Right in the middle of its worst stock plunge in the past year, Wal-Mart generated more bad headlines today with the announcement that once again the giant retailer was paying out millions of dollars to workers who were underpaid. It was announced today that Wal-Mart has agreed to pay more than $3.9 million to about 50,000 of its current and former employees in California, because the company owed them overtime and other wages over a five year period of time. The settlement was negotiated by the California Labor Commission. As part of the settlement, Wal-Mart also will pay $198,900 in civil penalties to the state. This settlement goes back two years ago, when Wal-Mart “voluntarily” notified the state Labor Commissioner that the corporation had made “errors” in its payroll that caused thousands of its workers to be underpaid. The payment errors affected all of Wal-Mart’s California workers from February 1, 2002 through January 19, 2007. The underpayments were connected to overtime and other wages. Wal-Mart at the time promised that it would mend its mistake, and pay the workers what they were owed. “This is a matter we discovered and reported … and the situation has been corrected,” said a Wal-Mart spokesman. “Everyone who was owed money is being paid with interest and we have added safeguards so that these errors don’t happen again.” According to the :Labor Commissioner, some of the affected workers already have a check in the mail, but some have waited years for what was owed to them. California’s Labor Commissioner praised Wal-Mart for setting “a positive example for other employers who may be out of compliance, because it illustrates how they can work with us to properly compensate workers as well as meet legal requirements.” According to media reports, 90% of the workers were owed $20 over the past five years. But a little bit of money denied to a lot of workers ends up saving Wal-Mart millions of dollars.
If this story sounds familiar — it should. Six months ago, the media ran a story about Wal-Mart paying a sum nearly ten times this amount — $34 million — to settle claims with employees nationally who had been short-sheeted by Wal-Mart. The agreement six months ago was with the U.S. Labor Department. As in today’s settlement, Wal-Mart admitted that it had underpaid around 87,000 of its workers across the country by at least $20. But the company also admitted that some workers were owed as much as $40,000. Last January, Wal-Mart also turned itself into authorities. At the time, a spokesman for the U.S. Department of Labor said, “It’s not particularly unusual for an employer to come to us to talk about potential payroll violations.” However, the federal settlement was one of the largest overtime payments ever paid. Wal-Mart immediately tried to put the case behind it. “The issue has been resolved,” a Wal-Mart spokesman said. “We are committed to our associates, and we have apologized to them for this error.” Ironically, Wal-Mart said at the time that it overpaid 210,000 of its “associates” and lost more than $4.3 million in that mistake. But the company did not go after the $20 it overpaid these workers. Wal-Mart claimed the whole affair was uncovered in 2004 during an internal audit, and was due to “calculation errors and procedural errors” at headquarters. Because of the error, some of Wal-Mart’s workers had worked 45 to 48 hours before they earned overtime. They also were not paid time and a half for their work over 40 hours. One day before the federal case was settled, the state of California filed suit against Wal-Mart in Superior Court in Sacramento, charging the retailer with similar overtime violations in that state.. At the time, California officials told the Washington Post, “While Wal-Mart has indicated its desire to pay all additional wages owed under California law, we will not agree to any settlement terms until state auditors have the opportunity to verify the accounting records relied upon by [U.S. Labor Department] officials and to examine additional records that relate to those issues that are subject to more stringent California statutes.” Wal-Mart’s lawyers have been working overtime on a stack of overtime lawsuits against the company. Some estimates of wage and hour lawsuits against Wal-Mart have ranged as high as 60 or more. The more prominent of these cases took up two pages in Wal-Mart’s most recent Annual Report. Wal-Mart has more lawsuits, than men’s suits.
