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Lessons from Wal-Mart’s employment-law missteps

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in FMLA Guidelines,Human Resources,Leaders & Managers,Management Training

Wal-Mart bashing may be the new spectator sport in America, but the nation’s largest retailer is slowly learning some important lessons from a series of legal setbacks involving time and attendance records and managers’ misguided efforts at cost control.

Employers of all sizes nationwide can learn a thing or two from Wal-Mart’s mistakes.

Requiring work during breaks: a $78 million error. The most recent blow came from a Pennsylvania jury that awarded a group of present and former Wal-Mart workers $78 million in damages because the retailer forced employees to work without pay.

The employees sued under state labor laws (an increasingly popular way to get bigger awards from local juries) and claimed that managers pressured them to work off the clock and cut or skip meal/rest breaks. Two cashiers told of being locked in the store to work without pay. One cashier testified she feared losing her job if she didn’t agree to work for free during breaks.

Jurors took just two hours to conclude that the Arkansas-based retailer had violated state labor laws. The verdict awarded back pay and damages to nearly 187,000 current and former Wal-Mart employees reaching back to 1998. Wal-Mart plans to appeal.

That ruling comes on the heels of a California jury awarding $172 million last year to former Wal-Mart workers for wage violations. In 2002, a group of 83 Oregon employees won back pay, and the company settled a Colorado lunch-break dispute for $50 million.

Managers’ comments undercut claim of “isolated” incidents. Despite showing that the company had taken steps to address pay and break issues, Wal-Mart’s attorneys failed to convince the jury that the retailer was a large, repentant employer committed to fixing a few small problems.

A crushing blow: videotapes of Wal-Mart managers bragging about ill-advised cost-cutting measures at their stores. One manager told of the “one-minute punch,” in which employees clocked in, but not out. The manager would mark that employee as having worked one minute that day.

Another former Wal-Mart manager discussed the “40-hour club,” which was a way to avoid paying overtime. Employees who worked more than 40 hours in a week were recorded as having worked only 40 hours.

Managing public perceptions. Despite media campaigns designed to clean Wal-Mart’s image, the company still faces big hurdles in front of juries. Madison Avenue hasn’t yet convinced Main Street’s residents that Wal-Mart’s smiley face isn’t just smirking at them.

Every employer has to manage its public image. Legal battles like this send the wrong message to employees, prospective employees and customers. Firm policies and regular supervisor training go a long way to eliminate such problems.  

Wal-Mart’s tougher new attendance policy

Wal-Mart isn’t the only company facing no-show troubles. The unscheduled absenteeism rate hit 2.5 percent this year, up from 2.3 percent last year and the highest rate in seven years, according to a new CCH survey. In response, Wal-Mart tightened up its attendance and tardiness policy last month. Predictably, the policy shift created a media firestorm against the retailer. The company’s new rules say:

  • Employees must report unscheduled absences or tardiness by calling a toll-free number at least one hour before their scheduled start time and write down a confirmation code.
  • Employees then are to call their store manager with the code. (Previously, employees received permission directly from store managers.)
  • Employees are tardy and receive an attendance demerit if they arrive more than 10 minutes late.
  • Employees with three attendance demerits (down from four) in a rolling six-month period will be disciplined. Seven attendance demerits will result in termination.   

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