Wal-Mart will pay $40m to workers

Settlement is biggest in Bay State history

By Dave Copeland
Globe Correspondent / December 3, 2009

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Wal-Mart Stores Inc., the world’s largest retailer, has agreed to pay $40 million to as many as 87,500 current and former employees in Massachusetts, the largest wage-and-hour class-action settlement in the state’s history.

The class-action lawsuit, filed in 2001, accused the retailer of denying workers rest and meal breaks, refusing to pay overtime, and manipulating time cards to lower employees’ pay. Under terms of the agreement, which was filed in Middlesex Superior Court yesterday by the employees’ attorneys, any person who worked for Wal-Mart between August 1995 and the settlement date will receive a payment of between $400 and $2,500, depending on the number of years worked, with the average worker receiving a check for $734.

“The magnitude is large - it’s bigger than most settlements paid in wage-and-hour cases,’’ said Justin M. Swartz of New York-based law firm Outten & Golden LLP, who has handled similar cases, including a pending case against Wal-Mart. “But you would expect it to be bigger since Wal-Mart is the biggest retailer.’’

Under the terms of the settlement, neither side is allowed to comment. But in an affidavit filed with the settlement, the lead counsel for the employees, Philip Gordon of Boston’s Gordon Law Group, said the accord “dwarfs settlements of similar class actions against Wal-Mart across the country.’’

“For many employers, this settlement will serve as a reminder to take the payment of earned wages and benefits seriously. For many other employers, it will provide comfort that all Massachusetts businesses must operate on a level playing field,’’ Gordon wrote in the affidavit. “But most importantly, for employees of Wal-Mart, it finally pays them their earned wages and it puts in place systems and processes to ensure that abuses like those alleged never happen again.’’

The Massachusetts case is similar to many others that have been brought against the retail behemoth by employees across the country, most alleging that the Bentonville, Ark.-based company violated laws by requiring employees to work through breaks, to work beyond their regular shifts, and similar practices. Wal-Mart has denied the allegations, but in December, the merchant agreed to pay up to $640 million to settle 63 federal and state class-action wage-and-hour lawsuits.

The Massachusetts case, which was not part of that settlement, was initially filed eight years ago on behalf of 67,000 people who worked for Wal-Mart in Massachusetts between 1995 and 2005. The two plaintiffs, Elaine Polion and Crystal Salvas, left Wal-Mart years ago. The case has been moving back and forth for years, first being certified as a class action, being almost thrown out as a trial date approached in 2006, and then being revived on appeal and sent back to trial as a class action by the state Supreme Judicial Court two years ago.

This isn’t the first wage case settlement for Wal-Mart in Massachusetts. In September, the retailer settled an investigation of violations of state meal-break policies, agreeing to pay $3 million. The state attorney general investigated after workers reported they were required to work though meal breaks, take breaks after having worked more than six hours, or to cut such breaks short, according to the state.

After some preliminary skirmishes over the terms of the latest Massachusetts settlement, the lawsuit was set to go to court this week, but lawyers for the company and employees alerted the court they would be filing settlement papers instead. In the settlement affidavit, Gordon said his firm had begun tracking down as many former Wal-Mart employees as possible.

A phone number could not be located for Polion, and a phone listing for Salvas was disconnected. Workers approached yesterday by The Boston Globe at a Wal-Mart parking lot in Raynham declined to comment on the settlement.

Sean Blais, who worked at a Wal-Mart in Weymouth for a year before he was fired for texting at work in July, said he thought the accord “seems reasonable.’’ Blais, 19, said while he did not notice any discrepancies in his pay, he routinely had trouble scheduling breaks during his shift.

“You got a 15-minute, unpaid break, but you usually had to fight to get it,’’ he said.

David Reis, chairman of law firm Howard Rice’s labor and employment practice in San Francisco, said Wal-Mart has probably already addressed the alleged practices in the suit. “Given that this suit was filed more than eight years ago, I would expect that any alleged suspect pay practices have been remedied by Wal-Mart long ago and that this settlement is simply a calculated business decision that it’s cheaper and easier for the company to resolve the case and move forward than to continue paying its lawyers to fight it,’’ said Reis.

Prior to the latest Wal-Mart settlement, the biggest wage-and-hour case payout in Massachusetts was $14.5 million last year by Canyon Ranch. In that lawsuit, the owners of the Lenox spa were accused of not passing along gratuities to workers. The settlement affected 600 workers.

Globe columnist Steven Syre contributed to this report. He can be reached at Material from Bloomberg News was included in this report.