Last week, Wal-Mart publicly apologized to 87,000 of its workers all across America, for denying them the overtime wages they were due. “We apologize to them for this error,” a Wal-Mart spokesman said. The unusual admission from Wal-Mart comes in a 50 state lawsuit brought against the retailer by the U.S. Labor Department. Wal-Mart has been implicated in several dozen similar lawsuits at the state level. The apology was worth five years of back wages, a total of $33.5 million, and means that the average worker who was denied overtime pay will get $375 in back pay. According to the New York Times, 75 workers received more than $10,000, and one lucky worker received more nearly $40,000 in back wages. In its 2006 annual report, Wal-Mart spends nearly two pages of text outlining its legal problems, including certified class action lawsuits in California, Colorado, Massachusetts, Minnesota, Missouri, New Mexico, Oregon, Pennsylvania, and Washington. Most of these cases were brought under the
Fair Labor Standards Act by current and former Wal-Mart employees who charge they were forced to work “off the clock” and not paid for the work they performed. The DOL sued Wal-Mart for failing to pay time-and-a-half pay to its workers when they worked in excess of 40 hours per week. The federal lawsuit also charged that Wal-Mart did not properly calculate bonuses and geographical variations in pay when calculating the wages before determining the time-and-a-half rate. Wal-Mart set the salaries of some managers in training based on a 45-hour or 48-hour week, but failed to pay them overtime when they worked more than 40 hours. This settlement is one of the largest on record. The consent decree was filed in U.S. District Court for the Western District in Fort Smith, Arkansas. In response, Wal-Mart says that it tipped off the DOL that the company had overtime problems, which were uncovered during an audit Wal-Mart did on its own books. A Wal-Mart spokesman assured its “associates” that the overtime system at the retailer “has been fixed,” and that new safeguards at the company will “make sure that these types of errors don’t happen again.” Even though Wal-Mart had denied its workers millions of dollars in pay they earned, the company denied “any wrongdoing and liability whatsoever,” and said none of the charges raised by the federal government were true. One company spokesman said the charges were not “particularly unusual violations.” However, the lawsuit charged that Wal-Mart was making illegal calculations because it computed pay on a biweekly rate rather than a weekly rate. The company was also including vacation and sick pay in determining the base hourly rate, which produced a lower hourly rate.
Wal-Mart took the occasion of this huge back wages settlement to say that “We are committed to our associates, and we apologize to them for this error. We work very hard to make sure associates are compensated correctly.” But these “errors,” which are illegal activities, lower the operating costs of the company by millions of dollars. One Wal-Mart official has compared its workers to a “building cost,” like heat or light. Just as you can save money by lowering the thermostat or turning off lights, so you can save money by reducing your payroll costs by denying your workers their earned wages. Wal-Mart says in this case that it turned itself in — but the company had an audit that apparently showed they had not been paying their workers for the hours they worked. At Wal-Mart, they like to say, “Our Associates make the difference.” In this case, the difference that 87,000 workers will make is $375. Let’s just hope they don’t turn around and spend that wage at the employer who denied it to them in the first place.