Wal-Mart Settles with DOL in FLSA Investigation to the tune of $4.8 Million

It's my favorite foil for employment classes for a reason. According to the DOL, Wal-Mart has agreed to pay more than $ 4.8 million in back wages and damages to 4500 workers improperly classified as exempt from the FLSA's overtime provisions. The superstore will also pay about $450,000 in civil fines. From the press release,

The violations affected 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. Wal-Mart failed to compensate these employees with overtime pay, considering them to be exempt from the FLSA's overtime requirements. The Labor Department's investigation found that the employees are nonexempt and consequently due overtime pay for any hours worked beyond 40 in a week. 

"Misclassification of employees as exempt from FLSA coverage is a costly problem with adverse consequences for employees and corporations," said Secretary of Labor Hilda L. 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."

Under the terms of the settlement, Wal-Mart has agreed to pay all back wages the department determined are owed for the violations in addition to paying liquidated damages to the employees and a penalty to the department. The civil money penalties assessed stem from the repeat nature of the violations. Wal-Mart, which operates more than 3,900 establishments in the United States, corrected its classification practices for these workers in 2007, and negotiation over the back pay issues has been ongoing since that time. A third-party administrator will disburse the payments to the affected employees.

"Our department has been working with Wal-Mart for a long time to reach this agreement," said Nancy J. Leppink, deputy administrator of the Wage and Hour Division. "I am very pleased that staff in our Southwest region persevered, ensured these employees will be paid the back wages they are owed and brought this case to conclusion. 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."

This settlement comes at the same time that Wal-Mart's bribery scandal in Mexico appears to have cost the company more than $10 billion in stock value. At least one pension fund has urged a vote against the current directors. Maybe this is part of an effort to clean up more generally?

MM