Wal-Mart to pay $33-million settlement in overtime case

Wal-Mart Stores Inc. agreed Thursday to pay more than $33 million to tens of thousands of workers who were shortchanged on overtime wages during the last five years.

The Labor Department said the settlement would average about $386 in back pay and interest for each of the 87,000 Wal-Mart employees.

“These are employees not making a lot of money, and so the fact that they did not get all of the overtime due is a significant problem,” said Steven Mandel, a lawyer for the department’s Fair Labor Standards Division. “$386 is real money.”

The award is the second-largest case of its kind in the division’s history, he said.

As part of the agreement, approved Thursday by U.S. District Judge Robert Dawson in Arkansas, Wal-Mart will not pay any fines or penalties. That incensed some of the company’s critics.

“It appears that Wal-Mart will bear little cost beyond what it should have paid to workers in the first place,” said U.S. Rep. George Miller (D-Martinez), chairman of the House Education and Labor Committee. “That’s unfortunate.

“Employers need to know that there will be serious consequences when they break the law and mistreat their workers.”

But the Labor Department said the settlement was good because Wal-Mart agreed to pay five years of back pay, rather than the required two, and said it would use a website, a toll-free phone number and a search firm to locate former employees affected by the agreement.

Mandel said the world’s largest retailer would also be subject to an injunction requiring it to follow rules for overtime pay, which means that any future violation could subject Wal-Mart to contempt-of-court charges.

Thursday’s agreement grew out of a standard internal review in 2004, which revealed problems with determining the overtime pay rate for some employees, Wal-Mart said.

A Wal-Mart spokesman said the Bentonville, Ark.-based company brought the issues to the Labor Department in February 2005 after an internal probe.

During the review, Wal-Mart said it also found that 215,000 employees were overpaid by at least $20 during the same time period; Wal-Mart said it would not seek repayment.

As part of the settlement, the company will be required to repay all workers who were underpaid by at least $20 since 2002.

Some employees, however, will be getting much more. The Labor Department said one Wal-Mart worker would receive nearly $40,000 in back pay.

Glenn Rothner, a Pasadena attorney who represents unions and workers in civil rights and employment cases, questioned the fairness of the settlement, which by law prevents employees from filing private lawsuits in the matter.

“Wal-Mart wanted to strike a sweeter deal with the government, rather than let the matter go to litigation,” Rothner said. “I’ve never heard of this happening.”

Rothner also noted that the employees, who probably did not know that the pay problems existed, had no watch guard other than the Labor Department.

“One of the peculiar things about this settlement is that the court signed the consent decree on the same day that the lawsuit was filed,” he said. “If the court is going to approve it, then it has an obligation to inquire into the fairness of the deal reached.”

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abigail.goldman@latimes.com