Labor and Employment

Wal-Mart: A Target for Employment Lawsuits?

Update

In mid-May 2010, Wal-Mart announced its agreement to settle In re: Wal-Mart Stores Inc Wage and Hour Litigation, a class action lawsuit filed in a California federal court. In the suit, thousands of former employees claimed Wal-Mart didn't pay them vacation pay and wages as required by California law.

Wal-Mart has agreed to pay Wal-Mart at least $43 million and as much as $86 million to settle the suit. As of mis-May 2010, the federal court hasn't approved the settlement yet.

Update

In late April 2010, the US Court of Appeals for the Ninth Circuit made an important decision in the Dukes v. Wal-Mart suit. It's a sexual discrimination case that started back in 2001 as a class action lawsuit.

The suit involves over one million current and former female Wal-Mart employees who claim:

  • Women are paid less for doing the same jobs as men
  • Women workers aren't promoted as often or as quickly as men workers

Wal-Mart has fought the suit since the beginning, mainly on the groundthat the group of former and current employees (the "class") isn't qualified legally to file the lawsuit in the fist place.

In a very close decision - six judges sided with the employees and five sided with Wal-Mart - the Ninth Circuit said the case could go to trial. However, the federal trial court will first have to decide if the employees can sue for "punitive" damages - that's money Wal-Mart would have to pay as punishment for its discrimination. It also has to decide if other employees should be included in the suit.

Regardless of whether or not more employees are added or they can ask for punitive damages, Wal-Mart will have to pay billions of dollars if it loses the lawsuit.

Wal-Mart responded to the Ninth Circuit's ruling,saying it's pleased with parts of the decision, but is also thinking about asking the US Supreme Court to look at the case.

Original Article

If you live or have ever shopped in the United States, most likely you've entered a Wal-Mart store and were amazed by the store's size, variety of items and low costs.

Wal-Mart Stores, Inc. (Wal-Mart) runs a chain of large discount department stores that contain everything from kids' toys to caskets. It's the world's largest public corporation, the largest grocery retailer in the United States and also its largest private employer.

Very Public Profile

While financially successful, Wal-Mart's image isn't as positive. It's been criticized by women's rights' groups, community groups and labor unions. It's known for sourcing foreign products, not offering health insurance to workers, resisting union representation and allegations of sexism. On the other end of the spectrum, its efficiency and low costs offers its customers the lowest prices and provides many jobs in the communities where it operates.

Wal-Mart's working conditions have been subject to criticism and many lawsuits have been started against the retailer. In October, Wal-Mart agreed to pay $11 million to settle a class action lawsuit against it in Iowa. This lawsuit was filed in 2001 by 97,000 current and former Wal-Mart workers in Iowa, accusing the store of forcing them to skip lunch and rest breaks. Wal-Mart's also been accused of making employees work "off the clock" - continuing to work after punching out and not getting paid for this time.

The Iowa settlement is only one of many. Wal-Mart has at least 80 class action lawsuits in 41 states pending against it, 76 stem from wage and off the clock issues. In December 2009, it announced it would pay as much as $640 million to settle these cases.

What Is a Settlement?

A legal settlement is when the parties of a lawsuit reach an agreement to a case rather than going to court, thus "settling" the issue. Most of these lawsuits involve class action claims, meaning a large group of people with similar claims come together in one lawsuit. Any settlement proposal must be approved by the court.

As part of the Iowa settlement, Wal-Mart did not admit any wrongdoing.

