Wal-Mart 0, Employees 3, In Meal And Rest Break Cases

(Published July 15, 2008)

The third time wasn't the charm for Wal-Mart. The giant retailer recently lost its third high-profile case in which it was accused of violating workers' rights to take rest and meal breaks.

Most recently, 56,000 Minnesota employees alleged that they weren't allowed to take rest breaks, weren't paid for their meal breaks, and were compelled to work off-the-clock during training. Earlier this month, a court ruled that the company willfully broke the state's wage and hour laws two million times, and awarded employees $6.5 million in back pay. In addition, the company could be on the hook for up to $2 billion in state law fines (two million violations x $1,000 per violation), not to mention punitive damages. The company is considering appealing.

This is a familiar road for Wal-Mart. Previously, a California jury handed down a $172 million verdict against the company for failing to provide employees with meal breaks. The employees alleged that the company violated state law more than eight million times. The company is appealing.

A Pennsylvania jury decided that 187,000 current and former employees worked through rest breaks and after their shifts for no overtime pay, in violation of Pennsylvania's wage and hour laws. Verdict: $78 million. If Wal-Mart acted in bad faith, it'll be on the hook for an additional $62 million in damages. The company is appealing this verdict, as well.

And the road is long. It's facing other wage and hour lawsuits around the country.

Give Them A Break!

Whether employees must be provided with breaks is a matter of state law. The federal Fair Labor Standards Act (FLSA) does not require employers to provide breaks, but does address whether or not they must be paid. More than half the states have laws regarding meal and rest breaks, and each must be consulted to determine your responsibility to provide this time to employees. Some laws, for example, only mandate that minors be provided with meal breaks. AHI's website links to state wage andhour offices at http://www.legalworkplace.com/state-labor-law.aspx.

Routine audits of employees' time records are a good way to make sure you're in compliance with both state and federal wage and hour laws. But if you don't act on your findings, it's a good way to be accused of willfully violating the law.

Wal-Mart did perform audits, which revealed the unpaid overtime, but did nothing to ameliorate the situation. The company said later that those audits were unreliable. Don't make the same mistake. Permitting employees to work unpaid overtime or through lunch, after you become aware of it, will be considered willful behavior. Under the FLSA, employers that act willfully are liable for three years of back pay and liquidated (or double) damages, instead of two years.

• Are employees eating at their workstations? If they are, ensure that they are not also answering business phone calls or otherwise continuing to perform work.
• Are managers pressuring employees to work through lunch, or to stay late or come in early to complete work?
• Are there employees whose responsibilities have significantly expanded? If they are expected to complete their work in the same amount of time as they did before, there is the potential that overtime hours will not be documented.

Related Topic(s): Payroll Management/FLSA - Fair Labor Standards Act, Payroll Management/Overtime