves in its stores and distribution centers across the country.”

On the recommendation of Dollar Tree’s board, shareholders rejected the United Church Funds resolution.

WORKER UNREST

The difficulties for Dollar Tree’s employees have escalated at a time when low-wage earners elsewhere are winning victories for better pay and working conditions. Retail employees at Amazon, Apple, Starbucks and Trader Joe’s have formed their first unions in the past three years.

Dollar Tree employees share similar concerns as other retail workers but have taken only limited steps toward organizing.

“We consider our relationship with our associates to be good, and have not experienced significant interruptions of operations due to labor disagreements,” Dollar Tree wrote in its most recent annual report, released in March.

Labor organizers said building bargaining power at Dollar Tree and Family Dollar stores is an uphill battle. Their workers interact with only a few colleagues at a time and have personal and financial pressures that leave them little opportunity for labor organizing.

Greg Wilson, a lead organizer with the labor advocacy group Step Up Louisiana, has helped unionize employees at hotels, ballparks and convention centers, and none were as challenging as dollar stores, he said. “It’s not just a job for folks — it’s their livelihoods,” Wilson said of dollar store workers.

Pay is low, and workers don’t stick around long. They work with just a handful of other employees at any one store. In rural areas, locations are spread out. And even when close by, employees of different stores rarely interact.

In the current labor market, an unhappy worker is more likely to move to another job than stay at Dollar Tree and fight, said Thomas Kochan, a professor and co-director of the Sloan Institute for Work and Employment Research at Massachusetts Institute of Technology.

“The isolation, the locations and the turnover rates make it very difficult to organize and reduce the incentive of existing unions to organize them,” Kochan said.

In some states, legislators and local officials have stepped in to protect workers. Louisiana lawmakers formed a task force last year to look at safety and health violations identified by Step Up Louisiana in Dollar Tree, Family Dollar and Dollar General stores.

The Chicago City Council, in response to an alderman’s concerns about poor store conditions and crime around stores, passed an ordinance in February to restrict where chains can locate new dollar stores.

But Kochan said grassroots campaigns like Step Up Louisiana are the best line of defense for workers.

“I really do believe you’ve got to have a sustained form of representation,” he said. “That’s what a union brings, and a union will drive companies to improve their conditions. It certainly will raise wages but then creates incentives for them to go ahead and recoup those increased wages by improving operations, improving productivity in their workforce, being better managers.”

No such movement has started in Virginia.

Villalobos, the Family Dollar worker in Manassas, said she’d like Dollar Tree to allow workers like her to have more flexibility to close a store early when they don’t have as many customers, so she doesn’t always have to leave work so late.

She hoped company officials could give more thought to the needs and personal lives of those working for them. And they could give those workers better raises, she added.

While executives are home with their families “watching the profits that they’re making,” Villalobos said, “we’re at the store working.”

The story was supported by The Sidney Hillman Foundation.

VCIJ at WHRO journalist Christopher Tyree contributed to this report.

Reach Carolyn Shapiro at [email protected].