labor lawAdivision of labor law center

Federal and South Dakota overtime laws have been the subject of a recent court ruling which orders the nation’s largest retail employer to pay back wages plus interest to employees who received less overtime pay than the law allows.  The payout totals more than $33 million and affects more than 86,680 employees.

In a recent announcement, the US Department of Labor (DOL) said Wal-Mart Stores, Inc. (Wal-Mart), failed to maintain compliance with laws pertaining to calculating South Dakota minimum wage overtime payments.  Wal-Mart used base rates of pay to compute overtime wages for employees who were regularly receiving incentives and over premium payments in addition to base pay.

To illustrate this point, consider an employee who earns a base pay rate of $6.00 per hour but who also receives incentive and premium payments on a regular basis.  In this example, the employee is regularly paid an all-inclusive rate of $7.00 instead of the $6.00 base.  To remain in compliance with federal and state laws, the employee’s overtime rate of pay must be calculated using the $7.00 per hour rate, not $6.00.

Both the South Dakota overtime law and the federal law consider a standard work week to be 40 hours.  Any work done in excess of 40 hours for the week is considered overtime and the rate of pay is increased to 1.5 times the standard pay rate.

The DOL complaint was filed in US District Court, where it was promptly approved.  Compensation for unpaid back wages must be paid, along with interest on these unpaid wages, as a deterrent to future violations of these laws.

“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,” said Victoria A. Lipnic, DOL’s Assistant Secretary of Labor for Employment Standards.

The court order requires payment of miscalculated overtime wages for the period beginning on February 1, 2002, and continuing until January 19, 2007.

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