Wal-Mart Stores Inc. broke Minnesota labor law more than 2 million times over six years, routinely forcing some employees to work off the clock through lunch and rest breaks, a Dakota County judge has ruled.
The violations were willful, said District Judge Robert King in a ruling Monday in Hastings. They could bring a penalty of up to $1,000 per violation, which could mean a $2 billion fine for the world's largest retailer. A jury will decide the size of the penalty during the second phase of the trial, expected to begin Oct. 20.
Nancy Braun, one of four named plaintiffs on the suit, said Tuesday that she was "ecstatic" about the judge's decision. Braun, who worked in an Apple Valley store for about 14 months beginning in March 1998, said the store repeatedly didn't find people to give her breaks when she was the sole cook and waitress at the store's grill.
In several instances no one came in time for her to go to the bathroom. "I would end up soiling myself," said Braun, now 53 and living in Rochester. "Sometimes I'd have other clothes with me in my locker, or they would say to me, 'We have clothes in the store you can buy.'"
Braun said she kept complaining, "and they kept promising to get me help, but they never did it."
In his ruling, King especially noted Braun's treatment and a similar episode with a menstruating employee, calling it "dehumanizing and reprehensible" but also an "aberration."
Wal-Mart is reviewing the ruling and considering an appeal, said spokeswoman Daphne Moore, at the company's Bentonville, Ark., headquarters. "We're pleased the court ruled in our favor on many points, [but] we do respectfully disagree with portions of the decision."
Suit was filed in 2001
The judge's ruling comes seven years after the suit was filed. "We think this will send a loud message to Wal-Mart that compliance with wage and hour law is important, and employees will have their day in court," said Jon Parritz in Minneapolis, one of the attorneys representing about 56,000 Wal-Mart and Sam's Club employees in Minnesota in their class-action lawsuit. Monday's order also awards plaintiffs more than $6.5 million in damages.
It is one of dozens of similar employment lawsuits across the country against the discount retailer that has worked recently to overcome its longtime anti-labor image. Judgments so far have gone both ways, but Parritz expects the Minnesota ruling to have wide influence because it is the first to be issued by a judge instead of a jury.
"There are 150 pages of detailed analysis of the evidence, not something that is part of a jury ruling," he said.
'Heads in the sand'
From September of 1998 through January 2004, the judge said, Wal-Mart violations of Minnesota law including underpaying employees for 1.5 million rest breaks, denying them 74,000 meal breaks and not paying them for 70,000 training sessions. He also said that payroll records for 325,000 shifts were missing.
The judge also put a lot of weight on an internal audit by Wal-Mart during one June week in 2000 that documented tens of thousands of missed rest and meal breaks at 127 of 128 audited stores, including six in Minnesota. The auditor's warning of "adverse consequences" as a result went to more than 50 senior Wal-Mart managers, including then-president Tom Coughlin.
"Wal-Mart management responded to the audits with no action," the judge wrote. "In essence, they put their heads in the sand."
As part of its defense, the company argued that the audit was ignored because it was "methodologically unsound," and that time-clock data is unreliable because employees often take breaks forgetting or without bothering to punch out.
On Tuesday, Moore also reiterated this company policy: "It is to pay every associate for every hour worked, and to make sure rest and meal breaks are available," Moore said. "Any manager who violates that policy is subject to discipline up to and including termination."
'One step backward'
As a recent report from the Federal Reserve Bank of Minneapolis notes, Wal-Mart has the contradictory title of being both the most popular retailer in the world -- with nearly 7,300 stores and revenues of $344 billion in 2007 -- and public enemy No. 1.
Unions and citizens groups began waging all-out war on Wal-Mart in early 2005 over wages, health insurance, worker conditions and its reliance on overseas labor and materials. Wal-Mart responded by donating billions to charities, stepping in after disasters such as Hurricane Katrina and pledging to become a better environmental citizen. And several retail analysts said they don't expect Monday's decision to deter Wal-Mart customers, long drawn by its "Always Low Prices" slogan, which was replaced last year with "Save Money. Live Better."
Still, Monday's ruling is a setback for Wal-Mart, said Britt Beemer, retail analyst at America's Research Group.
"It's one step backward for them in Minnesota, which obviously is an issue because their biggest rival, Target, is based there," Beemer said.
Target also happens to be the current employer of lead plaintiff Braun. "I let them know up front what was going on, so they'd be forewarned," she said. "They've been very accommodating. They told me if I needed time to just let them know."
The Minneapolis law firms Maslon Edelman Borman & Brand and Schwebel, Goetz & Sieben represented the plaintiffs.
Wal-Mart's stock closed at $57.03, up 83 cents, on Tuesday, and gained another 20 cents in after-hours trading.
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