Wal-Mart Pays $45 Million For "No Wrongdoing"

Wal-Mart has agreed to shell out up to $35 million to a class of its employees in Washington State who sued the company, but the retailer says it did nothing wrong -- always.
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It was announced this week that Wal-Mart has agreed to shell out up to $35 million to a class of its employees in Washington State who sued the company for denying them rest breaks and meal breaks, and for forcing them to work off the clock, which is illegal. But the retailer says it did nothing wrong -- always.

The settlement ends the case Barnett v. Wal-Mart, which was being presented in King County, W.A. Superior Court. According to legal documents, as many as 80,000 plaintiffs were covered by the class action suit. This settlement was actually reached just before Christmas in 2008. The Washington state case was part of a "Christmas Settlement" reached with Wal-Mart in a staggering 63 wage and hour class action lawsuits brought by the retailer's own "associates."

The workers covered in the Washington case were current and former Wal-Mart employees who worked for the company since September 10, 1997. The Washington case was just a small piece of the total suits settled, leaving Wal-Mart with a bill of at least $352 million, and possibly as high as $640 million, according to a press release issued last Christmas.

At the time, Wal-Mart's lawyers said that the settled cases were "in the best interest of our company, our shareholders and our associates." Wal-Mart brushed off criticisms of its labor policies by suggesting that the company had changed its ways. "This lawsuit was filed years ago," Wal-Mart's lawyer said, "and the allegations are not representative of the company we are today." After eight years of litigation, workers who were deprived of meal or rest breaks, or otherwise underpaid, will finally be compensated for their work.

The Washington case was originally filed in September 10, 2001. The workers alleged that they were not given short rest breaks and meal periods, had to work off-the-clock, and were not paid for all the time they worked. By the fall of 2004, the courts had ruled that these workers could pursue their claim as a class. Wal-Mart appealed that ruling, but in the spring of 2007, the Washington Supreme Court denied Wal-Mart's petition for review regarding the class definition. On December 10, 2008, the parties participated in a full-day private mediation, and as a result of the settlement discussions and mediation, the parties reached an agreement to settle the litigation. Wal-Mart agreed to pay up to $35 million to these Washington state workers, while at the same time stipulating that the company did nothing wrong. The King County Court also ordered Wal-Mart to pay its workers' attorneys $10 million in legal fees. The total legal cost to Wal-Mart for its own attorneys was not disclosed.

In the settlement agreement, Wal-Mart included the following Statement of No Admission: "Nothing contained in this Agreement shall be construed or deemed an admission of liability, culpability, or wrongdoing on the part of Wal-Mart, and Wal-Mart denies liability therefor. Nor shall this Agreement constitute an admission by Wal-Mart as to any interpretation of laws or as to the merits, validity, or accuracy of any claims made against it in the Litigation. Each of the Parties has entered into this Settlement with the intention to avoid further disputes and litigation with the attendant inconvenience and expenses."

Wal-Mart insists to this day that their workers should not have been allowed to form a class for the purposes of the lawsuit, and that the workers did not miss their meal breaks: "Wal-Mart denies any liability or wrongdoing of any kind associated with the claims alleged and contends that this Litigation is not appropriate for class or collective action treatment...Wal-Mart also preserves and does not waive other objections, including without limitation whether Wal-Mart's time-clock records and other evidence as alleged by Plaintiffs are sufficient to allow a fact finder to draw inferences regarding whether rest or meal breaks were missed or interrupted." In other words, "we were framed."

Wal-Mart was not willing to go back to a time clock to record rest breaks, giving workers a clear record of their hours, but the company said it would "make reasonable efforts to verify that hourly associates are being provided the opportunity to take legally required meal and rest breaks, and are not being permitted to work off the clock."

Wal-Mart also agreed to allow its workers to call its Ethics Hotline to report missed rest breaks, missed meal breaks or off-the-clock work. But any worker foolish enough to do that could expect coaching or a write up later by Wal-Mart. Wal-Mart said it would post a notice in the break room of each store or club informing its workers of the Ethics Hotline.

Wal-Mart stockholders might want to make a call of their own -- but not to the Ethics Hotline. Who could blame any shareholder from calling the company's Investor Relations line at 479-277-1498 with the following message: "It's all well and good for Wal-Mart to pay out $45 million to settle the Washington wage and hour dispute, but as a shareholder, I certainly hope we don't keep seeing more of these cases in the headlines. Not only are these cases cutting into the company's bottom line, but it hurts our credibility to have dozens of lawsuits on the same issue of rest breaks, meal breaks, and off the clock work. How can the company say with a straight face that 'our policy is to pay associates for every hour worked and to make rest and meal breaks available,' when we just settled more than 60 cases in which the workers say we shortchanged them? Pay your people for their hours worked, give them meal and rest breaks, and stop dragging us through the courts while saying there has been no wrongdoing. This is just not credible anymore, and it is selling the stockholders short as well. We expect this company to help its workers 'live better.' This is not the company Wal-Mart is today."

Al Norman is the founder of Sprawl-Busters. His first book about fighting big box stores was Slam-Dunking Wal-Mart: How You Can Stop Superstore Sprawl In Your Hometown.His website is http://www.sprawl-busters.com

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