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Thirty-three million dollars is on its way to tens of thousands of people employed by the nation’s largest retailer, according to an announcement made recently by the US Department of Labor (DOL).  The retailer, Wal-Mart Stores, Inc. (Wal-Mart), has been found in violation of state and federal minimum wage laws that pertain to overtime pay.

A recent ruling by the US District Court says both federal and New York overtime  laws were violated by the way Wal-Mart calculated minimum wage payments to its employees between February 1, 2002, and January 19, 2007.  The $33 million settlement will go to more than 86,680 Wal-Mart employees.

According to regulations overseen by the DOL Fair Labor Standards Act (FLSA), a standard work week consists of 40 hours.  Any work done in excess of 40 hours in a given week is to be paid at a rate of 1.5 times the standard pay.  The standard rate of pay is the source of the violations cited by the district court ruling.

Many Wal-Mart employees are paid a base hourly wage but may be entitled to incentives and other premium payments that boost their earnings.  The retail giant omitted the premium payments when calculating overtime pay rates during the time in question.

For example, an employee who earns $6.00 per hour as his or her base rate of pay would receive overtime computed at $6.00 times 1.5 (or $9.00 per overtime hour).  If this same employee regularly receives incentive and other premium payments paid on an hourly basis and these premium payments regularly bring the employee’s rate of pay for a standard work week to $7.00 per hour, overtime must be calculated using the larger figure (or $10.50 per overtime hour).

The judgment against Wal-Mart was filed by the DOL and was quickly approved in district court.  The ruling requires Wal-Mart to pay interest as well as back wages.  Victoria A. Lipnic, Assistant Secretary of Labor for Employment Standards, said recently, “This settlement provides $33 million in back wages, plus interest, to Wal-Mart workers, and the company has taken corrective action to prevent this from happening again.” 

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1. Posted by: Texas Company Pays $1.8 million in Back Wages - Labor Law Center Blog

   […] A number of other prominent companies have had similar violations of the FLSA this year. Rather than face a federal suit, Wal-Mart agreed to pay $33 million in unpaid overtime wages to nearly 86,700 workers nationwide for violations of overtime laws. […]