Wal-Mart to Pay $4.8M in Back Wages, Damages

The U.S. Department of Labor said today that Wal-Mart Stores Inc. has agreed to pay $4.8 million in back wages and damages to more than 4,500 employees nationwide, following an investigation dating back to 2004 that turned up overtime violations under the Fair Labor Standards Act.

Wal-Mart will also pay $463,815 in civil penalties as part of the settlement reached with the DOL.

The settlement comes in the wake of separate allegations of bribery at Wal-Mart’s subsidiary in Mexico, which has also brought federal scrutiny to the retail giant. Wal-Mart’s stock has already taken a hit because of the bribery allegations, which surfaced in a New York Times exposé over a week ago. Wal-Mart’s stock closed Tuesday at $59.07, up 16 cents, on the New York Stock Exchange, but still below the $62.45 mark it held before the bribery allegations hit before 10 days ago.

A DOL spokeswoman said the investigation by the agency’s Wage and Hour Division took place from June 2004 through March 2007. Wal-Mart corrected the classification practices in 2007 and negotiations over the back-pay issues had been ongoing, according to the agency.

Labor officials charge that Wal-Mart improperly classified current and former vision center managers and asset protection coordinators at Wal-Mart Discount Stores, Wal-Mart Supercenters, Neighborhood Markets and Sam’s Club Warehouses as exempt from overtime pay. The agency said the 4,500 employees are nonexempt from the FLSA and are due overtime pay for any hours worked beyond 40 in a week.

The FLSA does provide an exemption from minimum wage and overtime pay requirements for individuals in executive, administrative, professional and outside sales positions, as well as certain computer employees, but to qualify for the exemption, employees must meet certain tests regarding job duties and be paid on a salary basis at a minimum of $455 a week. Job titles do not determine exempt status.

“Our department has been working with Wal-Mart for a long time to reach this agreement,” said Nancy J. Leppink, deputy administrator of the DOL’s Wage and Hour Division. “Thanks to this resolution, thousands of employees will see money put back into their pockets that should have been there all along. The damages and penalties assessed in this case should put other employers on notice that they cannot avoid their obligations to their employees by inappropriately classifying their workers as exempt.”

Greg Rossiter, director of corporate communications at Wal-Mart, said, “When the issues resolved today were initially raised, we took them seriously and fully cooperated with the Department of Labor to make sure they were corrected in 2007. We adjusted our pay practices at that time and determined that back wages should be paid for the associates involved. We have agreed on a fair settlement amount for the associates that trained for the role of asset protection coordinator and associates in the role of vision center manager, and we are pleased to have resolved this matter.”

In addition to the back wages owed to the employees, Wal-Mart agreed to pay an equal amount in liquidated damages to the employees, as part of the settlement. The agency said the civil penalties stem from the “repeat nature of the violations.”

“Misclassification of employees as exempt from FLSA coverage is a costly problem with adverse consequences for employees and corporations,” said Secretary of Labor Hilda Solis. “Let this be a signal to other companies that when violations are found, the Labor Department will take appropriate action to ensure that workers receive the wages they have earned.”

source WWD