According to a recent court settlement, Wal-Mart violated federal and Pennsylvania overtime laws when it under-calculated overtime pay for its employees, according to the U.S. Labor Department.
The price tag for violating a labor law on overtime compensation is no discount – the nationwide retailer must now pay $33 million in back pay to 86,680 employees around the U.S.
The reimbursement puts Wal-Mart in compliance with federal and Pennsylvania minimum wage laws.
The U.S. Labor Department alleged that Wal-Mart violated the Fair Labor Standards Act, or FLSA. The retailer under-calculated the overtime for the employees by using their “base rate” rather than their “average hourly compensation,” which is a larger number. All employees must be paid 1.5 times their pay for any hours over 40 hours. It’s customarily called “time-and-a-half.”
But the law says the 1.5 must be calculated according to the employee’s base pay plus premiums and incentives – in other words, the “average hourly compensation” The “base rate,” which Wal-Mart was using, is the pay without premiums or incentives. For example, if $6 an hour is the base rate but the employee gets, on average, $7 with premiums and incentives, then $7 is the figure that must be used for overtime payment.
“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, Assistant Secretary of Labor for Employment Standards.
The Labor Department also obtained a consent judgment from U.S. District Court. In the complaint with that court against Wal-Mart Stores, Inc., the Labor Department alleged that the retailer violated the overtime provisions of the Fair Labor Standards Act, or FLSA as well as state minimum wage laws. The court issued a consent judgment ordering Wal-Mart to make the back payments and ordered it to abstain from any future violations. The agreement has Wal-Mart paying all back wages for the violations, plus interest on the amount as a deterrent.
The Pennsylvania law for overtime is an interesting mix of regulations that we’ve seen in many other states, as well as regulations that are more based in just the Keystone State. That makes the state a worthy look for this blog here.
The main part of the Pennsylvania law that is similar to many other overtime labor laws throughout the United States is the length of the work week that Pennsylvania considers to be the standard week. And that length is 40 hours. In other words, if I were an employee and worked 45 hours one week, that would be over the standard work week and would trigger the overtime regulations.
Then, according to Pennsylvania law, my employer would be required to pay me a premium overtime pay rate for those five extra hours over the baseline 40. The premium pay rate for overtime in Pennsylvania is, again, similar to most other states: time and a half of my normal pay rate.
This is actually also the standard work week length and premium overtime pay rate prescribed by the federal statutes on overtime labor, the so-called Fair Labor Standards Act. This law, though, is only in effect for certain businesses in Pennsylvania, namely those that practice interstate commerce, have offices in states outside of Pennsylvania, and/or bring in more than $500,000 in revenue a year.
The Pennsylvania overtime labor laws, however, covers every business in the state, or almost. This is where the unique character of Pennsylvania’s overtime labor laws can be seen. Pennsylvania excludes some very specific businesses from having to pay certain workers for overtime.
Some of these exclusions include seamen, taxi drivers, maple sugar processors, and even news editors, chief engineers, and announcers for radio and television stations. Other employees excluded from earning overtime include movie theater employees and people who work at auto dealerships.