Wal-Mart Settles Federal Lawsuit

It has been announced that the retailing giant Wal-Mart have agreed to pay $33.5 million in back wages plus interest to settle a federal lawsuit, which accused the company of violating overtime laws involving 86,680 workers.

Officials from the US Labor Department said that many of the violations involved failing to pay time-and-a-half premium pay to managers and programmers in training.

Some other salaried non-managerial employees had also not been paid the correct amount of overtime when they worked more than 40 hours a week.

Wal-Mart was also accused of violating the Fair Labor Standards Act (FLSA) – a federal law that governs overtime – by failing to properly include factors such as bonuses when calculating the base wage to which the time-and-a-half rate corresponds.

The settlement paid by Wal-Mart is one of the largest ever reached by the FLSA.

More than 40 state lawsuits have been filed against Wal-Mart, most of them still pending. Most of the accusations revolve around the retailer making employees work off the clock and for refusing to pay employees the overtime they had earned.

Wal-Mart officials have been keen to point out that it was Wal-Mart itself who alerted the Labor Department to the overtime problems after finding them in an internal audit and has stringently denied any wrongdoing and liability whatsoever.

Following the closure of this particular lawsuit, the average compensation for the nearly 87,000 employees will be around $375, with 75 employees receiving more than $10,000 in back wages.

Of course, whilst not guaranteeing that each employee will clock in correctly, it may be within your organization’s interest to invest in a time and attendance system, which automates the process of recording and paying wages to your employees.

Many companies have stumbled in calculating the base pay for establishing overtime pay. An often complicated piece of legislation, it was deemed in this case that Wal-Mart hade made improper and illegal calculations by computing pay on a biweekly rate rather than a weekly rate.

In addition, vacation and sick pay had been used to determine the base hourly rate, which resulted in a lower value.

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