Dec. 23, 2005 -- Wal-Mart, home of low prices, was ordered to pay a high price for denying meal breaks to thousands of its employees in California.
An Alameda County jury ordered the world's largest retailer to pay $172 million to 116,000 current and former employees. A 2001 state law requires employers to give unpaid 30-minute breaks to those working shifts over six hours or pay an hour's salary in compensation.
"Basically, the documents that we presented to the jury, which were from Wal-Mart's own files, show that throughout the U.S., Wal-Mart has systematically denied its workers their meal breaks and rest breaks," said Jessica Grant, one of the lawyers who represented the Wal-Mart employees.
Wal-Mart has issued a statement saying that it will appeal the verdict. For the company, which earned $10 billion last year, it will take less than a week to make up for the $172 million. This class-action suit, however, is the first of about 40 nationwide to go to trial. And, analysts said, the superstore has taken some shortcuts.
"Forty major lawsuits may not be wrong," said Burt Flickinger III, managing director of Strategic Resource Group in New York. "And in an industry that's typically non-litigious, Wal-Mart leads the league in litigation, or lawsuits, so where there's smoke there's often fire."
"This case is very important because it sets a precedent," Grant said. "There are class-action suits pending in 40 different states, and this was the first one to go to trial. So, I think it's just the beginning of a wave of victories for Wal-Mart workers across the U.S."
Employees say stores are run so lean that there are not enough workers to relieve them during breaks.
"The jury also saw a lot of evidence that Wal-Mart runs its stores basically with a skeleton crew to keep labor as cheap as possible even though every year sales are going up," Grant said.
During the trial, Wal-Mart contended that most of the employees voluntarily waived their lunch breaks, but the jury rejected that notion, according to Grant.
"There was a lot of testimony these waivers were coerced," Grant said. "Employees had been asked to sign them to avoid being fired. The jury [members] said they weren't going to give Wal-Mart credit for a single one of those waivers because they were illegally obtained."