Monday, 15 July 2024

Federal, state labor departments sue Wal-Mart


Wal-Mart operates more than 3,900 establishments in the U.S. Locally, it has a store in Clearlake.

The DOL said Thursday that it had already reached an agreement with Wal-Mart, which must pay more than $33 million in back wages to resolve issues that arose under the Fair Labor Standards Act (FLSA) concerning how the company computed overtime pay.

The agreement covers 86,680 employees who worked for the company from Feb. 1, 2002 to Jan. 19, 2007.

The reports have not specified which stores around the country had underpaid employees. The DOL said only that back wage payments will go to current and former employees of the company's retail divisions in the U.S. and Puerto Rico, including Wal-Mart Discount Stores, Wal-Mart Supercenters, Neighborhood Markets and Sam's Club warehouses.

"This settlement provides $33 million in back wages, plus interest, to Wal-Mart workers, and the company has taken corrective action to prevent this from happening again," said Assistant Secretary of Labor for Employment Standards Victoria A. Lipnic.

To finalize the agreement, the Labor Department filed a complaint Thursday in the U.S. District Court for the Western District of Arkansas, Ft. Smith Division, against Wal-Mart Stores Inc. alleging violations of the FLSA overtime provisions. A consent judgment ordering the company to pay back wages and enjoining it from further violations was filed at the same time.

The consent judgment was approved by the court that same morning.

DOL stated that Wal-Mart brought the matter to its attention after an internal audit raised concerns regarding overtime computations.

The issues involve how Wal-Mart treated incentives and other premium payments in the calculation of employees' overtime pay. The agreement also addresses payment of overtime to certain non-exempt salaried interns, manager trainees, and programmer trainees.

Wal-Mart's corporate headquarters in Bentonville, Ark., released a statement Thursday that said the company had failed in the past to include periodic bonuses and other earned income in determining some associates’ weekly average hourly pay rate, or “regular rate,” which is used to determine associates’ overtime pay.

The company said it calculated the regular rate on a biweekly rather than weekly basis and did not properly account for overtime involving some managers in training and other associates.

Those practices resulted in underpayments to the nearly 87,000 employees. Wal-Mart said it found it had underpaid 90 percent of the affected employees and former employees in total amounts of less than $20 over the past five years.

Wal-Mart said it determined that about 215,000 current and former hourly associates were overpaid by at least $20 during the last five years. The company said it will not seek to recover any overpayments due to this miscalculation, regardless of the amount.

Approximately 20,000 of these associates who were overpaid also were among those who were underpaid, the company reported.

Wal-Mart said it has has adopted measures to prevent these errors from occurring in the future.

“We want our associates to know that the situation has been fixed, that overtime calculations now are being done correctly, and that we’ve added safeguards to our payroll processes to make sure these types of errors don’t happen again,” said Sue Oliver, senior vice president of the People Division at Wal-Mart.

Under the terms of the consent judgment, Wal-Mart has agreed to pay all back wages the Labor Department has determined are owed for violations identified in the consent judgment to present and former employees, and to pay pre- and post-judgment interest.

The company has also agreed to set up a Web site ( and to staff a toll-free telephone number, (888) 262-1559 or TTY (800) 318-7442, to answer questions regarding the back wages.

A third-party administrator will disburse the payments to the affected employees.

Meanwhile, in California, the State Labor Commissioner filed its own suit against Wal-Mart in the Superior Court of Sacramento County seeking all underpayments of overtime wages resulting from errors in the company's payroll processes.

CDOL stated that the errors in the calculation of required overtime payments to employees were first reported by Wal-Mart in early 2005, and agreed with Wal-Mart's statement that most of the underpayments were for small amounts to a large number of employees throughout the United States.

"Unlike the federal lawsuit, we have not agreed to a settlement of the California lawsuit," said Robert Jones, acting state labor commissioner.

Jones said CDOL would not agree to any settlement terms until state auditors have the opportunity to verify the accounting records relied upon by DOL officials.

The state suit also seeks interest and penalties that may be owed to former Wal-Mart employees who were underpaid for their overtime work and who have since left employment with Wal-Mart, as well as penalties due to the state for the wage and hour statute violations, and attorneys' fees.

E-mail Elizabeth Larson at This email address is being protected from spambots. You need JavaScript enabled to view it..


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