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Wal-Mart to pay at least $78 million for violating Pa. labor laws

Saturday, October 14, 2006

PHILADELPHIA -- Wal-Mart Stores Inc., the world's biggest retailer, must pay at least $78.5 million for violating Pennsylvania labor laws by forcing employees to work through rest breaks and off the clock, a jury found Friday.

Plaintiffs' lawyer Michael Donovan will also seek another $62 million in damages because the jury found that Wal-Mart acted in bad faith. Common Pleas Judge Mark Bernstein is expected to rule on that issue in the next few weeks.

The jury awarded the exact amount the plaintiffs sought, rejecting Wal-Mart's claim that some employees chose to work through breaks and that the loss of a few minutes' pay here or there was insignificant.

"It should send a message to corporate America that you can't say one thing and do another ... and that you should put people ahead of profits," Donovan said.

Payments to each plaintiff are expected to range from about $50, on up to a few thousand dollars, depending on how long they worked for the company, Donovan said. Wal-Mart must pay the plaintiffs' legal fees on top of the award.

Donovan argued that Wal-Mart's pay practices gave the company a competitive advantage. Wal-Mart is the nation's largest retailer, earning $11.2 billion in profits on $312.4 billion in sales in the last fiscal year.

The Bentonville, Ark.-based company is facing a slew of similar suits around the country. Wal-Mart is appealing a $172 million verdict in a California case and settled a Colorado suit for $50 million.

The Pennsylvania class-action suit involves 187,000 current and former employees who worked at Wal-Mart and Sam's Clubs from March 1998 through May of this year. The jury found Thursday that Wal-Mart broke its contract, thereby violating state labor laws.

Lead plaintiff Dolores Hummel, a single parent, said she worked at a Sam's Club in Reading for 10 years to support her son. Over the years, the pressure to get more work done intensified, she said. Hummel said she worked eight to 12 unpaid hours a month, on average, to meet work demands.

"It had to be done, all these class actions, to show how we were treated working at Wal-Mart -- working off the clock and not getting paid," said Hummel, 53. "It was all about production."

She was fired in 2002 after complaining about working conditions, she said.

Wal-Mart attorney Neal S. Manne said the company plans to appeal both the class certification and the jury's findings.

"I think a lot of employees who had short or missed breaks did it by personal choice," Manne told jurors in closing arguments Friday.

In a statement, Wal-Mart said it disagreed with the verdict but noted that it has been making changes to try to ensure that employees take breaks.

Donovan pointed out, though, that Wal-Mart computers were programmed to dock workers for every minute they signed in late. Those minutes of lost pay saved Wal-Mart stores in Pennsylvania $26 million over the course of a year, he said.

Donovan said he presented evidence during the five-week trial that employees were sometimes logged on to a cash register when they were not on the clock. He said Wal-Mart tried to avoid overtime at all costs, and told employees to work off the books if they had worked too many hours that week.

"This has set a benchmark for what the rest of these cases are worth," said lawyer Franklin D. Azar of Aurora, Colo., who worked on the California and Colorado cases.

"I've seen them change with the filing of these lawsuits," Azar said. "They've done a lot of stuff to basically clean up."

Wal-Mart had a corporate policy that gives hourly employees in Pennsylvania one paid 15-minute break during a shift of at least three hours and two such breaks, plus an unpaid 30-minute meal break, on a shift of at least six hours.

The jury rejected claims that Wal-Mart forced employees to work through the unpaid meal breaks.

The company employs 1.8 million people worldwide, 1.3 million of them in the United States. Employees earn an average $10.11 an hour, according to the company Web site.

Shares of Wal-Mart rose 14 cents to close at $48.46 in trading Friday on the New York Stock Exchange.


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