Wal-Mart To Pay $34 Million In Back Pay January 25, 2007Posted by notapundit in US News.
By Jennifer Waters
Wal-Mart Stores Inc. (WMT) came under fire by detractors Thursday after it said that it will pay back employees $34 million in overtime wages under one of the largest such settlements ever made with the U.S. Department of Labor.
Shortly after the Wal-Mart announcement, the California State Labor Commissioner said it had filed suit against Wal-Mart in a separate but similar case aimed at recovering lost wages. That could cost Wal-Mart another $2 million or more in penalties.
“Unlike the federal lawsuit, we have not agreed to a settlement of the California lawsuit,” Robert Jones, acting state labor commissioner said.
Bentonville, Ark.-based Wal-Mart said it found a number of miscalculations in the overtime pay for about 87,000 current and former employees – most of whom were based in California – during an internal review and reported it to the Labor Department.
The gaffes also hit the checks of some 40% of people training to be managers and programmers who were entitled to overtime during the process. It’s unclear exactly how many people that represents.
The two highest-profile labor-related groups scrutinizing Wal-Mart’s actions criticized the retailer as being disingenuous.
Wal-Mart Watch Executive Director David Nassar called the news the latest in a “disturbing pattern of Wal-Mart’s disregard for the law. “Wal-Mart only came forward because (it was) facing greater legal exposure on this matter on several other related lawsuits,” Nassar said in a statement.
Chris Kofinis, communications director for WakeUpWalMart.com, called the Labor Department pact “another backroom sweetheart deal” between the company and the Bush Administration.
“Worse still, the notion that Wal-Mart, a company that faces (more than) 57 wage and hour lawsuits, including the largest gender-discrimination lawsuit in U.S. history, would negotiate in the best interests of its workers is ludicrous on its face,” he added.
The settlement is not considered material to the company’s earnings because it happened during previous quarters. The resolution will affect hourly associates who worked at Wal-Mart, Sam’s Club and Neighborhood Markets stores, as well as in the logistics department and at the home office.
Over the last five years, the retailer believes those employees were underpaid by at least $20 – with a handful missing a much larger sum. The company will pay the underpayments plus interest, and noted in a press release that it will “pay all associates who were underpaid as little as one cent over the same period.”
The probe also discovered that about 215,000 current and former hourly employees were overpaid by at least $20 during that time. Wal-Mart’s not going to try to get that money back, it said. There’s also some overlap involved in which some of those underpaid also were overpaid.
The mistakes, which the company blamed totally on issues at the corporate headquarters, were made in how the overtime pay rate is calculated compared with the regular rate.
“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 company’s human-relations department.
In a separate press release, the Labor Department said Wal-Mart will pay the back wages to the Labor Department, which will then have a third party disburse the money. The plan does not affect ongoing private litigation or a worker’s ability to file complaints with the Labor Department.
The California suit addresses the same issues but Jones, the acting labor commissioner, said he wants his auditors to double-check the accounting records that the Labor Department relied on plus some additional records tied to those issues that are subject to “more stringent” California laws.
Jones said that his office also had been informed by Wal-Mart of discrepancies and has been working with the company to “insure that each employee is fully reimbursed for all wages that exceed what (the Labor Department) determined to be owed under federal wage and hour laws.”
Jones warned that it could take some time for his office to look at more than four million individual payroll records of California employees before determining the amount of money underpaid plus interest and penalties.
Based on the information available, Jones said he believes a future settlement will cost Wal-Mart $2 million or more in payments to California workers.
Shares of Wal-Mart were recently trading lower by 44 cents, or 0.9%, at $48.17.