Misapplied Overtime Exemption Can Result In Millions of Dollars in Payments For Wage Violations
The U.S. Department of Labor (DOL) announced on May 1, 2012, that in accordance with a settlement agreement, Wal-Mart Stores Inc. has agreed to pay $4,828,442.00 in back wages and damages to more than 4,500 employees nationwide and $463,815.00 in civil money penalties for misclassifying employees and associated violations of the overtime provisions of the Fair Labor Standards Act (FLSA), the federal wage and hour law.
According to the DOL, 4,500 vision center managers and asset protection coordinators at Wal-Mart Supercenters, Wal-Mart Discount Stores, Neighborhood Markets and Sam’s Club Warehouses were not paid proper overtime wages for hours worked beyond 40 in a work week. Apparently, the workers had been improperly classified as exempt from the FLSA’s overtime provisions.
According to Secretary of Labor Hilda L. Solis, "[m]isclassification of employees as exempt from FLSA coverage is a costly problem with adverse consequences for employees and corporations." Secretary Solis warned: "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."
Wal-Mart agreed to pay back wages owed in the amount determined by DOL plus an equal amount in liquidated damages, as required by law. In 2007, Wal-Mart, which operates more than 3,900 establishments in the United States, had corrected its classification practices for these workers, and negotiations over the back pay issues have been continuing since then.
As per Secretary Solis’s warning, to avoid any potential ramifications, employers should make sure to properly classify their employees to avoid violating the overtime provisions of the FLSA.
