Wal-Mart Stores announced a $54.25 million settlement on Tuesday of a lawsuit accusing it of wage violations in Minnesota — far less than the $2 billion in fines that it was threatened with when a judge ruled against it last July.
The settlement covers about 100,000 current and former hourly workers at Wal-Mart and Sam’s Club stores in Minnesota from September 1998 through last month.
In July, a state judge in Dakota County, Minn., ruled that Wal-Mart had violated state laws on rest breaks and other wage matters more than two million times and could as a result face more than $2 billion in fines. The judge, Robert R. King Jr., threatened a $1,000 penalty for each violation.
Judge King also ruled that Wal-Mart owed $6.5 million to 56,000 employees because of contractual violations, including a failure to give promised rest breaks at least 1.5 million times.
The settlement includes a substantial payment to the State of Minnesota, the two sides said. As part of the settlement, Wal-Mart agreed to maintain various electronic systems, surveys and notices that would help ensure compliance with state law and its own wage and hour policies.
Justin Perl, a lawyer for the plaintiffs, said, “We are satisfied with this settlement, gratified that these hourly workers will now be paid after seven years of litigation.”
In his July decision, Judge King ruled in Wal-Mart’s favor on several issues, concluding that it did not routinely make cashiers and stockers work off the clock. But he did find that Wal-Mart managers broke state law by making employees work off the clock while taking computerized in-house training courses.
Employing Wal-Mart’s use of the term associates for its workers, David Tovar, a company spokesman, said: “Our policies are to pay every associate for every hour worked and to make rest and meal breaks available for associates. Any manager who violates these policies is subject to discipline, up to and including termination.”
Wal-Mart maintained that some workers had voluntarily missed breaks for meals, but Judge King concluded that the company knew about that practice and allowed it. He noted that Wal-Mart executives did little to redress the problem of missed breaks even after audits had repeatedly highlighted the practice. “They put their heads in the sand,” Judge King wrote.
Wal-Mart has faced more than 70 lawsuits across the country in which workers have accused it of making them miss required breaks or work off the clock. In a 2005 verdict in California, the retailer was ordered to pay $172 million for making employees miss meal breaks.
In 2006, a jury in Pennsylvania awarded $78 million against Wal-Mart in a lawsuit over rest breaks and off-the-clock work. Last year, a judge increased that award to $188 million to include damages, interest and lawyers’ fees. The company has appealed both verdicts.
Nancy Braun, one of the four original plaintiffs in the Minnesota lawsuit, complained that managers at her store in Apple Valley repeatedly failed to find substitute workers so that she could take breaks, including bathroom breaks, when she was the sole cook and waitress at the in-store restaurant. Judge King noted that Ms. Braun, as a result, ended up soiling herself several times.
Ms. Braun testified that the store was understaffed and the managers were under great pressure to minimize spending on payroll.