Wal-Mart Plans to Appeal $172 Million Judgment

Last Thursday a jury found that the world’s largest retailer, Wal-Mart Stores Inc., had violated a 2001 California state law that requires employers to give 30-minute unpaid lunch breaks to employees who work for at least 6 hours. Thousands of Wal-Mart employees had claimed that they were illegally denied lunch breaks, and the jury deliberated for almost three hours before agreeing with them and awarding them $172 million in punitive damages.

The class-action lawsuit filed in Alameda County Superior Court is the first of about 40 such lawsuits filed nationwide that allege workplace violations by Wal-Mart. The retailer, based in Bentonville, AR, was ordered to pay $57 million in general damages and $115 million in punitive damages to approximately 116,000 current and former Wal-Mart employees in California. The lawsuit was filed by several former Wal-Mart employees in the San Francisco Bay area in 2001, followed by four years of legal wrangling to get the case to come to trial. The workers claimed they were owed over $66 million, and they wanted to punish the company for the way Wal-Mart had treated them. A similar lawsuit in Colorado had been settled earlier for a reported $50 million. A federal lawsuit pending in San Francisco has alleged that Wal-Mart pays men more than women.

Wal-Mart has announced that it plans to appeal the ruling. "We absolutely disagree with their findings," said Wal-Mart attorney Neal Manne, who added that the state law used to decide the verdict could be enforced only by California regulators, not by workers in a courtroom. Although he admitted that Wal-Mart had made mistakes in not always allowing lunch breaks before the 2001 law took effect, he said that Wal-Mart is "100% in compliance" now.

The company claims that workers did not demand penalty wages on a timely basis, and that under the law they must pay workers a full hour’s wages for every missed lunch. Wal-Mart said that it did pay some employees their penalty pay, and in 2003 most workers agreed to waive their meal periods anyway. The company says that the law does not allow for punitive damages because "the meal-period premiums in question are penalties rather than wages. In short, California law prohibits penalties on top of penalties."

The damaging verdict added fuel to the flames of Wal-Mart’s recently damaged public image. The company is furiously waging a war to counter critics who want to stop the expansion of the company, while forcing it to boost workers’ salaries and benefits. A union-affiliated advocacy group for Wal-Mart employees, WakeUpWalMart.com, believes that the company’s policies dealing with wages, health benefits, and other issues harm families and communities. Paul Blank, the group’s campaign director, said that he was delighted by the verdict. "It is a sad day when Wal-Mart provides these so-called low prices by exploiting their workers and even the law." After an internal memo came to light this year showing that 46% of Wal-Mart employees’ children were on Medicaid or uninsured, the company added lower-cost health insurance to employees’ benefit packages. The company earned $10 billion last year. For a company that grew to a retail giant by holding itself up as an icon of traditional American values, Wal-Mart has miserably failed the legacy created by Sam Walton.