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Pennsylvania Court Affirms $187 Million Verdict Against Wal-Mart for Unpaid Rest Breaks

    Client Alerts
  • July 08, 2011

While most recent class or collective action wage and hour cases involve unpaid overtime and employee misclassification claims, mundane working time disputes can lead to large financial liabilities, especially when multiplied across many employees. For example, last month a Pennsylvania appellate court affirmed a $187 million verdict against Wal-Mart based on claims that a class of 187,000 current and former employees had not been compensated for rest breaks and off-the-clock work as mandated in its own policies.

In Braun v. Wal-Mart Stores, Inc., the employee handbook promised employees a certain number of paid breaks. Among other things, the plaintiffs claimed that understaffing in the stores resulted in not being permitted to take such breaks, constituting a breach of the contracted working terms. Wal-Mart contended that the handbook's terms were not contractual in nature.

On appeal, the court affirmed the award of back wages and liquidated damages to the class. Even in states that do not consider employee handbooks to be contractual in nature, wage promises are generally found to be binding unilateral contracts. The paid breaks were a benefit of employment that could not be retroactively denied by Wal-Mart. Wal-Mart was unjustly enriched by the millions of dollars saved through labor practices in contravention of its handbook policies.

While the amount of unpaid wages for each class member was relatively small, when multiplied by the total number of employees over a multi-year period in the entire state, and through the addition of liquidated damages and attorneys' fees, Wal-Mart faces a nine-digit verdict in just one state in which it operates.

This case should serve as guidance for employers with multiple locations without an on-site human resource presence. Simply publishing wage policies without periodic audits, incentives for management to properly classify all working time,and consequences for violations of the policy can lead to disastrous litigation results like the one faced by Wal-Mart.