Thousands of workers in Washington may feel they’ve been poorly treated during their employment with Wal-Mart Stores, Inc. (Wal-Mart), but a recent court order backed by the US Department of Labor (DOL) may change that.
Wal-Mart has been cited with failing to comply with federal and Washington state overtime laws. The retail giant has agreed to make amends by paying more than $33 million for unpaid back wages plus interest.
The Washington overtime law closely parallels similar federal laws including the Fair Labor Standards Act (FLSA). These labor laws require employers to pay an overtime rate of 1.5 times the usual hourly rate paid to an employee for every hour the employee works beyond the full-time standard of 40 hours per week.
To remain in compliance with federal and Washington overtime laws, Wal-Mart has agreed to pay approximately 86,680 workers in the state who worked at Wal-Mart for the period ranging from February 1, 2002, to January 19, 2007. According to FLSA regulations, Wal-Mart computed overtime rates for these employees incorrectly.
Wal-Mart paid its workers overtime rates based upon their average hourly wage rate and failed to include premium payments, such as incentive bonuses. As an example, a worker earning a standard hourly wage of $6.00 who received incentives and other premium payments that regularly brings the hourly rate to $7.00 per hour is entitled by law to earn overtime pay at a rate of 1.5 times the $7.00 per hour rate. During the time in violation, Wal-Mart based the overtime rate for this employee at $6.00 per hour instead of the correct $7.00 per hour.
Wal-Mart is required to pay back wages on the unpaid overtime plus interest as an effort to deter the nation’s largest retailer from future violations of these state and federal laws. According to Victoria A. Lipnic, DOL’s Assistant Secretary of Labor for Employment Standards, “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.”
An agreement Wal-Mart Stores, Inc. reached with the US Department of Labor concerns federal and Washington overtime and minimum wage laws. In the agreement, Wal-Mart has agreed to pay employees back wages of over $33 million. The issue behind this agreement was how overtime pay was computed by the giant retailer.
Wal-Mart Stores, Inc. did not pay overtime properly, thereby violating the Fair Labor Standards Act, also known as FLSA. To comply with FLSA, employers need to pay employees who work over 40 hours in a week overtime that is calculated using their normal hourly rate. Overtime is to be calculated at 1.5 times an employee’s usual rate. The number of employees affected by this agreement is 86,680. The time period covered by the agreement is from February 1, 2002, though January 19, 2007.
According to Assistant Secretary of Labor for Employment Standards, Victoria A. Lipnic, “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.”
Wal-Mart Stores, Inc. owes the back pay because of the way it handled premium and incentive payments when it calculated overtime for employees. The way the law works, overtime for employees is calculated using their average hourly pay rate. For instance, if employees normally earn $7.00 per hour due to incentives and premiums but their base pay is $6.00 per hour, overtime should be figured on the $7.00 per hour amount.
The terms of the agreement mean that for identified violations, Wal-Mart Stores, Inc. will pay employees not only their back pay, but also interest on that pay. The interest acts as a deterrent so that in the future, this sort of overtime violation does not happen again.
The agreement was finalized by the U.S. Department of Labor, which filed a complaint against Wal-Mart in the U.S. District Court. At the same time, a consent judgment was filed, which ordered the company to pay employees their back wages.
If you are a worker is who regularly asked to work more than 40 hours per week, it might be worth your while taking some time to sit down with a pencil and paper and do a few calculations to make sure that you are receiving the overtime payments that you are entitled to.
A recent announcement by the US Dept of Labor states that Wal-Mart Stores Inc., has agreed to pay over $33 million in back wages to comply with federal and Washington overtime laws. This means that it could prove to be worth your while to take a fresh look at the laws relating to overtime payments.
Wal-Mart was found to be in violation of the Fair Labor Standards Act, according to the US Dept of Labor. This act states that employees who are covered by the act are entitled to overtime payments at the rate of 1.5 times their usual hourly rate, for every hour they work over 40 hours per week.
The crucial word here is ‘usual’.
Employers cannot calculate your overtime pay on your base hourly rate, if you usually receive more than that per hour, for example, if you receive incentive payments. They must take these into account in their overtime calculations. This is one area where Wal-Mart fell afoul of the Fair Labor Standards Act. It calculated many employees overtime payments based on their base hourly rate only.
Nearly every U.S. employee is covered under the FLSA.
Suppose your hourly rate is $6.00 per hour, but with premium or incentives you usually receive $7.00 per hour. Then your overtime payment must be calculated on that $7.00, not $6.00. That is, for each hour you work over 40 hours per week, you should receive 1.5 time $7.00, or $10.50 per hour.
This mistake can be costly for employers. Wal-Mart not only had to pay back wages, but also interest on the money, so as to act as a deterrent. Around 86,680 employees were effected by the judgment.
In Washington state, when considering the overtime labor laws there, we will have to look at the laws exemptions for the main differences that this state’s laws have with other states’ laws, as well as the federal laws.
Because when it comes to work week lengths and the overtime pay rate, Washington follows generally speaking the guidelines set up by the federal government in the Fair Labor Standards Act, or FLSA.
That says that employees must receive at least one and a half times their normal pay rate for all work that they do over 40 hours in a week. Where the differences come in, as I mentioned before, is where there are people in Washington state who aren’t attached to this law.
But another difference is that Washington allows compensatory pay instead of overtime pay for hours worked over 40. That means that if I work 43 hours in a week, then during the following week I can work 3 hours less—37 hours—to compensate for the overtime I worked the previous week. Of course, then I wouldn’t get overtime pay for those 3 hours.
That would make me exempt from overtime, then, if I took the compensatory benefit instead of the overtime pay, technically speaking. There are many other instances of exemption in the Washington law that we should look at.
For instance, any worker who is exempt from the state minimum wage law is also automatically exempt from the overtime law according to Washington state’s rules.
Also exempt are a whole host of other occupations. These include people who work seasonally at agricultural fairs, union movie projectionists, truck and bus drivers who fall under federal guidelines for transporting goods and people, and farm employees. Commissioned salesmen who sell vehicles are also exempt from the overtime law in certain circumstances and if they meet certain criteria.