Labor & Employment Law

Class Action Liquidated Damages Award of $62 Million Against Wal-Mart

By Mark E. Tabakman, Esq.

In the continuation of a class action that has been going on for some time, Wal-Mart has recently been ordered by the court to pay a class of 125,304 employees roughly $62 million in liquidated damages for Walmart's violating state wage and break laws by refusing to allow employees to record their hours worked in the computerized pay system. This action had the effect of employees not being paid for all time they worked.  In addition, Wal-Mart prohibited employees from taking need rest breaks which they had been promised, thereby further denying employees rightfully earned wages. The jury determined that Wal-Mart saved $1,031,430.00 by denying employees the right to record their hours in the computerized pay system and $48,258,111.00 by prohibiting promised rest breaks. Taken together, the estimated savings totaled $49,289,541.00.

What this case highlights is that liquidated damages are a real possibility in a class action.  Such damages are not viewed under the law as a fine or penalty but are deemed to be more in the vein of “waiting time” damages.  The employees are awarded the liquidated damages as a remedy for the long delay in their receiving their justly deserved wages, at the time they were due. In this case, 98.81% of the 125,304 class employees were owed liquidated damages as determined by an expert. The dollar amount arrived at was $62,253,000.00. The number could have been much greater as the state law at issue required a $500.00 penalty for each violation of rest break violation.

This award is, to put it mildly, exorbitant.  The ostensible excessiveness of the liquidated damages portion of the award does not detract from the fundamental fact that such damages are an all too common component of a successful class action. The basic lesson to be taken from this is for employers to be ever cognizant that their failure to comply with all wage-hour laws and regulations may provide the fodder for the filing of a class action lawsuit and the imposition of large-dollar damage awards.

Full post as published by Wage & Hour - Development & Highlights on October 15, 2007 (boomark / email).