Wal-Mart Loses Pennsylvania Suit Over Missed Breaks
Wal-Mart Loses Pennsylvania Suit Over Missed Breaks (Update5)
By Sophia Pearson and Margaret Cronin Fisk
Oct. 12 (Bloomberg) -- Wal-Mart Stores Inc., the world's largest retailer, violated Pennsylvania labor laws by forcing hourly employees to work through rest periods and after their shifts had ended, a state court jury found.
Jurors in Philadelphia today sided with two former Wal-Mart workers who sued on behalf of almost 187,000 current and former employees in Pennsylvania. The workers' lawyers will seek as much as $162 million in damages in a second phase of the trial that starts tomorrow.
Lawyers for the ex-employees, Dolores Hummel and Michelle Braun, claimed that Wal-Mart made workers skip more than 33 million rest breaks from 1998 to 2001 to boost productivity and curb labor costs. More than 70 similar wage-and-hour suits have been filed across the U.S. against the Bentonville, Arkansas- based company.
``Today's decision is another harsh indictment of Wal- Mart's pattern of disrespect for its workers and disregard for state law,'' Andrew Grossman, executive director of labor- advocacy group Wal-Mart Watch, said in an e-mailed statement. ``They're exploiting their workers and passing it off as efficiency.''
Second Loss
Lawyers for both sides declined to comment after today's verdict. John Simley, a Wal-Mart spokesman, said the company wouldn't comment until after the jury determines damages.
The loss is Wal-Mart's second in a class-action lawsuit over wages in less than a year. In December, a California jury awarded $172.3 million to Wal-Mart workers for missed meal breaks. In August, the judge in the case ordered Wal-Mart to obey California laws requiring rest breaks for hourly workers.
Shares of Wal-Mart rose 1 cent to $48.32 in New York Stock Exchange composite trading at 4 p.m. They have gained 3.2 percent this year, valuing the company at $201.4 billion.
``Wal-Mart has a lot of labor issues: Do they pay the workers enough? Are they making managers work through overtime?'' said David Abella, an analyst at Rochdale Investment Management in New York, which owns Wal-Mart shares. ``It's a little bit of a factor'' for the stock price, he said.
Staff Shortages
The jury, which began deliberations yesterday, found in Wal-Mart's favor on a claim for missed meal breaks. Lawyers for Braun and Hummel accused the company of denying 2 million unpaid meal breaks to workers at its Wal-Mart and Sam's Club stores in Pennsylvania from 1998 to 2001.
During the six-week trial in Philadelphia Common Pleas Court, former Wal-Mart employees testified that they were pressured by store managers to pass up breaks and cut meals short. Two cashiers claimed they were locked in stores after their shifts ended and forced to restock merchandise before they could leave.
Lawyers for Braun and Hummel blamed the missed rest breaks in part on Wal-Mart's staffing system, which based a store's staffing levels on its budgeted sales. The system led to personnel shortages at stores that made it impossible for workers to take breaks, the plaintiffs said.
Wal-Mart denied the claims, with executives testifying that the company required workers to take scheduled breaks and didn't ignore employees' complaints. Company officials said records appeared to show that workers were shortchanged only because some chose not to take breaks or neglected to sign out.
Under Wal-Mart's policy, 30-minute meal periods are unpaid and awarded after six hours of work. Rest breaks are paid, with employees who work more than six hours allowed two 15-minute periods.
Possible Damages
The company faces as much as $97.2 million in compensatory damages and $65 million in liquidated damages, said Michael Donovan, an attorney for Hummel and Braun. Wal-Mart reported net income of $11.2 billion for the fiscal year through January, on sales of $312.4 billion.
An Oregon jury found in 2002 that Wal-Mart violated state and federal wage laws by forcing employees to work unpaid overtime. A judge ordered the company to pay $180,000 to about 80 workers.
The cases are Braun v. Wal-Mart Stores Inc., 3127, and Hummel v. Wal-Mart, 3757, Common Pleas Court, Philadelphia County, Pennsylvania (Philadelphia).
