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Wal-Mart settles suits by workers

Dozens of class actions had accused the firm of violating rules on wages and breaks.

December 24, 2008|Andrea Chang

Wal-Mart Stores Inc. said Tuesday that it would pay as much as $640 million to settle dozens of wage-and-hour class-action lawsuits across the nation that accused the world's largest retailer of cheating hourly workers and forcing them to work through breaks and off the clock.

Wal-Mart has faced numerous accusations in recent years that it has engaged in illegal wage practices such as shortchanging workers on overtime pay and not allowing them to take lunch breaks.

"Many of these lawsuits were filed years ago, and the allegations are not representative of the company we are today," Tom Mars, Wal-Mart's executive vice president, said in a statement.

The cases being settled, 63 in all, involve thousands of current and former Wal-Mart employees and were brought by various groups of lawyers. A similar case in California, in which Wal-Mart was ordered to pay $172 million, was not included in the settlements and is under appeal.

Lawyers for the plaintiffs could not be reached Tuesday, but some released statements saying they believed the settlements set a standard for other companies.

"We are equally pleased that Wal-Mart has made tremendous strides in wage-and-hour compliance and that it has implemented and agreed to continue to follow state-of-the-art compliance programs," said Frank Azar, co-lead counsel in 14 states. "We are pleased with this settlement and believe it is fair and reasonable for our clients."

Industry experts said Wal-Mart probably agreed to settle as a good-faith effort, especially as it ushers in new Chief Executive Mike Duke on Feb. 1.

"The company's trying everything it can to clean up its corporate image and try to put out a new face," said Burt P. Flickinger III, managing director of consulting firm Strategic Resource Group.

Under the agreements, the Bentonville, Ark., company will pay $352 million to $640 million. The total will depend on the amount of claims submitted, the company said.

Wal-Mart's separate California case is under appeal after the retailer lost a suit in 2005 brought by workers who alleged they were forced to work through meal and rest breaks. Company spokesman John Simley declined to comment on the case and those pending in other states.

As a result of the settlements, Wal-Mart said it would record an after-tax charge to continuing operations in its fiscal fourth quarter of about $250 million, or roughly 6 cents on earnings per share.

Shares of Wal-Mart fell 70 cents to $55.29.

Eli Portnoy, a Los Angeles brand strategist, said lawsuits against Wal-Mart had hurt its reputation as a good place to work.

"They do appear to take advantage of these employees as they can and they backtrack and pay up settlements," Portnoy said. "You hear more and more cases of Wal-Mart being less employee-friendly and more Big Brother, more controlling and more money- focused. I don't think anybody thinks Wal-Mart is still the same kind of company it used to be."

Still, he said, the company probably wouldn't suffer from consumer backlash -- especially with the country in a recession.

"It won't ruin the brand in this particular economic climate," he said, "because the vast majority of their customers are so desperate to save every penny that even bad news about how they may mistreat their employees isn't going to stop people from shopping there."

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andrea.chang@latimes.com

Times staff writer Marc Lifsher contributed to this report.

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