California Wal-Mart Workers Win Settlement Over Wage Violations

By California Labor Federation Communications Intern Rachel Johnson

Wal-Mart has been under fire for years for its shoddy treatment of its employees. In 2006, California Wal-Mart workers decided they’d had enough, taking the fiercely anti-union retail giant to court for failing to pay overtime, vacation and other wages. Yesterday Wal-Mart ended the lawsuit by agreeing to settle a class action lawsuit and pay up to $86 million to 232,000 affected employees. 

Current and past Wal-Mart employees maintain they were collectively denied over $12 million in vacation pay and $74 million in other unpaid wages mandated by California law. While agreeing to settle the multimillion-dollar lawsuit, Wal-Mart still refuses to acknowledge its efforts to cheat workers out of their hard-earned wages. The settlement is separate from the 2008 $640 million agreement to settle 63 federal and state class-action lawsuits claiming similar illegal wage violations.

This week’s settlement was just the latest in a long line of legal actions taken against Wal-Mart Corporation over workers’ rights and wage violations. Over the years, the corporate giant has routinely wronged its employees and customers, and has chosen to fight any issue in court as opposed to modifying current company practices and policies. According to http://www.WakeUpWalmart.com Wal-Mart was involved in at least 73 wage-and-hour violation class action lawsuits in 2009 alone.

In April, a federal appeals court in San Francisco allowed six female employees to pursue a class action sex discrimination lawsuit against Wal-Mart. This lawsuit, claiming systematic discrimination, wage and promotion discrepancies includes over 1 million female employees and will be the largest sex discrimination case in U.S. history.

From Reuters:

The original lawsuit, hailed by lawyers as the largest sex discrimination class-action in U.S. history when it was filed in 2001, claimed that Wal-Mart paid female workers less than male colleagues and gave them fewer promotions.

Wal-Mart, the world's largest retailer and largest private U.S. employer, had asked the Ninth Circuit Court of Appeals in San Francisco to undo class-action certification in the case that alleged discrimination in its more than 3,000 stores.

"It's a huge win for the plaintiffs, and a tremendous loss for Wal-Mart," said Paul Secunda, an associate professor of law at Marquette University Law School. Given the number of employees involved and many years of pay at issue, he said "the amount of liability can be many billions of dollars."

That lawsuit is pending. Wal-Mart has threatened to take the case all the way to the Supreme Court rather than compensate the affected employees.

Wal-Mart is notorious for paying its employees low wages and offering few benefits. The average wage at Wal-Mart is $11.75 per hour or $20,774 per year, nearly 6% below the federal poverty level.   Workers who have sought to improve their situations through unionizing have repeatedly been met with hostility and even store closures to prevent the creation of a union. Every lawsuit filed against Wal-Mart over workers’ rights violations highlights the sad truth that the company’s executives continue to prioritize profits over the quality of life for the workers who directly contribute to the company’s success. 

At a time when their employees are struggling to make ends meet, Wal-Mart profits continue to skyrocket. The company’s stock continues to rise despite the legal trouble. As for the impact the $86 million settlement will have on Wal-Mart, analysts say it won’t even make a dent in the company’s enormous profits. The settlement of the lawsuit equals roughly two days of after-tax operating profit for Wal-Mart. While the fiscal impact of exploiting their employees then settling lawsuit after lawsuit has yet to be of significant detriment to Wal-Mart, one can only hope that their crumbling reputation will have a much stronger impact on their profits.

Perhaps then they will finally start to care.