Wal-Mart hit with $188 million judgment for ‘off the clock’ work

Wal-Mart Stores, the nation’s largest private employer, was hit with a $188 million order this week by the Pennsylvania Supreme Court over failure to allow workers their full meal and rest breaks. Braun/Hummel versus Wal-Mart, a class action case, was originally filed in March 2002 for the class period beginning in 1998 and ending in 2006.

The original ruling was handed down in 2006 but Wal-Mart appealed in 2011. Monday’s (Dec. 15) decision was an answer to that 2011 appeal. Aside from reversing some of the attorney fees, the court largely affirmed its original order, according to a filing with Securities and Exchange Commission on Tuesday (Dec. 16).

“We disagree with the decision, and continue to believe that these claims should not be bundled together into a class action lawsuit. We are reviewing the opinion closely and considering our options, including a petition for review by the U.S. Supreme Court,” said Wal-Mart corporate spokesman Randy Hargrove.
 
Continuing, Hargrove noted: “Most of these claims are over 10 years old. Wal-Mart has had strong policies in place to make sure all associates receive their appropriate pay and break periods. We have taken additional steps over the last decade, including enhancing our timekeeping systems and additional training, to make sure all our associates understand the importance of those policies and comply with them. We are committed to our 1.3 million associates who work hard every day to serve our customers.”

The lawsuit represented approximately 187,000 employees who worked in Pennsylvania between 1998 and 2006. The plaintiffs alleged they were promised paid rest and meal breaks, but were forced to work on breaks and “off the clock” because the stores were “chronically understaffed.”

The original court found Wal-Mart owed $78.5 million in unpaid wages for off-the-clock work and break violations from March 1998 to April 2006. The trial judge also awarded an additional $62.2 million in statutory liquidated damages, $10.2 million in prejudgment interest, $33.8 million in statutory attorney fees and $11.9 million in non-statutory attorney fees. 

On Monday, the Pennsylvania Superior Court affirmed the bulk of that judgment at roughly $188 million.

"We are gratified by the Court's decision and hope that after all of these many years our clients will finally be paid all of the money they worked for and are owed by Wal-Mart,” said Michael Donovan, attorney for the class members.

This latest decision will require Wal-Mart to pay post-judgement interest at 6% dating back to the Nov. 14, 2007 date the original judgment was rendered, unless it is set aside on future appeal.

This order is going to pinch profits for the retailer who said it will incur a charge of roughly 6 cents per share in its fourth quarter earnings relating to this matter. That amounts to roughly 4% of its profit forecast of $1.46 to $1.56 for the period ending Jan. 31.

Wal-Mart shares were trading down only slightly on Tuesday, following the company’s SEC filing that outlined the impact to fourth quarter earnings. Shares were down 17 cents to $83.77 in the morning session. Over the past 52 weeks Wal-Mart shares have traded from a high $88.05 to a low $72.27.