Wal-Mart Voluntarily Reported Error to the U.S. Department of Labor
Settlement Involves No Fines or Penalties
BENTONVILLE, Ark., Jan. 25 /PRNewswire-FirstCall/ -- Wal-Mart Stores,
Inc. (NYSE: WMT) today announced it has entered into a settlement agreement
with the U.S. Department of Labor (DOL) regarding the manner in which the
company calculates overtime pay. The agreement has been filed in federal
district court and is subject to the court's approval. In the past,
Wal-Mart failed to include periodic bonuses and other earned income in
determining some associates' weekly average hourly pay rate, or "regular
rate," which is used to determine associates' overtime pay. The company
also calculated the regular rate on a biweekly rather than weekly basis and
did not properly account for overtime involving some managers in training
and other associates. The settlement includes no fines or penalties, and
Wal-Mart has adopted measures to prevent these errors from occurring in the
future.
Wal-Mart discovered the errors during an internal review and
voluntarily reported them to the DOL. Working closely with the DOL,
Wal-Mart determined that approximately 87,000 current and former hourly
associates were underpaid by at least $20 during the last five years. There
are a limited number of cases where associates will be paid a much larger
sum.
Under the terms of the settlement, Wal-Mart will pay these associates
the amount of their underpayments -- plus interest -- totaling about $34
million. Although not required by the settlement to do so, Wal-Mart
voluntarily will pay all associates who were underpaid as little as one
cent over the same period.
In addition, Wal-Mart determined that about 215,000 current and former
hourly associates were overpaid by at least $20 during the last five years.
The company will not seek to recover any overpayments due to this
miscalculation, regardless of the amount. Approximately 20,000 of these
associates also were among those who were underpaid.
"We want our associates to know that the situation has been fixed, that
overtime calculations now are being done correctly, and that we've added
safeguards to our payroll processes to make sure these types of errors
don't happen again," said Sue Oliver, senior vice president of the People
Division at Wal-Mart. "The overtime issues relate to our payroll processes
at the Home Office rather than any individual's actions at our stores or
clubs."
"We are committed to our associates and we apologize to them for this
error," Oliver continued. "We work very hard to make sure associates are
compensated correctly. That's why Wal-Mart volunteered to go back five
years, instead of the two normally required by the Labor Department, and to
go beyond the requirements of the settlement and address underpayments
regardless of the amount."
Under Federal Law, the overtime pay rate is calculated as 1.5 times the
"regular rate" of pay. The regular rate can be higher than the basic hourly
rate because it includes all compensation earned in a work week divided by
the total number of hours actually worked in that same work week, unless
otherwise required by state law. That additional compensation may include
prizes, awards, premiums, shift and geographical differentials, and some
incentives. Regular rate errors affected only associates who received
additional compensation for the same week in which they worked overtime.
Another cause of miscalculation was that some overtime payments were
based on a regular rate calculated for each two-week payroll period, when
they should have been calculated weekly. If either of those weeks included
overtime hours, it may have resulted in an overpayment or an underpayment
in overtime pay.
Separately, some errors involved participants in the company's manager
and programmer in training programs, who were entitled to overtime pay
while in training. Approximately 40 percent of the associates owed more
than $20 were participants in these programs.
Wal-Mart began notifying associates today through an in-store
television broadcast and has established a website at
http://www.dol.settlement.wal-mart.com for current and former associates to
determine if they are entitled to any payment. Associates also can have
questions answered by calling 888-262-1559 toll-free (800-318-7442 for
hearing impaired).
The settlement involves hourly associates who worked at Wal-Mart
stores, Sam's Clubs, Neighborhood Markets, Logistics, and the Home Office.
The settlement payment was accrued over previous quarters and is not
material to the company's earnings.
The company also is working to resolve a similar complaint filed by the
state labor department in California, where state law includes some
additional requirements.
About Wal-Mart Stores, Inc.
Wal-Mart Stores, Inc. operates Wal-Mart Stores, Supercenters,
Neighborhood Markets and Sam's Club locations in the United States. The
Company also operates in Argentina, Brazil, Canada, China, Costa Rica, El
Salvador, Guatemala, Honduras, Japan, Mexico, Nicaragua, Puerto Rico and
the United Kingdom. The Company's securities are listed on the New York
Stock Exchange under the symbol WMT. More information about Wal-Mart can be
found by visiting http://www.walmartfacts.com .
SOURCE Wal-Mart Stores, Inc.
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Related links:
http://www.walmartfacts.com
http://www.dol.settlement.wal-mart.com
Photo Notes:
NewsCom: http://www.newscom.com/cgi-bin/prnh/20010831/WALMARTLOGO
AP Archive: http://photoarchive.ap.org
PRN Photo Desk, photodesk@prnewswire.com
CONTACT:
John Simley of Wal-Mart Stores, Inc.,
+1-800-331-0085
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