labor lawAdivision of labor law center

Wal-Mart, Inc. has just realized that infringing the federal and Arkansas overtime laws can prove a costly business. Other employers would do well to familiarize themselves with appropriate employment laws related to the payment of minimum wages and in particular, those relating to overtime payments.

Under the Fair Labor Standards Act, workers are entitled to overtime payments of 1.5 times their hourly rate, for each hour they work over a standard 40 hour week. But if you are regularly employing people who you require to work over 40 hours, then you should also make sure that you understand where the law stands regarding incentive and premium payments to your employees.

Under the Act, employees are entitled to 1.5 times their usual hourly rate when they work over 40 hours per week. The usual hourly rate may differ from their base hourly rate. And it is an important difference that could end up costing you dearly if you miscalculate as a result.

An example of how this works is, if an employee has a base hourly rate of $6.00 per hour, but with incentives or premium payments usually earns $7.00 per hour, then they are entitled to 1.5 the hourly rate $7.00, not as you may assume, $6.00.

Wal-Mart has been found guilty of making this mistake. The US Dept of Labor has recently reported that Wal-Mart Stores has agreed to pay more than $33 million in back wages, after being found to have violated federal and Arkansas minimum wage laws.

As well as violating minimum wage laws, they were found to have miscalculated overtime payments to many of their employees, as set out by the Fair Labor Standards Act. The $33 million covers back payment of wages for 86,680 employees, and cover a period from February 1, 2002 and January 19, 2007.

Speaking about the judgment, The Assistant Secretary of Labor for Employment Standard, Victoria A. Lipnic said, “This settlement provide $33 million in back wages, lust interest to Wal-Mart workers, and the company has taken corrective action to prevent this from happening again.”

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