Wal-Mart settles lawsuits claiming it cheated its staff

Published: 25 Dec 2008 18:40:44 PST

WAL-MART Stores, accused of cheating hourly workers and forcing them to work through their breaks, has agreed to pay as much as US$640 million to settle 63 federal and state class-action lawsuits.

The settlement ends most of the group lawsuits pending in state courts and in federal court in Nevada, and comes two weeks after a December 9 agreement in Minnesota.

The company, the world's largest retailer, will record an after-tax fourth-quarter expense of US$250 million, or about 6 cents a share.

The agreement comes five weeks before Mike Duke takes over from outgoing Chief Executive Officer H. Lee Scott, who has overseen a sales resurgence and sought to burnish Wal-Mart's image among environmentalists, politicians and labor groups. Wal-Mart may pay from US$352 million to US$640 million, potentially less than 0.1 percent of its US$378.8 billion revenue in 2008.

The company declined to comment on lawsuits pending in California, Massachusetts and Pennsylvania, Bloomberg News said.

Wal-Mart didn't disclose what would determine the range of settlement amounts going to workers. Settlement details will be covered in preliminary approval hearings in individual courts.

"Resolving this litigation is in the best interest of our company, our shareholders and our associates," Tom Mars, Wal-Mart executive vice president, said. "Many of these lawsuits were filed years ago and the allegations are not representative of the company we are today."

The settlement is "fair and reasonable," said attorney Frank Azar, who represents employees in 14 states. "Wal-Mart has made tremendous strides in wage-and-hour compliance."

Wal-Mart, based in Bentonville, Arkansas, faced more than 70 wage-and-hour suits, including class actions claiming the company failed to pay for all hours worked or didn't properly compensate workers for overtime. The workers claim Wal-Mart's own records show that hourly employees were cheated. Wal-Mart has denied the allegations.

Wal-Mart agreed on December 9 to pay US$54.3 million to settle a class-action suit by Minnesota hourly workers.

The Minnesota judge found in July that the company had broken wage-and-hour laws more than 2 million times.