By  on January 26, 2007

WASHINGTON — Wal-Mart Stores Inc. agreed to pay more than $33.5 million in back wages and interest to 87,000 workers who were shortchanged on overtime during the last five years, the largest such settlement in 20 years.

Wal-Mart, which has sought to improve its public image amid accusations that it provides inadequate health and other benefits, discovered the underpayment during an internal audit and alerted the U.S. Labor Department.

The company said it also overpaid 215,000 hourly workers by at least $20 per employee during the same five-year period, but is not seeking to recover the overpayments.

The Labor Department filed a complaint against the Bentonville, Ark.-based retailer, and a federal judge on Thursday issued a consent decree in U.S. district court for the Western District of Arkansas regarding the violations of the Fair Labor Standards Act's overtime provision.

Wal-Mart faces no penalty or fine because the company reported its own mistakes. The retailer said it has adjusted pay practices to prevent a recurrence. Among the mistakes that skewed compensation was the failure to include bonuses and other income when determining the "regular rate" that is used to calculate overtime.

"We want our associates to know that the situation has been fixed, that overtime calculations now are being done correctly and that we've added safeguards to our payroll processes to make sure these types of errors don't happen again," Sue Oliver, senior vice president of the People Division at Wal-Mart, said in a statement.

The company also is trying to resolve an overtime shortfall complaint filed by the California Labor Department.

Wal-Mart faces numerous challenges to its labor practices, including a sex discrimination lawsuit that alleges 1.6 million current and former women employees received unequal treatment in pay and promotions. Wal-Mart's appeal of the suit's class-action status is pending.

Critics of Wal-Mart remained skeptical of its actions, even though the company voluntarily reported the underpayments.

"You can't have a company with this track record and an administration with this track record actually negotiate a deal that anyone is going to believe on its face is going to be good for these workers," said a spokesman for WakeUpWalMart.com, which is backed by organized labor.

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