Factory Audit Ratings

The factory rating system is based on the concept of a stoplight, which indicates go, proceed with caution, and stop.

	Green Factories rated "Green" have no violations or low-risk violations. An example of a Green violation is one or two missing pulley guards on sewing machines. Factories rated Green are re-audited after two years as an incentive for compliance. This change from a one-year to a two-year audit period was made in 2006.
	Yellow Factories rated "Yellow"have medium-risk violations, such as no pay slips for workers. Yellow-rated factories are re-audited after 120 days. In 2007, the time between audits for a Yellow-rated factory increased from 120 to 180 days to benefit factories that are working toward increased compliance.
	Orange Factories rated "Orange" have high-risk violations. Orange-rated factories are re-audited after 120 days. An example of an Orange violation is failure to pay legally required overtime premium.
	Orange-Age An "Orange-Age Assessment" is given when one or two underage workers are found to be employed by a factory. A factory that receives an Orange-Age Assessment is given 30 days to address the violation by discontinuing the use of underage workers and by properly compensating and repatriating the underage workers. If the underage workers are not properly compensated and repatriated without any expense to the workers, the factory is given a Red-Failed rating and is permanently banned from producing merchandise for sale by Wal-Mart. A factory is only permitted one Orange-Age Assessment. Any subsequent identification of underage labor in the same factory results in a Red-Failed rating.
	Disapproved Four Orange ratings in a two-year time period will result in a factory being disapproved for producing merchandise for sale by Wal-Mart for one year. After a year elapses, the factory can then only produce merchandise for sale by Wal-Mart if a Yellow or Green rating is achieved.
	Red Factories are rated "Red-Failed" when egregious violations are found. A Red-Failed-rated factory is immediately and permanently banned from producing merchandise for sale by Wal-Mart.

Please note: While it is our policy to work with suppliers and their factories to overcome labor conditions that do not meet our standards, we disallow production of Wal-Mart merchandise in factories that exhibit certain violations including: forced or prison labor, transshipment, physical abuse of workers, and extremely unsafe working conditions. Unremedied underage labor is also among the violations that are not tolerated (see Orange-Age Assessment description above).