Wal-Mart Stores Inc. will pay up to $54.3 million to settle a class-action suit brought against it in Minnesota that alleged the firm reduced workers’ break time and let employees work off the clock.
This story first appeared in the December 10, 2008 issue of WWD. Subscribe Today.
Separately on Tuesday, the world’s largest retailer also said it was suspending a $15 billion share repurchase program. Wal-Mart said in a Securities and Exchange Commission filing that it is temporarily discontinuing a $15 billion stock repurchase program its board approved in May 2007 due to the economic environment and instability in the credit market. The company said that, as of Oct. 31, it still had about $5 billion remaining from the initial authorization.
The retailer revealed the Minnesota settlement agreement in a joint statement released with the plaintiffs in the case.
The settlement could be shared by up to 100,000 current and former hourly employees who worked at Minnesota Wal-Marts and Sam’s Clubs between Sept. 11, 1998, and Nov. 14, 2008. It will also include a substantial payment to the state of Minnesota, the parties said. The deal is still subject to approval from a trial court.
“We are satisfied with this settlement, gratified that these hourly workers will now be paid after seven years of litigation and happy that the state of Minnesota will receive the largest wage and hour civil penalty in its history,” said attorney Justin Perl of Maslon Edelman Borman & Brand, which represented the class.
Nancy Braun, a former hourly employee, first filed the suit in 2001 and was later joined by other workers. Braun’s initial complaint accused the retailer of not allowing for sufficient breaks and meal periods.
In July, after a trial in Hastings, Minn., a district court judge ordered Wal-Mart to pay $6.5 million to workers in the class-action suit. Following that decision, the discounter could have faced a jury trial to determine civil penalties in the case of up to $2 billion, had the two sides not reached a settlement.
As part of the settlement, Wal-Mart will maintain electronic systems, surveys and notices to further compliance with state wage and hour policies, the parties said.
“Wal-Mart is pleased that the court in Minnesota ruled in its favor on many claims,” said Wal-Mart spokesman David Tovar. “Our policies are to pay every associate for every hour worked and to make rest and meal breaks available for associates.”
In his July decision, Judge Robert R. King Jr. said Wal-Mart’s management “put their heads in the sand” when they did not respond to internal audits that should have alerted them to the potential for widespread problems with break times. King found that employees missed 1.6 million rest breaks and cut 428,641 breaks short over a nearly four-and-a-half-year span.
The court has scheduled a hearing for preliminary approval of the settlement for Jan. 14.