Wal-Mart Stores (WMT) has agreed to pay $40 million to settle a lawsuit filed in Massachusetts that alleged the big-box retailer cheated 87,500 current and former employees in the state out of pay and failed to obey work rules. The class-action suit, filed in 2001, accused Wal-Mart of altering time cards, refusing to pay overtime, and denying workers rest and meal breaks.
Under the terms of the agreement, filed Wednesday in Middlesex Superior Court by attorneys representing employees, anyone who worked for Wal-Mart between August 1995 and the settlement date will receive a payment of between $400 and $2,500, depending on the number of years they worked at the store, The Boston Globe reported on its Web site. The average worker will receive a check for $734, the newspaper said.
"The magnitude is large -- it's bigger than most settlements paid in wage-and-hour cases," said Justin M. Swartz of New York-based law-firm Outten & Golden, who has handled similar cases, including a pending case against the Bentonville, Ark.-based company. "But you would expect it to be bigger since Wal-Mart is the biggest retailer," he told the Globe.
The settlement is believed to be the largest of its kind in the state of Massachusetts and comes less than three months after Wal-Mart reached a deal with state officials to pay $3 million to settle complaints that the retailer failed to provide proper meal breaks, The Associated Press reported.
The agreement "dwarfs similar settlements of similar class actions against Wal-Mart across the country," plaintiffs attorney Philip Gordon said in an affidavit. The pact prohibits either side from commenting on the matter.
Wednesday's deal was reached after a previous agreement, which was proposed during the summer, was rejected by the court after Gordon and other plaintiffs attorneys objected, the AP said. That agreement would have limited Wal-Mart's liability to $20 million, and the majority of the money would have gone to pay attorneys' fees.
For its part, Wal-Mart said resolving the litigation was in the best interest of the company, its shareholders and its employees. "These cases were filed years ago, and the allegations are not representative of the company we are today," Wal-Mart spokeswoman Daphne Moore said.
The Massachusetts lawsuit was just one of a number of complaints filed against the company in 2001, according to the AP. A year ago, Wal-Mart agreed to pay as much as $640 million to settle 63 lawsuits over wage-and-hour violations.
Wal-Mart to pay $40 million to settle labor lawsuit in Massachusetts