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Wal-Mart to Pay Up to $640M in Labor Settlement

Wal-Mart Stores Inc. said it will pay up to $640 million to settle 63 class action suits charging that the retailer cheated employees of hourly pay.

Wal-Mart Stores Inc. said Tuesday that it will pay $352 million to $640 million to settle 63 class action suits charging that the retailer cheated employees of hourly pay by forcing them to work off the clock.

The lawsuits were filed in federal and state courts between 2000 and 2007. The settlement will be subject to approval in each separate court, and the number of claims filed by class members will determine the total amount Wal-Mart pays.

“Resolving this litigation is in the best interest of our company, our shareholders and our associates,” said Tom Mars, Wal-Mart executive vice president and general counsel. “Many of these lawsuits were filed years ago, and the allegations are not representative of the company we are today.”

The agreement also calls for the Bentonville, Ark.-based retailer, the world’s largest, to continue to use various measures, including electronic systems, to comply with wage and hour policies and laws.

The settlement will result in an after-tax charge of about $250 million, or 6 cents a share, in the fourth quarter for Wal-Mart, which employs about 1.4 million people.

Under president and chief executive officer H. Lee Scott, Wal-Mart has made progress in turning around its image, which had suffered under relentless criticism from labor groups, elected officials and environmentalists. Scott is retiring and will be replaced Feb. 1 by Mike Duke, ceo of Wal-Mart International.

“We are pleased with this settlement and believe it is fair and reasonable for our clients,” said Frank Azar, co-lead counsel for suits in 14 states. “We hope Wal-Mart’s compliance programs will serve as an example to other major retailers.”

The announcement from Wal-Mart came just weeks after it agreed to settle a similar wage lawsuit in Minnesota state court, one not included in Tuesday’s settlement. In 2001, workers in the state filed a class-action suit accusing the company of reducing break times and requiring off-the-clock work. On Dec. 9, the company said it would pay as much as $54.3 million to up to 100,000 workers to end the litigation.

In July, the Minnesota district court judge overseeing the lawsuit ordered Wal-Mart to pay $6.5 million to the plaintiffs. The parties settled before a jury trial to determine civil penalties, which could have been up to $2 billion. The court has scheduled a hearing for preliminary approval of that settlement on Jan. 14.