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Wal-Mart to settle wage suits for $640 million

Wal-Mart Stores Inc., the world's largest retailer, said Tuesday it will pay as much as $640 million to settle 63 lawsuits over wage-and-hour violations, ending years of dispute.
/ Source: The Associated Press

Wal-Mart Stores Inc., the world's largest retailer, said Tuesday it will pay as much as $640 million to settle 63 lawsuits over wage-and-hour violations, ending years of dispute.

The discount retailer, which has more than 1.4 million employees, said the amount it pays will depend on how many claims are submitted by eligible workers and could range from $352 million to $640 million.

The agreement the company announced Tuesday ends the vast majority of such cases against Wal-Mart. Each settlement still must be approved by a trial court.

Wal-Mart faced 76 similar class action lawsuits in courts across the country as of March 31, the company said in its most recent 10-K filing with the Securities and Exchange Commission.

The Bentonville, Ark.-based company said many of the settled lawsuits were filed years ago and the allegations are not representative of the company Wal-Mart is today.

"Our policy is to pay associates for every hour worked and to provide rest and meal breaks," Tom Mars, Wal-Mart's executive vice president and general counsel, said in a statement.

The company declined to discuss the case further. Lawyers for the plaintiffs did not return calls for comment Tuesday.

Wal-Mart has been working steadily to rehabilitate its image amid continuing scrutiny of its labor and business practices.

Earlier this month, Wal-Mart said it would pay up to $54.25 million to settle a class-action lawsuit alleging it cut workers' break time and didn't prevent employees from working off the clock in Minnesota.

Last year, Wal-Mart said it would pay more than $33 million in back wages to thousands of employees after turning itself in to the Labor Department for paying too little in overtime over the previous five years. Also last year, a judge in Pennsylvania ruled that Wal-Mart workers in that state who previously won a $78.5 million class-action award for working off the clock will share an additional $62.3 million in damages.

Under the announced agreement, Wal-Mart will continue to use various electronic systems and other measures to ensure its compliance with wage-and-hour policies and law.

Wal-Mart labor critics welcomed the settlement but said it gives no indication the company is changing its ways. Wal-Mart Watch Executive Director David Nassar said many workers still suffer mistreatment.

He said such lawsuits could have been avoided if the company had followed the law to begin with or allowed workers to unionize for better representation of their rights.

"If these millions of workers had been allowed union representation, they never would have had to hire lawyers and wait years to get their paychecks," he said.

Nassar and others said Wal-Mart, which has GOP ties, is settling the cases before the new presidential administration takes over.

"Wal-Mart typically fights lawsuits to the end more than any major corporation in America," said Burt P. Flickinger III, managing director of Strategic Resource Group, a retail-consulting firm. "So for the company to settle them within 30 days of President-elect Obama's inauguration indicates the company is trying to do what it can to present a newer face to the new administration and hope for the best given what the company did to try and keep the new administration being elected."

Flickinger said the company is changing, but still faces many of the labor hurdles that have riled its critics for years.

However, Flickinger said "ultimately everyone will be better off because of the settlement."

Richard D. Hastings, a strategist with Global Hunter Securities, said the settlement was good news for shareholders and Wal-Mart because it exacts only a one-time cost.

Wal-Mart, one of the few retailers doing well in a dismal holiday season, said it would take an after-tax charge to continuing operations of about $250 million, or approximately 6 cents per share, in its fiscal fourth quarter.

"This is a conclusion to the many years of issues, and everyone should be glad that it is behind them," Hastings said.