Thursday, October 4, 2007

Wal-Mart ordered to pay $140.5 million on overtime claim

Last week, I commented on the risks companies face from a lack of control over wage and hour practices (here, and here). This week, a federal judge in Pennsylvania reinforced my point for me by ordering Wal-Mart to pay an additional $62 million in statutory liquidated damages to 124,506 current and former Pennsylvania employees who last year a Philadelphia jury found were not properly compensated for off-the-clock work and missed rest breaks. That jury had previously awarded $78.5 million in compensatory damages to 186,000 current and former Wal-Mart employees. That jury verdict was based on the finding that Wal-Mart failed to pay its employees for time they worked off the clock or for their missed rest breaks. Motions are still pending on whether the plaintiffs are entitled to interest on their award, and whether they are entitled to recover attorneys' fees, which are estimated at a staggering $48 million.

This verdict is a good time to remind everyone that it is a good idea to have a policy in your handbook that requires all overtime to be authorized and forbids any hourly employee from working through a break without prior approval. It is unclear whether Wal-Mart had such a formal policy, if it was merely its practice to do so. Whatever Wal-Mart was doing, however, it was negatively affecting hundreds of thousands of its employees. Regardless, if it is your expectation that your employees take their breaks, you should spell out that expectation in the employee handbook. That way, if an employee is serially violating the policy by working through lunch without permission, you have a defense to refusing to pay that employee if you so choose.