HR Management & Compliance

Wal-Mart, DOL Reach Agreement for $5M+ Settlement Over FLSA Violations

Wal-Mart Stores, Inc. will pay almost $5.3 million in penalties, damages and back wages for overtime violations at stores nationwide, the U.S. Department of Labor said on May 1.

According to the agency, 4,500 vision center managers (VCMs) and asset protection coordinators (APCs) at Wal-Mart Supercenters, Wal-Mart Discount Stores, Neighborhood Markets and Sam’s Club Warehouses were not paid proper overtime wages. The workers had been misclassified as exempt from the Fair Labor Standards Act’s overtime provisions.

“Misclassification of employees as exempt from FLSA coverage is a costly problem with adverse consequences for employees and operations,” said Labor Secretary Hilda Solis. “Let this be a signal to other companies that when violations are found, the Labor Department will take appropriate action to ensure that workers receive the wages they have earned.”

Employees who are employed in “bona fide executive, administrative, professional and outside sales positions, as well as certain computer employees” are exempt under the FLSA, DOL noted. However, certain tests regarding the duties of a specific worker and their salary must also meet a specific set of criteria. Job titles alone are not enough to ensure that a position will truly be considered exempt by DOL.

Following a DOL investigation that found that APCs and VCMs were improperly qualified as exempt from the FLSA, Wal-Mart agreed to pay $4.83 million in back wages and damages and an additional $463,815 in civil penalties. Generally under the FLSA employers are liable to employees for back wages and for an equal amount in liquidated damages.

According to a company spokesman, DOL initially raised the misclassification issue six years ago, at which time Wal-Mart adjusted its pay practices for the two types of positions in question.

“We decided years ago to pay overtime back wages for associates training for the roles of asset protection coordinator and vision center managers,” the spokesman said. “We have agreed on a fair settlement for our associates.

APC employees handle store security and VCMs oversee the vision centers located in the front of Wal-Mart stores to sell contact lenses, prescription eyewear and sunglasses, the spokesman said. Approximately 2,000 VCMs and 1,700 APCs are eligible for some level of back wage payment. Generally, eligible APCs will receive approximately $290 in back wages and eligible VCMs will get about $2,300, according to Wal-Mart.

“Our department has been working with Wal-Mart for a long time to reach this agreement,” said Nancy Leppink, deputy administrator of DOL’s Wage and Hour Division. “I am very pleased that staff in our Southwest region persevered, ensured these employees will be paid the back wages they are owed and brought this case to conclusion. Thanks to this resolution, thousands of employees will see money put back into their pockets that should have been there all along. The damages and penalties assessed in this case should put other employers on notice that they cannot avoid their obligations to their employees by inappropriately classifying their workers as exempt.”

Enforcing misclassification of workers has been a top priority for DOL in recent months. The agency has announced a number of specific actions and has signed formal agreements with more than a dozen states to establish enforcement initiatives.

For more information about wage and hour issues, see Thompson’s full FLSA library.

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