Wal-Mart must pay $33 million in back wages to more than 86,600 employees after failing to compensate them enough for their overtime work over roughly five years.
Paying the back wages will put Wal-Mart stores, Inc., in compliance with both federal and Iowa overtime laws.
The U.S. Department of Labor says the retail giant calculated the employees’ overtime on their base pay alone, and not on their pay plus incentives and premium payments, which is called the “average hourly compensation.” Wal-Mart essentially violated the Fair Labor Standards Act (FLSA). The FLSA requires, first, that employees be paid 1.5 times their normal pay (called “time-and-a-half”) for any time worked over 40 hours. Second, overtime must be calculated against their “average hourly compensation,” not their base pay. In other words, if employees get $6 an hour base pay but incentives and premiums amount to an average hour pay of $7 an hour, then the overtime must be calculated according to the $7 an hour figure.
The country’s largest retailer agreed to pay all back ages for the violations between February 1, 2002 and January 19, 2007, and it has agreed to pay interest on the amount. According to the Labor Department, that should act as a deterrent.
“This settlement provides $33 million in back wages, plus interest, to Wal-Mart workers,” said Assistant Secretary of Labor for Employment Standards Victoria A. Lipnic. She added that the company “has taken corrective action to prevent this from happening again.”
To back up the agreement, the Labor Department obtained a consent judgment against Wal-Mart ordering it to pay the back wages and forbidding it from similar violations in the future. The consent judgment was obtained by filing a complaint against Wal-Mart Stores, Inc., in U.S. District court. The court’s consent judgment required Wal-Mart to pay the back wages and interest on the $33 million.
In all, 86,680 employees throughout the U.S. were involved.
Iowa is one of those states that we should look closer at when examining the overtime labor laws that different states have across the country. As we’ve seen in other states, there are some that have their own extensive definitions for overtime, and a whole list of their own exemptions for who is and who isn’t entitled to overtime pay.
Then again, there are a whole list of other states that choose to basically follow the federal guidelines for overtime as they stand. The so-called Fair Labor Standards Act, or FLSA for short, is the law used by the U.S. government to regulate how interstate and large employers pay their workers for overtime.
Chalk up Iowa to our list of these latter states. The only stipulation that Iowa adds on its own to the overtime labor laws within its borders is that employees are entitled to whatever agreement has been reached between them and their employers. That means if an employer has agreed to pay you two times your normal rate for work over 40 hours a week, they better pay you that when you work 50 hours one week.
If there isn’t such an agreement between employees and employers, then Iowa’s overtime labor law basically defers to the federal law, or FLSA. This law specifically mandates that employers that operate across state lines, or that produce goods or services that are used across state lines, must pay employees time and a half for any time spent working over 40 hours in a seven-day work week. Employers who have more than $500,000 in revenue also are required to follow this law.
Where does this leave employees at smaller companies in Iowa? Say, for instance, you work for a small mom and pop convenience store in Iowa. That isn’t an interstate company obviously. So any overtime that you could get paid would be dependent on whether you have an agreement with your employer for that overtime pay. Otherwise, you are not covered by the FSLA.