Current and former Wal-Mart workers in California received an early Christmas present last Thursday when an Alameda County jury ordered the retailer to pay $172 million for denying lunch breaks as required by state law.
About 116,000 past and present workers were awarded $57 million in general damages and $115 million in punitive damages after alleging violations of a 2001 law requiring California employers to give 30-minute, unpaid lunch breaks to employees who work at least six hours.
Wal-Mart said in a statement that the company will appeal the ruling and that it has no bearing outside of California. The company acknowledged it had “compliance issues” when the law was enacted, but so did other employers in the state.
But some legal experts believe the ruling will have a ripple effect, with similar litigation pending in about 40 other states.
“This is a very clear public statement that [Wal-Mart’s] policies are against the law,” Toby Marshall, a Seattle lawyer, told the Los Angeles Times. “While each state’s law is different, the fact that one jury found that Wal-Mart’s corporate policies are resulting in wage and hour violations means that it’s more likely that a jury here in Washington or elsewhere is going to find violations.”
The news hits at a bad time for Wal-Mart, which is engaged in a public-relations war against two union-backed campaigns pressuring the retailer to change policies they say hurt workers, move good jobs overseas and shift healthcare expenses onto taxpayers.
Paul Blank, campaign director for WakeUpWalMart.com, said he was “delighted” by the verdict.
“Over 100,000 current and former Wal-Mart workers will finally get the justice they deserve and rightfully earned,” he said in a Weblog. “It is a sad day when Wal-Mart provides these so-called low prices by exploiting their workers and even the law.”
Countering bad publicity, including Robert Greenwald’s popular documentary “Wal-Mart: The High Cost of Low Price” and a leaked 2005 internal memo revealing that 46 percent of Wal-Mart associates’ children are either on Medicaid or uninsured, Wal-Mart in September hired Edelman, a well-known Chicago-based public relations firm, to respond to criticism.
Last August Wal-Mart signed artist Garth Brooks to an exclusive multi-year contract making the retailer the only place where his music will be commercially available. A six-CD box set released the day after Thanksgiving set records as the top-selling music item in company history within three days.
In the weeks following Hurricane Katrina, Wal-Mart rushed 2,500 truckloads of supplies to stricken states, drawing attention to a private-sector response that by most accounts was handled better than the government’s response through FEMA.
In 2006 the company aims to increase sales and earnings by targeting wealthier shoppers with higher-end merchandise and marketing.
Wal-Mart says it is unfair to single one company out for criticism, saying healthcare is a national problem.
But critics say as America’s largest employer, with 1.4 million employees and more than $10 billion in annual profits, Wal-Mart has a responsibility to set a standard for customers and workers to build a better America.
In December WakeUpWalMart.com launched a faith-based campaign, which included TV spots questioning whether people of faith should shop at Wal-Mart and a letter signed by 13 moderate Baptists suggesting Jesus would not approve of the company’s “values of greed and profits at any cost.”
A poll in early December found Wal-Mart’s public image grew considerably more negative in the last year. Another survey in mid-December found that many Americans view Wal-Mart as a good place to shop but a poor place to work.
“Wal-Mart has already lost the battle in the court of public opinion, now Wal-Mart has lost the battle in a court of law as well,” said WakeUpWalMart.com’s Paul Blank.
“The size of this verdict speaks loudly to the disdain Americans have for multi-billion dollar company’s needlessly exploiting their workers,” Blank said. “Furthermore, this lawsuit is just the beginning of other class action lawsuits highlighting Wal-Mart’s practice of unfairly or illegally exploiting their workers.”
Last year Wal-Mart settled a similar case in Colorado for $50 million and an Oregon jury awarded 83 Wal-Mart workers in the state about $2,000 each for lunch-break violations.
If upheld, the California judgment will amount to an average of $1,500 per employee. The award represents about one week’s worth of Wal-Mart’s $10.3 billion in profits last year.
Bob Allen is managing editor of EthicsDaily.com.