Wal-Mart hit with $172.3m lunch bill By Jonathan Birchall in New York FT.com Updated: 3:12 a.m. ET Dec. 23, 2005
A jury in Oakland, California on Thursday ordered Wal-Mart, the largest US retailer, to pay $172.3m to current and former employees, after finding that the company had failed to respect their right to a 30-minute unpaid lunch break.
The verdict is the largest penalty of its kind imposed by a court on the retailer in a range of lawsuits that have accused it of deliberately allowing its employees to work unpaid overtime, or to work during legally required breaks.
State law in California requires employers to grant its workers the 30 minute unpaid break, or to compensate them if they decline to take the time.
The jury awarded $115m in punitive damages and $57.3m in compensatory damages to the workers.
The ruling came after a three-month trial of a class-action lawsuit brought on behalf of an estimated 116,000 employees who worked for Wal-Mart in California between 2001 and 2005.
Wal-Mart is facing about 40 similar lawsuits in other states. Last year, it paid $50m to settle a similar case in Colorado, while a jury in Oregon ordered the retailer to pay $2,000 each to about 100 workers.
In court documents, Wal-Mart claimed that its workers did not demand penalty wages on a timely basis.
It also argued that in 2003 most workers agreed to waive their meal periods as the law allowed.
However, the plaintiffs' attorney argued that the company was aware that it was breaking the law, and deliberately ran its stores in a way that put pressure on its workers to work during their meal breaks.
The ruling will be seized upon by Wal-Mart's critics in the UFCW grocery workers' union, who earlier this year launched a broad-based campaign aimed at mobilising opposition to the retailer's continued expansion.
The retailer has been facing particularly strong opposition to its efforts to expand in California in communities with local political leaders who have strong links to the unions.
Wal-Mart is also awaiting a ruling from the federal appeals court in California on its effort to oppose the granting of class-action status to a massive lawsuit alleging sexual discrimination against more than 1.6m current and former female employees.
At a second phase of the Oakland trial, the presiding judge will review additional claims related to overtime pay, which will not be submitted to a jury.
The lawsuit was brought in 2001 by a group of former Wal-Mart employees in the San Francisco area, and took four years of legal wrangling to get to trial.
During the discovery process, the plaintiffs' lawyers secured internal audits that they argued showed that the company's top management knew it was not granting meal breaks on thousands of occasions.
The lawsuit was brought in 2001 by a group of former Wal-Mart employees in the San Francisco area, and took four years of legal wrangling to get to trial. During the discovery process, the plaintiffs lawyers secured internal audits that they argued showed that the company's top management knew it was not granting meal breaks on thousands of occasions.
One company document called results of the audit "a chronic problem." A one-week review of company policies showed thousands of instances in which workers were not given a meal break in accordance with the law, according to the documents provided to the jury.
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