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.”
Wal-Mart recently agreed to pay more than $33 million to some 86,680 employees for violations of the overtime provisions of federal and Arkansas minimum wage laws. The company uncovered the violations during an internal audit, and voluntarily disclosed them to the US Dept. of Labor.
On the brighter side, Wal-Mart recently announced plans to pay over $530 million in bonuses to hourly workers. The annual bonuses are separate from management incentives. A total of 813,759 part-time and full-time workers at Wal-Mart and Sam’s Club retail outlets are eligible for the bonuses, which average $651 per employee. According to Wal-Mart spokesperson Sarah Clark, the bonuses are part of a program that has been in place for a decade, although this year’s amount is the highest ever paid. The company also announced separate bonus programs for employees who deliver exceptional customer service, and for workers with more than 20 years on the job. According to Clark, in future years the bonuses will be divided into quarterly payments, rather than paid on an annual basis.
Wal-Mart is headquartered in Bentonville, Arkansas and is the nation’s largest retailer. The corporation operates almost 4,000 stores in the country, including Wal-Mart Discount Stores, Neighborhood Markets, Sam’s Club warehouse stores and Wal-Mart Super centers. The company was founded by Sam Walton, famous for his homespun wisdom and unassuming manner.
In recent years, however, the company has faced a number of legal woes including allegations that some managers locked employees in the stores at night to prevent theft.
As part of this settlement, the retail giant has agreed to pay interest on the back wages, and to correct it’s payroll accounting in the future. To finalize the agreement, the Labor Department filed a complaint in U.S. District Court in Fort Smith, Arkansas, against Wal-Mart Stores Inc. The complaint alleges violations of the FLSA overtime provisions as well as state minimum wage laws. A consent judgment ordering the company to pay back wages and enjoining it from further violations was filed at the same time. The consent judgment was promptly approved by the court.
The Razorback state, Arkansas, has its very own overtime laws that we should cover while we’re looking at how overtime laws are quite different all around the Union. As with many of the overtime laws that I’ve brought up so far, and will surely cover in the future, Arkansas’ overtime law has some striking similarities with other state laws.
First and foremost, Arkansas’ law provides that no employer should make their employees work a week that lasts longer than 40 work hours. Well, they can work their employees longer than that, as long as they pay them one and a half times their normal wages for every hour, minute, and second over 40. This is pretty standard stuff that we’ve seen before in other states, and in fact matches the federal Hour and Wage Law.
Now come the differences, though. In Arkansas, you used to be exempt from the overtime law as it stood normally, for instance, if you were a hotel, tourist attraction, restaurant, or similar establishment and did not bring in more than $500,000 in annual sales volume.
In that case, you only had to start to pay overtime rates if your employees worked more than 44 hours from July 1, 1991, to July 1, 1992. After July 1, 1992, however, these employees would get the normal overtime rate after working more than 40 hours per week.
To this day, though, agricultural workers do not get overtime pay in Arkansas. This exception in Arkansas gets mention in two subsections of their overtime law. The first specifically mentions the 1.5 times pay rate, and how farmers don’t get it. The second similar provision says that no sections of the overtime law can be shown to mean that agricultural workers get extra pay for working more than 40 hours a week. We’ve seen that in other states as well, and it shows the value that farmers still have in this Great Land.
Arkansas overtime laws can be found on the Arkansas Complete Labor Law poster encompassing both the state and federal labor laws.