Wal*Mart Lessons Learned (or Maybe Not)
Posted on 26-Jul-08 by The Timekeeper
The news lately has been full of the story of Wal*Mart’s potential $2 billion (yep, that’s billion with a “b”) penalty for allegedly violating wage and hour laws in the case of Braun v. Wal-Mart Inc. in Minnesota. Basically, a state judge ruled Wal*Mart broke Minnesota labor laws by requiring hourly employees to work off-the-clock during training and denying full rest or meal breaks.
District Judge Robert King Jr. ordered the company to give employees $6.5 million in back pay. Perhaps more significantly, he ruled Wal*Mart broke labor laws more than 2 million times.
Judge King wrote: “Wal-Mart’s failure to compensate plaintiffs was willful. Wal-Mart was on notice from numerous sources of the wage and hour violations at issue and failed to correct the problem.”
So with $6.5 million in back pay awarded, where does the $2 billion figure come from? Well, Judge King’s decision the company broke the law means the case now goes to a second trial, this time in front of a jury, scheduled to begin in late October. Minnesota labor law allows a fine of up to $1,000 per violation, which with 2 million violations could total $2 billion in penalties. Of course, it’ll be up to the jury to decide specifically how much each violation is worth, so the actual total could be lower.
Now, one thing I found funny, in a sad sort of way, is that Wal*Mart’s own audits found that its hourly workers were missing rest and meal breaks. But managers were allegedly unresponsive to these audit reports, and Wal*Mart argued at trial the audits were unreliable.
Maybe they should have read my post advising them to have their lawyers conduct their wage and hour audits, so attorney-client privilege could have kept the audit results from being introduced as evidence in the case. 
This is actually the third straight loss they’ve faced in wage and hour class action suits. The first was in California in 2005 (over three years ago) and the second was in Pennsylvania in 2006. (Both rulings have been appealed.) As it happens, the company is facing something like 70 wage and hour cases — not all of them class action, of course — across the country.
So let me see if I’ve got this straight. The company’s already lost in two big class action suits. They’re facing around 70 more suits all over the country. They have their own internal labor audit results that show people are working off the clock and skipping breaks and meals. And instead of doing something substantive to make sure store managers play by the rules they call the audit finding “unreliable” and ignore them. What were they thinking?!?
Naturally, the company says they don’t endorse or permit store management to violate wage and hour law. Officially, that’s what they’d have to say (to say anything else would be insane, frankly).
But at some point, you have to wonder if the company’s policy to lowball prices, coupled with pressures on store management to maximize store profits, doesn’t have something to do with their ongoing wage and hour issues. And you have to wonder who’s brilliant idea it was to ignore their own wage and hour audits.
If the jury comes through with the maximum fine of $2 billion, I can’t see how this could possibly turn out to have been cheaper than playing by the rules to start with.
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