Wal-Mart Stores Inc. is one of the latest large companies to fall afoul of the federal and Colorado overtime laws.  The US Dept of Labor has recently announced that the store has agreed to pay more than $33 million in back wages.

Under the terms of the judgment, Wal-Mart not only has to pay the back wages owed to employees, but also interest on those wages. This was thought to provide a deterrent against similar laws being violated in the future.

“This settlement provides $33 million in back wages, plus interest, to Wal-Mart workers, and the company has taken corrective action to prevent this from happening again.” This is what Victoria A. Lipnic, Assistant Secretary of Labor for Employment Standards had to say on the matter.

It was found that Wal-Mart was guilty of wrongfully calculating the amount of overtime pay for workers in Colorado, as well as throughout the United States. The US Dept of Labor found that the company violated the Fair Labor Standards Act, or FLSA.

They did this by not paying the right amount of overtime to workers who worked for more than 40 hours a week.  According to the Fair Labor Standards Act, workers are entitled to overtime at a rate of 1.5 times their usual hourly rate for each hour they work over 40 hours per week.

Wal-Mart were found guilty of violating Colorado overtime laws because they did not take into account incentives and premiums paid to the workers, and  paid employees overtime of 1.5 of the base rate only.  For example, if an employee earns $6.00 per hour, but with incentives usually earns $7.00 per hour, then their over time rate should be 1.5 times their usual hourly rate (including incentives), not their basic hourly rate.

The amount that Wal-Mart have agreed to pay back to their employees covers back wages for workers numbering 86,680 for the period between February 1, 2002 and January 19, 2007.

Via Labor Law Center Blog