Trial Wraps Up In Minnesota Wage & Hour Case

Another wage and hour lawsuit [Braun v. Wal-Mart] is heading towards it conclusion now that a 12-week trial in Minnesota’s Dakota County Court has concluded. Both the plaintiffs and Wal-Mart now have until February 1 to submit summaries of their arguments, and a ruling will come sometime by early May. The class is seeking $25 million in back pay, plus punitive damages.

The complaint, like those filed across the country, alleges that Wal-Mart failed to pay employees for off-the-clock work, and prevented them from taking or completed their earned meal and rest breaks by scheduling more work than could be completed during a normal shift. Beyond claims of state wage and hour law violations, this case is very much a breach of contract case - Wal-Mart had a contract with its employees, and in doing so it promised employee breaks as laid out in its company policies and handbook. Wal-Mart corporate policy entitles employees to one paid rest break for every three consecutive hours worked, and one unpaid meal break for employees working six or more consecutive hours.

Wal-Mart has countered that its payroll and break records are inaccurate because employees forgot to punch in or out on various occassions, although attorneys for plaintiffs are not convinced - they argue that Wal-mart has been perfectly willing to submit those records for payroll and tax purposes:

“Wal-Mart relies on its time records for everything...To pay people, to pay taxes – for every purpose they say, ‘Look at our time records,’ except for when we sued them.”

Deposition testimony from a previous case (Radonna Perrin - manager of Wal-Mart’s Customer Service Scheduling Project) has shown that, at least in the past, Wal-Mart had a policy of drawing up employee hours based on need for each store, and then “requesting” that store managers schedule below those hours. Could “Every Day Understaffing” be every bit the Wal-Mart motto as “EveryDay Low Prices?”

Hastings residents involved in lawsuit against Wal-Mart [Hastings Star-Gazette]

A class-action lawsuit against Wal-Mart wrapped up last week in Dakota County court. The suit alleges the company engaged in a “systematic scheme of wage abuse” against its hourly employees. Wal-Mart, however, denies the allegations.

Two female employees of the Hastings Wal-Mart, Kristin Beissel and Andrea Vaccaro, were plaintiffs in the class-action case, but the entire class encompasses about 58,000 current and ex-employees of Wal-Mart, according to William Sieben, a co-lead counsel for the prosecution.

Wal-Mart operates about 50 stores in Minnesota (including nine Sam’s Club stores) and employs about 14,000 people in the state.

The civil complaint dates back to Sept. 2001, but the trial didn’t start until mid-September of this year, Sieben said, because Wal-Mart exercised all its possible due process rights before going to trial, something he doesn’t fault them for doing, but admits it did slow the process down considerably.

The “wage abuse” alleged in the complaint involves failing to pay hourly employees for off-the-clock work and overtime, and preventing those employees from taking and/or completing their rest and meal periods. The total amount of money the prosecution is alleging Wal-Mart withheld from its employees is about $25 million, Sieben said.

Wal-Mart’s corporate policy on rest and meal breaks is quoted in the complaint as saying an employee is entitled to one paid rest break for every three consecutive hours worked, and an unpaid meal break for employees working six or more consecutive hours.

One of the prosecution’s key claims was that by hiring employees, Wal-Mart entered into a contract with them and in doing so, promised them the breaks that were laid out in the company’s policies and its handbook.

“So they (Wal-Mart) didn’t give the class members what their contract entitled them to,” Sieben said.

The complaint lays out the following allegations:

Beginning at least as early as Sept. 1995, Wal-Mart began engaging in wage abuse against its Minnesota employees, including but not limited to, the approximately 40 named plaintiffs in the class-action suit, the complaint said.

“Wal-Mart gives its employees work assignments that Wal-Mart knows, or should know, its employees cannot complete within their scheduled hours,” the complaint states. “Wal-Mart also creates pressure on its employees to complete their work assignments through intimidation (and) threats of discharge and demotion, while at the same time precluding such employees from clocking in for hours worked necessary to accomplish their assignment outside their regular work schedule.

