Walmart Faces Another Round of Wage Theft Claims

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News Law and Policy

Walmart Faces Another Round of Wage Theft Claims

Jessica Mason Pieklo

A potential class action lawsuit in California accuses the retail giant of intentionally misclassifying workers to avoid overtime pay.

Retail giant Walmart faces a potential class action lawsuit in California alleging the company has engaged in wage theft.

The lawsuit, filed in Alameda County Superior Court, claims Walmart uses “assistant store managers” to do the work of lower-level employees in order to avoid paying overtime to those lower-level employees.

Walmart routinely has assistant managers performing many of the same tasks as hourly employees, including greeting customers and taking inventory, according to the allegations in the complaint. Bonnie Cardoza, an assistant at Walmart for almost five years and the named plaintiff in the class action suit, claims she and other Walmart assistant store managers would perform these tasks for more than eight hours a day, but unlike hourly employees, would never reach overtime status.

“[Cardoza] and all the other [Walmart] Assistant Store Managers were ‘managers’ in name only because they did not have the managerial duties or authority and should therefore have been properly classified as non-exempt employees,” the lawsuit alleges.

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Under the Fair Labor Standards Act, the federal law that governs employee pay standards, salaried employees earning $23,660 per year ($455 per week) are considered “exempt” from overtime pay, which means no matter how many hours per month they work, employers are not required to pay those exempt employees more than their stated salary.

Walmart has “willingly” and “deceptively” incorporated the practice of misclassifying its employees as assistant managers into company policy as a way to cut costs, according to Cardoza’s lawsuit. Cardoza claims that she and other assistant managers were also deprived of rest and meal breaks, and that they weren’t provided with pay stubs detailing how many over hours they actually worked.

Cardoza filed the suit on behalf of any Walmart employee who worked as an assistant store manager between January 2011 and January 2015. On behalf of the class, Cardoza is suing for back wages and for unpaid overtime, as well as compensation for missed rest breaks.

The court must approve the status of the lawsuit of class action, which has not yet happened.

Walmart has a history of wage theft allegations. A Pennsylvania Supreme Court in 2014 ordered the retailer pay $151 million in back wages to 187,000 current and former employees who claim the company made them work off the clock during breaks.

In 2013, Walmart faced allegations that it forced workers to skip meal breaks.

An executive order issued last year by President Obama could help address the problem of employee wage theft through misclassification. That executive order would update overtime laws so that fewer employers could be classified as managers and exempt from overtime rules. The order would also raise the salary threshold for getting overtime pay. That threshold has not been significantly updated since 1975.

Walmart recently announced it was raising its minimum wage to $9 an hour starting this month, and then to $10 in 2016 for workers who have passed a six-month training period. Critics note that the wage increases will not be enough to keep many full-time Walmart employees from having to rely on government programs like food stamps and Medicaid.