Wal-Mart Stores Inc. has agreed to pay $4,828,442 in back wages and damages to more than 4,500 employees nationwide following an investigation by the U.S. Department of Labor’s Wage and Hour Division (WHD). According to the DOL, the investigation found violations of the federal Fair Labor Standards Act’s (FLSA) overtime provisions. Additionally, Wal-Mart will pay $463,815 in civil money penalties.
The alleged violations affected current and former vision center managers and asset protection coordinators at Wal-Mart Discount Stores, Wal-Mart Supercenters, Neighborhood Markets and Sam’s Club warehouses. Wal-Mart failed to compensate these employees with overtime pay, classifying them as exempt. WHD’s investigation found that the employees are nonexempt and consequently due overtime pay for any hours worked beyond 40 in a week.
Under the terms of the settlement, Wal-Mart has agreed to pay all back wages the department determined are owed for the violations plus an equal amount in liquidated damages to the employees. The FLSA provides that employers who violate the law are, as a general rule, liable to employees for back wages and an equal amount in liquidated damages. The civil money penalties assessed stem from the repeat nature of the violations. Wal-Mart corrected its classification practices for these workers in 2007, and negotiation over the back pay issues has been ongoing since that time.
“Let this be a signal to other companies that when violations are found, the Labor Department will take appropriate action to ensure that workers receive the wages they have earned,” warned Secretary of Labor Hilda L. Solis.
Tip for employers: Exempt workers present a special risk for employers; on one hand, having employees who are exempt from overtime pay can be beneficial, but on the other hand, the employer risks fines from misclassification issues if they get it wrong. In a BLR webinar titled “2012 Exemption Checkup: How to Find and Fix Pay Practice Problems with An Easy Audit,” experts outlined some of the risks of misclassification, giving us the reasons to be certain when determining who to classify as exempt workers.