Wal-Mart’s Costly Wage and Hour Mistakes

The big news recently in the employment law arena is that Wal-Mart Stores, Inc. has agreed to settle 63 wage and hour lawsuits in 43 states. The settlement of these class actions will cost Wal-Mart somewhere between $352 million and $640 million!

What the heck did Wal-Mart do wrong that could cost them a half billion dollars? The thousands of class action plaintiffs allege that Wal-Mart managers pressured employees not to record all their time actually worked or to work through hours that were recorded as unpaid meal and rest breaks. Employees who actually recorded the overtime hours they worked were allegedly disciplined and humiliated. For example, one store manager allegedly posted the names of employees recording overtime next to the time clock to remind others that overtime was against company policy.

For its part, Wal-Mart says that these are old allegations and not indicative of how Wal-Mart does business today. Unfortunately, it is the way many employers in the Panhandle still do business. Here are a few points to remember to avoid wage and hour liability in your business:

  • Assume that every employee is nonexempt and due overtime pay for every hour over 40 worked in one workweek. The number of “executive” or “administrative” employees who actually fit the white-collar overtime exemptions is very small. Unless you have a legal opinion supporting your belief that a particular employee is exempt, the smart bet is to pay time and a half for all overtime any of your employees works.
  • Pay employees for all meal and rest breaks unless you can very clearly show that the employee was completely relieved of all duties for at least 30 minutes. If you have your secretary run to the post office to retrieve your mail or to Office Depot to pick up supplies during her lunch break, she is still working for part of that break and must be compensated for that time.
  • Similarly, pay employees for any time spent getting ready or finishing up your work. If they are doning uniforms or safety equipment, refueling the company truck, or cleaning up a worksite at the end of the day, that is still time related to the job and you would be smart to pay them for it.
  • Even if you have a policy that says that overtime must be authorized by a supervisor prior to working it, that does not lessen your responsibility to pay for all overtime, even if unauthorized. You can use that policy to begin progressive discipline of the employee who blatantly violates it, but you can’t withhold the overtime pay due to that employee.
  • Have all of your employees fill out time records, even if you consider them exempt. When the Department of Labor investigates, they will accept the employee’s version of how much overtime was worked (no matter how outlandish) unless the employer has time records to contradict the employee’s testimony. Even though the employee makes an allegation of overtime due, the burden of proof is on the employer to show that all overtime was paid correctly. This puts the responsibility on your business to keep very accurate and detailed records.

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