Time-Clock Fraud Liability for Employers

In a class-action suit, 170,000 Wal-Mart employees took the retailer to court, alleging they were entitled to compensation because they were routinely asked by management to work through their breaks and to perform work after they were off the clock.

Wal-Mart’s policy provided for a 15-minute paid rest break during any three-hour work period for all employees, as well as two 15-minute paid rest breaks and a 30-minute unpaid meal break in a six-hour work period.

Wal-Mart argued that it should not be held liable because several employees testified that they skipped breaks or cut their breaks short by their own choice. Wal-Mart contended that it strongly discouraged this practice and employees merely chose to do this on their own. Additionally, the company argued it had improved its systems to ensure all employees receive scheduled breaks.

A Pennsylvania state court jury found that Wal-Mart had failed to pay employees for off-the-clock work. The jury found that Wal-Mart had violated state wage and rest break regulations by requiring the employees to work through their breaks while off the clock. The jury awarded the class of employees $78.47 million. Braun v. Wal-Mart Stores Inc., Pa. Ct., No. 020303127 (October 13, 2006).

Impact: Employers are cautioned to train their managers on applicable regulatory standards dealing with meal and break times.

Workforce Management, December 11, 2006, p. 16 — Subscribe