Wal-Mart Agrees to Pay $34 Million for Overtime Violations

Wal-Mart Stores, Inc., has agreed to pay nearly $34 million in back wages and interest for calculating overtime incorrectly over a span of almost 5 years. The agreement with the Department of Labor covers 86,680 employees who worked for the company from February 1, 2002 to January 19, 2007. The department says that Wal-Mart brought the matter to its attention after an internal audit raised concerns regarding overtime calculations. 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.LaborProfBlog makes two points regarding this story:

  1. He says Wal-Mart deserves credit for self-reporting this error; but
  2. It is very surprising that Wal-Mart's HR department allowed this to happen at all. This is not a complicated area of FLSA law.

While Wal-Mart does deserve some credit for self-reporting the issue, it is likely they did so because it was simply good business. By self-reporting and negotiating directly with the Labor Department, they were apparently able to cut a deal in which they are not required to pay any interest or penalties (including standard double damages) that they would most likely have had to pay had this been brought as a lawsuit against the company. It is also as yet unclear to me whether the Labor Department obtained all of the pay records at issue and calculated the wages owed themselves or whether they simply took Wal-Mart's word for what was owed.