“Consequently, employees must work after clocking out at the end of their shifts, before clocking in at the beginning of their shifts, and throughout meal and/or rest periods without being compensated for that time.”

Wal-Mart denies these allegations, according to its answer to the complaint.

Other allegations in the complaint include: employees being “encouraged” not to record overtime and employees being forced to go back to work during their rest and meal breaks without being permitted to clock back in before returning to work. Wal-Mart denies both of these allegations.

The complaint also says Wal-Mart “deceitfully hides behind its written policy that purports to forbid unlawful labor practices while at the same time it maintains conditions that foster such practices.”

For example, “Wal-Mart unfairly, fraudulently and unlawfully uses its ‘no (work) off-the-clock policy’ as a double-edged sword against its hourly employees,” the complaint says. “Wal-Mart uses its written policies to shield itself from paying for off-the-clock work and overtime and then terminates employees who complain about having to do such work.” Wal-Mart denies these claims in its answer to the complaint.

Wal-Mart knew, or should have known, wage abuse was occurring at its stores, the complaint says, for three reasons.

First, its managers have been present while off-the-clock work was being performed. Second, managers assign work that cannot be accomplished during an employee’s shift and make “threats or intimidating remarks if the assigned work is not completed,” while prohibiting employees from clocking in to complete the work. And last, managers systematically under-staff stores.

Wal-Mart denies these claims in its answer to the complaint.

Sieben said the whole case really boils down to two major questions: First, did Wal-Mart enter into a contract with its employees by hiring them? A question which the court has already ruled on by saying there was a contract. And second, did Wal-Mart breach that contract by not allowing employees to take the breaks promised to them in the contract?

The evidence that will decide the second question is Wal-Mart employee’s time records, or the records that show when employees clocked in and out.

“We believe the Wal-Mart time records are accurate and accurately reflect that employees didn’t get the breaks (they were entitled to),” Sieben said.

Wal-Mart’s lawyers, however, tell a different story.

Neil Manne is a lawyer with the Houston law firm Susman and Godfrey that represented Wal-Mart in the case. He said their position on the time records is that employees forgot to punch in and out, and that created the inaccurate records.

“Our defense, as simply as I can put it, is that Wal-Mart didn’t do what the prosecution alleged,” he said. “The employees did get their breaks.”

Manne said the records are inaccurate because they were created by the employees themselves, many of whom testified at the case that they forgot to punch in or out on various occasions.

Sieben doesn’t buy that story though.

“Wal-Mart relies on its time records for everything,” Sieben said. “To pay people, to pay taxes – for every purpose they say, ‘Look at our time records,’ except for when we sued them.”

The 12-week trial wrapped up last week and Judge Robert King Jr. gave both sides until Feb. 1 to submit summaries of their arguments. After that, King has 90 days to rule, which would mean a decision is likely in early May, Sieben said.

Wal-Mart recently lost two similar cases alleging the same wage abuse practices in California and Pennsylvania. The California case ended with $175 million in restitution and $120 million in punitive damages. The Pennsylvania case awarded $200 million in restitution and $50 million in statutory penalties.

Sieben said the case here is seeking $25 million in restitution, but the bigger claim would come in a second phase of the trial when penalties for violating Minnesota law would be decided. In Judge King’s ruling that’s expected in May, he will decide whether to allow a second phase, which Sieben thinks he will. That phase would likely begin in the summer of next year.

Sieben said the case was a big deal for Hastings. It’s garnered national press coverage and drew lawyers from all over the country, who spent their lunch hours at places like the Levee Café and Tamales.

Manne said he and his team of lawyers enjoyed being in Hastings for the trial, and that Judge King was a great judge for the case, paying “incredibly close attention” to every detail.

Posted by Corey Himrod on Friday, December 21, 2007

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