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US: Wal-Mart Agrees to Pay $33 Million in Back Wages (Update3)

by Lauren Coleman-LochnerBloomberg
January 25th, 2007

Wal-Mart Stores Inc., the largest U.S. private employer, will pay $33 million in back wages plus interest under an agreement with the U.S. Labor Department.

The accord covers 86,680 hourly and salaried employees who worked at the company during the past five years, the Labor Department said in a statement today. The back pay relates to how Wal-Mart calculated overtime pay at its Bentonville, Arkansas- based headquarters.

The world's largest retailer brought the errors to the Labor Department's attention and agreed to correct them, the government and company said. Wal-Mart faces about 70 lawsuits over disputed pay. Since 2005, juries in California and Pennsylvania have awarded $251 million to its workers for missed breaks and hours.

The kind of violations cited in today's settlement ``are ones that we frequently see,'' Steven Mandel, an associate solicitor in the department, said today in an interview. While common, ``these are serious violations,'' he said.

``The issue has been resolved,'' Wal-Mart spokesman John Simley said in an interview. ``We are in compliance'' with all Fair Labor Standards Act rules. The agreement with the U.S. Labor Department involved no fines or penalties.

The errors were made at the company's central office, unlike wage and hour cases that often involve individual stores and managers, Mandel said. The accord doesn't affect any of the other cases on disputed pay, he said.

California

Separately, California, which has the ability to impose penalties, filed a lawsuit against Wal-Mart today seeking payment for the miscalculated overtime wages. California won't agree to a settlement until state auditors verify the records relied upon by Labor Department officials, said Robert Jones, acting state labor commissioner, in a statement.

Wal-Mart is working to resolve the California complaint and anticipates reaching an agreement with state officials in the next few weeks, Simley said. A U.S. district court in Arkansas approved today's agreement.

Shares of Wal-Mart fell 46 cents to $48.15 at 4 p.m. in New York Stock Exchange composite trading. The stock dropped 1.3 percent in 2006, the third consecutive annual decline.

Wal-Mart failed to include some payments such as bonuses that affect the overtime pay rate, the Labor Department said. The underpayments, which involved employees who worked between Feb. 1 2002 and Jan. 19, 2007, ranged from 1 cent to 39 cents.

Wal-Mart said it had set aside money and the settlement wouldn't be material to earnings.

Chris Kofinis, a spokesman for Wake-Up Wal-Mart, funded by the United Food and Commercial Workers union, said workers should be included in the process of resolving such disputes. ``How do you negotiate a deal on behalf of workers when workers aren't included in the negotiations,'' he said today in an interview.





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