August 2007

OT miscalculations cost Wal-Mart $4 million in California

You may not be Wal-Mart Stores, Inc., but if you employ nonexempt employees, you may learn a lesson from this popular company. The retailer recently was ordered to pay more than $3.9 million in overtime, penalties, and interest to approximately 50,000 employees in the state of California, the state’s labor commissioner announced.

The settlement includes payment of “waiting time” penalties to employees for late payment of final wages. Under the terms of the settlement agreement, waiting time penalties will be provided to employees who are no longer working for Wal-Mart, but left before receiving their overtime pay. Many of the employees have already received checks for overtime and interest, with remaining payments to be issued within 45 days, according to the agreement.

In addition, Wal-Mart agreed to pay $198,900 in civil penalties to the state of California. The payments affect California workers who were employed by Wal-Mart from February 2002 through January 19, 2007.

Wal-Mart voluntarily notified both the federal government and the state of California that errors in the company’s payroll processes led to the underpayment of overtime and other wages.

Wal-Mart says it failed to include periodic bonuses and other earned income in determining some employees’ regular rate of pay for overtime purposes. In addition, some overtime payments were based on a regular rate calculated for each two-week payroll period, when they should have been calculated weekly.

In January, Wal-Mart entered into a settlement with the U.S. Department of Labor. The settlement required the company to pay nearly $34 million in back wages and interest.

Source: Business & Legal Reports, www.blr.com

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