Update: Wal-mart issued a statement in response to Monday's ruling, saying that considerations are being made tot ake the case to the U.S. Supreme Court.
"Most of these claims are over 10 years old," the statement says. "Walmart has had strong policies in place to make sure all associates receive their appropriate pay and break periods. We have taken additional steps over the last decade, including enhancing our timekeeping systems and additional training, to make sure all our associates understand the importance of those policies and comply with them. We are committed to our 1.3 million associates who work hard every day to serve our customers."
Original story: The Pennsylvania Supreme Court says that Wal-mart and its wholesale subsidiary Sam's
Club owes employees more than $151 million of lost wages from off-the-clock work and missed paid breaks, according to a 4-1 ruling published Monday.
The ruling denied Wal-Mart's appeal of a Superior Court's finding that affirmed the trial court's verdict in the class action suit, saying that the outcome did not constitute a trial-by-formula.
"Wal-Mart’s liability was proven on a classwide basis," said the opinion authored by Supreme Court Chief Justice Ronald Castille. "Damages were assessed based on a computation of the average rate of an employee’s pay multiplied by the number of hours for which pay should have been received but was not. In our view, this was not a case of 'trial by formula' or of a class action 'run amok.'"
Damages will be divided among more than 187,000 members of the certified class, Wal-Mart and Sam's Club employees who worked for the company sometime between March 19, 1998 and Dec. 27, 2005. The judgement also includes more than $33.8 million in attorney fees and $2.6 million for expenses, bringing the final number to more than $187 million.
According to the opinion, the class action was originally filed on behalf of former employees who claimed they were promised paid rest and meal breaks upon their hiring, but subsequently forced by management to miss those breaks and provide work while off-the-clock.
Evidence presented at trial shows that Wal-Mart's rest break policy states that a paid, 15 minute break will be given to an employee who works between three and six hours, and that an additional paid, 15-minute break will be given to an employee who works more than six hours.
The rest break policy requires that employees take full, uninterrupted breaks, and warns that disciplinary action may result if an employee misses breaks or takes breaks that are either too long or too short. Wal-Mart’s off-the-clock work policy provides that it is against company policy for any employee to perform work without being paid, and that employees will be compensated for all work performed.
Following six weeks of testimony from 18 witnesses and three expert witnesses, the trial court found in favor of the plaintiffs regarding payment for rest breaks and off-the-clock work. Wal-Mart appealed to the Superior Court that the verdict and damages awards were based on extrapolated data from the expert witnesses and not the individual circumstances from each plaintiff, resulting in a trial-by-formula.
"Wal-Mart claims that the analysis regarding rest breaks failed to account for “voluntary” missed breaks, and that the analysis regarding off-the-clock work failed to account for the alleged fact that it was not uncommon for cashiers to log into and operate cash registers under another employee’s name," the opinion says.
At trial, statistician L. Scott Baggett testified that he had been provided the time clock and payroll records for all 139 Wal-Mart stores in Pennsylvania from 1998 to 2006, amounting to 46 million individual shifts. He said the data was incomplete and extrapolated the total shifts to 52 million, then calculated how many rest breaks had been missed. Wal-Mart claims that the number required too many assumptions because the stores instituted a policy in 2001 that employees should not swipe in or out for the rest breaks.
"Dr. Baggett also testified that, although he could not tell from the data why any individual rest break had been missed, he presumed rest breaks had not been missed voluntarily because Wal-Mart’s policy prohibited employees from missing or working through scheduled rest breaks," Castille writes.
The defendants argued that the class was improperly certified because the plaintiffs failed to prove that questions of law and fact were common to the class, and that common questions predominated over individual issues.
The Supreme Court denied the argument, saying that the evidence of Wal-Mart’s liability to the entire class for breach of contract was established at trial by presentation of Wal-Mart’s own universal employment and wage policies, as well as its own business records and internal audits.
These records were sufficient to support the determination that there was an extensive pattern of discrepancies between the number and duration of breaks earned and the number and duration of breaks taken. Both parties had ample opportunity to present evidence to show that the discrepancies were or were not evidence of class-wide wage-and-hour violations, the court held.
"There was a single, central, common issue of liability here: whether Wal-Mart failed to compensate its employees in accordance with its own written policies," the opinion says. "On that question, both parties presented evidence. Wal-Mart’s liability was proven on a classwide basis."