Wal-Mart Stores, Inc. is having a tough time right now. Exxon-Mobile just bumped the mega-retailer from first place on the Fortune 500 list of revenue-generating U.S. companies. The company is facing allegations of bribing foreign government officials and may soon be hit with a related shareholder suit. With all of this, corporate leaders must have been relieved last week to settle a wage and hour claim brought by the U.S. Department of Labor.
Not as relieved, perhaps, as the 4,500 or so employees that will benefit from the $4.8 million settlement. The award includes back wages and estimated damages. Wal-Mart also agreed to pay $463,815 in civil penalties.
The employees were security guards or vision department managers in either Walmart or Sam's Club stores. From 2004 to 2007, the employees were misclassified as exempt (salaried, not hourly) under the Fair Labor Standards Act, and as a result they were not paid time-and-a-half for the overtime hours they worked.
Wal-Mart and the Department of Labor say that the overtime error was corrected in 2007. The last five years have been spent negotiating the settlement.
The government believes the damages and penalties paid by Wal-Mart will serve as a deterrent to other companies, especially retailers. Investigators are paying close attention, especially to employee classification, and companies cannot escape their obligations to the workers or the government.
As for this settlement, the parties agreed that an independent administrator would determine and distribute the payments to the employees. Initial estimates indicate that workers will receive payments from $30 at the low end to $10,800 at the high end.
Source: Wall Street Journal, "Wal-Mart to Pay $4.8 Million in Back Wages, Damages," Shelly Banjo, May 1, 2012