Other Wal-Mart Lawsuits

  • Barnett v. Wal-Mart Stores, Inc. et al - Settled December 2008; Wal-Mart reached a settlement of the wage and hour class action lawsuit against it in Washington state. This settlement provided a $35 million payment to a certified class of over 80,000 current and former Wal-Mart associates who worked for Wal-Mart in Washington since September 10, 1997 and were deprived of meal or rest breaks, or were underpaid. In addition to money rewards, Wal-Mart agreed to use various electronic systems and other measures designed to maintain compliance with its wage and hour policies
  • Dukes v. Wal-Mart - Filed 2001;A landmark case in employment discrimination. Here, 1.6 million female employees accused Wal-Mart of discriminating in promotions, pay, training and job assignments. Six women, including two who still work at Wal-Mart stores, originally filed the suit in 2001. They brought the case on behalf of all past and present female employees in the company's US retail stores and warehouse clubs since 1998. This is the largest sex-bias case in US legal history and an award is predicted to be at least a billion dollars. Wal-Mart continues to fight the class certification in this case
  • Savaglio v. Wal-Mart - Wal-Mart is facing a $198 million judgment from a class action lawsuit where employees said they were not provided meal and rest breaks in accordance with California state law. This is the largest verdict to date against the retailer. The allegations are like the others: Workers weren't provided meal and rest breaks according to California state law which grants employees working more than 6 hours a 30-minute meal break or an additional hour pay
  • Braun/Hummel v. Wal-Mart - A similar case in Pennsylvania involved complaints of missed meal and rest breaks and other failures to pay employees for all time worked. That case resulted in a judgment against Wal-Mart of nearly $188 million
  • Hale v. Wal-Mart - Filed 2002; Five former employees in Missouri filed the claim, but since then it's grown to more than 200,000. The employees, working for the company's stores and discount warehouses between 1996 and 2003 alleged systematic understaffing and overtime limits. The understaffing caused employees to miss breaks and work off the clock without compensation

Wal-Mart's Response and its Future

Wal-Mart has consistently denied wrongdoing in these and other cases. It continually affirms that "Wal-Mart is committed to treating its associates fairly and in accordance with the law" and that employees didn't take their breaks voluntarily1. Wal-Mart spokeswoman Daphne Moore said in a statement. "It is our policy to pay every associate for every hour worked, and any manager who violates that policy is subject to discipline, up to and including termination."2

While Wal-Mart made $12.8 billion in net income in its recent fiscal year, these lawsuits threaten Wal-Mart's financial success. However, Wal-Mart reserves cash for potential lawsuit payouts, which means a reduced impact to the company and its shareholders.

Also, while many of these cases are now either in the trial setting or else being settled, most of these cases began many years ago. According to fund manager Patricia Edwards, this is a "consolidation" because "there doesn't seem to be a lot of new cases in the pipeline, an indication that Wal-Mart may have changed its ways." She explains "If you're dealing with things that happened three to five years ago and you've changed and are not doing those things anymore, then you have to look at the company on a go-forward basis rather than what's happened before."3

While most of these cases are being either won in courts or settled out of courts, Wal-Mart isn't an easy target. "Wal-Mart is a formidable defendant," Steve Long, representing the Missouri plaintiffs in Hale v. Wal-Mart said. "They fight very hard for what they believe, and they fight very hard to protect the way they practice their business in order to preserve their profits. Since they make a lot of money, they can fight very hard."4 Nonetheless, the Iowa settlement and the class certifications in the pending cases are changing the way Wal-Mart treats its employees.

Filing an Employment Claim

Just because these employees filed a claim and "won" the case through a settlement, doesn't mean that it's easy to sue your employer. It takes proof, time and money. Not to mention a lawyer who thinks your case has merit and take your case.

One of the reasons these cases won is that it became a class action lawsuit involving thousands of people.

You may also feel repercussions from filing a claim or "blowing the whistle" on the company you work for. For example by losing your job, demoted or being "left out" of company events, meetings or acknowledgement.

Sources

1Steven Greenhouse, Wal-Mart Told to Pay $78 Million, The New York Times, Oct. 14, 2009, available at http://query.nytimes.com/gst/fullpage.html?res=9F06E6DA1130F937A25753C1A9609C8B63, accessed Nov. 12, 2009.
2 Sheri Qualters, Mass. High Court Orders Certification of Wal-Mart Meal Break Class Action, The National Law Journal, Sept. 25, 2008, available at http://www.law.com/jsp/article.jsp?id=1202424767375, accessed Nov. 12, 2009.
3 Kimberly Morrison, Like Clock Work: Wal-Mart Faces 80 Class Action, Most from Off-The-Clock Allegations, The Morning News from Wakeup Walmart.com, June 21, 2008, available at http://wakeupwalmart.com/news/article.html?article=1621, accessed Nov. 12, 2009.
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Questions for Your Attorney

  • I have a part-time job with a major retail chain; what are my options for legal help if I think my employer is violating wage and hour laws? Isn't my situation too insignificant to matter unless my claim is part of a class action lawsuit?
  • If I think my direct manager or department is violating employment laws, should I seek help from the company's human resources department before seeking legal relief?
  • I used to work for a company that's involved in a class action lawsuit by employees; how can I find out if I can be included in the lawsuit?
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