Wal-Mart told to pay Pa. workers $62 million

A Philadelphia judge yesterday ordered Wal-Mart Stores Inc. to pay $62.3 million in penalties to 124,506 current and former Pennsylvania employees of the company who were not paid when they worked during rest breaks.

The award by Common Pleas Court Judge Mark I. Bernstein, which amounts to about $500 per worker, came on top of the $78.5 million awarded by a Philadelphia jury nearly a year ago after a five-week trial in the class-action case.

"I think the judge properly delivered a firm corporate spanking to Wal-Mart," said lawyer Michael Donovan of Donovan Searles L.L.C., of Philadelphia, which represented the workers.

In a statement, Wal-Mart said it disagreed with the judge's and jury's decisions in the case. "It is our policy to pay every associate for every hour worked," spokeswoman Sharon Weber said.

"Many employees testified that they skipped or cut short their rest breaks by their own choice," Weber said. "While we discourage this practice, an employer should not be penalized when employees do this on their own."

Last October, the jury found that Wal-Mart did not compensate workers for time they had worked without pay and for missed breaks, and that the company had no good reason for this. The jury found that Wal-Mart had saved more than $49 million by not paying workers properly. "The jury found the defendant Wal-Mart abused their workers" in a way that can be remedied by the Pennsylvania Wage Payment and Collection Law, the judge wrote in his opinion.

The class in the case numbers 187,000 workers and covers pay missed between March 1998 and May 2006. The $62.3 million extra applies to 124,506 workers employed between January 2002 and May 2006, while the statute of limitations was still in effect.

Wal-Mart said it now employs 51,497 people in Pennsylvania, about 6,550 of them in Philadelphia and its Pennsylvania suburbs. There are 145 Wal-Mart and Sam's Club stores in the state.

In his 12-page opinion, Bernstein stressed the importance of compensating workers for their time.

"The law in its majesty applies equally to highly paid executives and minimum-wage clerks," he wrote. "Just as highly paid executives' promised equity interests . . . are protected fringe benefits and wage supplements . . ., so too [are] the monetary equivalents of 'paid break' time cashiers and other employees were prohibited from taking."

Former Wal-Mart cashier and customer-service representative Jacqueline Copeland, now a nurse, agreed. "I think the judge made the right decision," she said in an interview yesterday. "You can't have people work for you and not pay them."

Copeland, of South Philadelphia, worked at the Wal-Mart on Columbus Boulevard from 1999 until 2002.

Yesterday's ruling comes as the company has been working to improve its public image in the face of ongoing criticism about its business practices.

Wal-Mart, for example, has launched a major "green" push led by a former Sierra Club president. Environmentalists continue to criticize Wal-Mart's contribution to rural and suburban sprawl.

Wal-Mart executives and some union leaders have stood side-by-side, vowing to work to improve health care for Americans, and the chain now sells many low-priced generic drugs in its pharmacy.

Wal-Mart has been stung by criticism that its workers were so poorly paid that they could not afford company-offered health insurance for their families. And unions have long - unsuccessfully - fought to organize employees of the Arkansas-based chain.

There are as many as 80 wage-and-hour suits against Wal-Mart around the country, although not all of them are class actions.

Wal-Mart faces class-action suits in New Jersey, Missouri and South Carolina, but staved off class certification in New York, Maryland and Illinois. In California, a jury awarded Wal-Mart workers $172 million in a class-action suit in 2005.

The cases involve some combination of missed lunch or rest breaks, or time worked off the clock without pay.

"What kind of image does the company have if it appears to not treat its workers in accord with the law?" said University of Richmond law professor Carl Tobias, who follows the Wal-Mart cases.

Bernstein's ruling came as a Minnesota judge continued to hear testimony yesterday in a class-action case involving the same wage-and-hour issues. That case involves 56,000 Wal-Mart employees and began Sept. 25.

In the Philadelphia case, the jury found in Wal-Mart's favor on the lunch-break issue: Employees did receive their lunch breaks.

The $78.5 million awarded to current and former Wal-Mart employees last October was to compensate them for their lost pay. During the trial, Wal-Mart attorney Neal Manne, of Houston, suggested to the jury that $8 million would be enough.

At the time, Manne said Wal-Mart would appeal. Weber yesterday would not discuss Wal-Mart's legal plans.

No money has reached plaintiffs - or their attorneys - pending possible appeals in the case.

The judge's ruling yesterday involves penalties in connection with the Pennsylvania Wage Payment and Collection Law. The $62.3 million will add to money received by 124,506 workers affected from 2002 to 2006.

There are still outstanding issues in the case. The judge must decide whether to require Wal-Mart to pay $10 million in interest on the amount of money owed to employees who missed breaks between 1998 and 2002. The workers are divided into two groups based on the statute of limitations.

Also undecided is what proportion of the $48 million in plaintiffs' attorneys' fees in the case will be paid by Wal-Mart.

Donovan's firm will not get the entire $48 million. He and his firm were assisted by other attorneys across the nation who share discovery strategies and expertise in these large and data-intense cases.