Damages for Wage-Hour Law Violations Can Escalate Rapidly
Last week Law.com reported, in an article by Alison Frankel of the American Lawyer (“Wal-Mart Loses $6.5 million Wage-and-Hour Class Action”) that Wal-Mart had lost a non-jury trial on complaints of violation of the Wage-Hour laws that resulted in an award of damages of $6.5 million. Law.com also reported that Wal-Mart was 0 for 3, in that, in the preceding several years it has lost two other trials, these with juries, resulting in damages of $172 million and $78 million. Appeals are pending in the latter two cases and planned in the current case, also according to Law.com. The alleged violations involved, apparently, failure to give employees rest breaks.
Normally, we do not comment on “big business.” What caught our attention was not so much the controversy and apparent hostility between Wal-Mart and the class-action bar. Both have the resources, apparently, to be formidable adversaries to each other. Nor was it Wal-Mart’s apparent willingness to accept the public relations consequences of losing these types of cases.
Rather, what caught our attention were several points about the composition of the damages that may be of interest to the attorneys and managers of businesses with much more modest resources:
- Damages accrued on each occurrence, each time there was no break; thus, the number of employees and the number of days multiplied to millions of alleged violations;
- On the table were compensatory damages, attorneys fees and punitive damages;
- After losing the federal case last week, these same allegations of Wage-Hour violations (whether or not employees were appropriately given breaks) will be the subject of state law litigation with potential for even more damages.
The Law.com article notes that not all the damages that were sought were actually awarded. That highlights the fact that the potential liabilities were even greater.
In short, the case serves as a reminder that violations of the Wage-Hour laws can be extremely serious because damages can escalate very rapidly. Business owners and managers should be aware of the potential for damages and pay careful attention to compliance.
