December 23, 2005

A California jury has just awarded $172 million to thousands of California employees at Wal-Mart Stores Inc. who claimed they were illegally denied lunch breaks. The retailer was ordered to pay $57 million in general damages and $115 million in punitive damages to 116,000 current and former employees for violating a 2001 state law that requires employers to give 30-minute, unpaid lunch breaks to employees who work at least six hours.

The lawsuit is one of about 40 tort suits nationwide alleging various workplace violations by Wal-Mart, and the first to go to trial. Wal-Mart settled a similar lawsuit in Colorado for $50 million.

In the suit, Wal-Mart claimed that workers did not demand penalty wages on a timely basis (Under the law, the company must pay workers a full hour's wages for every missed lunch.), and that in 2003 most workers agreed to waive their meal periods as the law allows. Wal-Mart attorney Neal Manne claimed the law did not allow for private lawsuits. He added that Wal-Mart did not believe the lunch law allowed for punitive damages.

Wal-Mart has recently argued for a substantial increase in minimum wages (thus making it very difficult for competitors to underprice it). It is now on the receiving end of this cartellization, as state labor laws are making it difficult to wring out the efficiencies that made the company famous and prosperous. Thus does heightened minimum wage legislation disguise itself as tort law.