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September 22, 2010
Value of an Internal Risk Audit on Overtime, Bonuses

In a BLR webinar entitled "Avoid Startling High Fines and Expensive Lawsuits Based on Failure to Pay Overtime on Bonuses," Clint D. Robison, Esq. from the Los Angeles office of Hinshaw and Culbertson LLP described a scenario in which Wal-Mart Stores discovered discrepancies via its own internal audit. Despite the $34 million price tag to cover the discrepancies the audit revealed, a lawsuit would have been more costly and likely involved additional fines:

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  • Wal-Mart Stores entered into a settlement agreement with the DOL regarding the manner in which the company calculates overtime pay.
  • Wal-Mart had failed to include periodic bonuses and other earned income in determining some associates' weekly average hourly pay rate, or "regular rate," which was used to determine associates' overtime pay.
  • The company also calculated the regular rate on a biweekly rather than weekly basis and did not properly account for overtime involving some managers in training and other associates.
  • The settlement included no fines or penalties, and Wal-Mart adopted measures to prevent these errors from occurring in the future.
  • Approximately 87,000 current and former hourly associates were underpaid by at least $20 during the last five years.
  • Under the terms of the settlement, Wal-Mart paid these associates the amount of their underpayments -- plus interest -- totaling about $34 million.

Clint D. Robison, Esq. is a an attorney in the Los Angeles office of Hinshaw and Culbertson LLP (www.hinshawlaw.com) and Chair of its Employment Practice Liability subgroup. He provides counseling, litigation and risk management services to medium- and large-sized public and private entities and handles all aspects of employment litigation and advice including wage and hour matters, discrimination claims, employment contracts, trade secret issues, retaliation claims, sexual harassment claims and Americans with Disabilities Act (ADA) issues.

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