To contact the reporters on this story: Sophia Pearson in Philadelphia at Spearson3@bloomberg.net Margaret Cronin Fisk in Southfield, Michigan, at mcfisk@bloomberg.net
Last Updated: October 12, 2006 16:02 EDT
By Sophia Pearson and Margaret Cronin Fisk
Oct. 12 (Bloomberg) -- Wal-Mart Stores Inc., the world's largest retailer, violated Pennsylvania labor laws by forcing hourly employees to work through rest periods and after their shifts had ended, a state court jury found.
Jurors in Philadelphia today sided with two former Wal-Mart workers who sued on behalf of almost 187,000 current and former employees in Pennsylvania. The workers' lawyers will seek as much as $162 million in damages in a second phase of the trial that starts tomorrow.
Lawyers for the ex-employees, Dolores Hummel and Michelle Braun, claimed that Wal-Mart made workers skip more than 33 million rest breaks from 1998 to 2001 to boost productivity and curb labor costs. More than 70 similar wage-and-hour suits have been filed across the U.S. against the Bentonville, Arkansas- based company.
``Today's decision is another harsh indictment of Wal- Mart's pattern of disrespect for its workers and disregard for state law,'' Andrew Grossman, executive director of labor- advocacy group Wal-Mart Watch, said in an e-mailed statement. ``They're exploiting their workers and passing it off as efficiency.''
Second Loss
Lawyers for both sides declined to comment after today's verdict. John Simley, a Wal-Mart spokesman, said the company wouldn't comment until after the jury determines damages.
The loss is Wal-Mart's second in a class-action lawsuit over wages in less than a year. In December, a California jury awarded $172.3 million to Wal-Mart workers for missed meal breaks. In August, the judge in the case ordered Wal-Mart to obey California laws requiring rest breaks for hourly workers.
Shares of Wal-Mart rose 1 cent to $48.32 in New York Stock Exchange composite trading at 4 p.m. They have gained 3.2 percent this year, valuing the company at $201.4 billion.
``Wal-Mart has a lot of labor issues: Do they pay the workers enough? Are they making managers work through overtime?'' said David Abella, an analyst at Rochdale Investment Management in New York, which owns Wal-Mart shares. ``It's a little bit of a factor'' for the stock price, he said.
Staff Shortages
The jury, which began deliberations yesterday, found in Wal-Mart's favor on a claim for missed meal breaks. Lawyers for Braun and Hummel accused the company of denying 2 million unpaid meal breaks to workers at its Wal-Mart and Sam's Club stores in Pennsylvania from 1998 to 2001.
During the six-week trial in Philadelphia Common Pleas Court, former Wal-Mart employees testified that they were pressured by store managers to pass up breaks and cut meals short. Two cashiers claimed they were locked in stores after their shifts ended and forced to restock merchandise before they could leave.
Lawyers for Braun and Hummel blamed the missed rest breaks in part on Wal-Mart's staffing system, which based a store's staffing levels on its budgeted sales. The system led to personnel shortages at stores that made it impossible for workers to take breaks, the plaintiffs said.
Wal-Mart denied the claims, with executives testifying that the company required workers to take scheduled breaks and didn't ignore employees' complaints. Company officials said records appeared to show that workers were shortchanged only because some chose not to take breaks or neglected to sign out.
Under Wal-Mart's policy, 30-minute meal periods are unpaid and awarded after six hours of work. Rest breaks are paid, with employees who work more than six hours allowed two 15-minute periods.
Possible Damages
The company faces as much as $97.2 million in compensatory damages and $65 million in liquidated damages, said Michael Donovan, an attorney for Hummel and Braun. Wal-Mart reported net income of $11.2 billion for the fiscal year through January, on sales of $312.4 billion.
An Oregon jury found in 2002 that Wal-Mart violated state and federal wage laws by forcing employees to work unpaid overtime. A judge ordered the company to pay $180,000 to about 80 workers.
The cases are Braun v. Wal-Mart Stores Inc., 3127, and Hummel v. Wal-Mart, 3757, Common Pleas Court, Philadelphia County, Pennsylvania (Philadelphia).
To contact the reporters on this story: Sophia Pearson in Philadelphia at Spearson3@bloomberg.net Margaret Cronin Fisk in Southfield, Michigan, at mcfisk@bloomberg.net
Last Updated: October 12, 2006 16:02 EDT
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