IR #2007-02
January 25, 2007

Dean Fryer
Renée Bacchini
(415) 703-5050

California Labor Commissioner files suit against Wal-Mart

Sacramento-The California State Labor Commissioner today filed suit against Wal-Mart in the Superior Court of Sacramento County seeking all underpayments of overtime wages resulting from errors in the company's payroll processes. The errors in the calculation of required overtime payments to employees were first reported by Wal-Mart in early 2005. Most of the errors resulted in small amounts of underpayments to a large number of employees throughout the United States. The U.S Dept. of Labor (DOL) also filed suit today against Wal-Mart and immediately filed a nationwide settlement agreement regarding the overtime violations.

"Unlike the federal lawsuit, we have not agreed to a settlement of the California lawsuit" said Robert Jones, acting state labor commissioner. "While Wal-Mart has indicated its desire to pay all additional wages owed under California law, we will not agree to any settlement terms until state auditors have the opportunity to verify the accounting records relied upon by DOL officials and to examine additional records that relate to those issues that are subject to more stringent California statutes."

Wal-Mart voluntarily notified the California State Labor Commissioner of underpayment of overtime wages to approximately 50,000 California employees. Approximately 90% of these employees and former employees were underpaid in total amounts of less than $20.00 over the past 5 years. Wal-Mart further informed the state that it intended to correct the payroll calculation problems as quickly as possible and that it would pay all workers employed in California since Feb. 1, 2002 all wage amounts they may have been underpaid, no matter how small the amount. The Labor Commissioner's Office has been working with Wal-Mart to determine precisely how much is owed to these California employees. This will ensure that each employee is fully reimbursed for all wages that exceed what DOL determined to be owed under federal wage and hour laws.

Wal-Mart also informed the Labor Commissioner that many employees received overpayment of wages as a result of the errors in the computer payroll program. However, Wal-Mart has indicated that they will not seek reimbursement of any overpayment to employees.

The State of California suit also seeks interest and penalties that may be owed to former Wal-Mart employees who were underpaid for their overtime work and who have since left employment with Wal-Mart. In addition, the California suit seeks penalties due to the State for the violation of specific wage and hour statutes and attorneys' fees.

At the present time, based on the information supplied by Wal-Mart, it is anticipated that any future settlement may exceed $2 Million in additional payments to affected California employees. The amounts may range from as little as $1.00 to several thousand dollars for a limited number of past employees. The audits necessary to verify accounting records may take some time as there are over four million individual payroll records of California employees.

"Our goal is to encourage voluntary compliance by all businesses," added Jones. "Wal-Mart's actions to resolve this issue go a long way to encourage all employers who may be out of compliance to work with us to regain compliance and to compensate employees for wages they may be owed."

To learn more about the functions of the California Labor Commissioner, visit our web site at