Walmart's Employee Handbook Cost them $187.6 Million;
What Could Your Employee Handbook Cost You?
By: Kraig J.
Marton, Esq. and Jerrie
Martinez-Palombo, M.Ed., SPHR
Recently, Pennsylvania's Superior Court upheld a jury verdict of
$187.6 million against retail giant, Walmart, Inc. in part for
denying employee's meal and rest periods as promised in their
employee handbooks. Walmart's violation regarding breaks and meal
periods was not statutory but rather contractual.
Pennsylvania law does not require meal breaks or rest breaks to
employees over 18 years of age. However, Walmart's employee
handbook stated that hourly employees who work between three and
six hours per shift would be given one 15-minute paid rest period
and employees working more than six hours per shift would be given
two 15 minute paid rest periods. The handbook further stated that
if the employees were interrupted during their lunch break they
would be paid in full for the break and given an additional rest
period, which employees alleged did not occur.
Employees filed a class action lawsuit against Walmart claiming
they were not paid for rest periods and meal periods, as well as
off the clock work in violation of the Pennsylvania Wage Payment
and Collection Act and in breach of contract. The court ruled
that Walmart's handbook policies pertaining to meal and rest
periods were "unilateral contracts" with employees that Walmart
breached. Braun v.
Wal-Mart Stores, No. 3373 EDA 2007 (June 10, 2011).
Neither federal law nor Arizona law require that an
employer give meal periods or breaks, but what does your employee
handbook say?
Federal law nor Arizona law require employers to provide
employees with meal or break periods. However, the Fair Labor
Standards Act (FLSA) does state that if employers do offer short
breaks, which are defined as 20 minutes or less, that those breaks
be paid.
The FLSA defines "bona fide meal periods" as serving
a different purpose than a break and are typically 30 minutes or
longer. Employers do not need to compensate employees for meal
periods that are 30 minutes or longer, as long as the employees are
free to use their time for their own purposes.
Employers are expected to abide by their own written policies.
Walmart's policy on meal and rest periods was very specific
and viewed as an enforceable promise. Employers who provide
breaks and meal periods to employees should mention it vaguely in
the handbook and specify that breaks and meal periods are not
guaranteed. For example, the handbook might state something
like:
Breaks and meal periods are at
management's discretion. When time permits we will do our best to
provide employees with a short break. Additionally, we will
do our best to provide employees with an unpaid 30 minute or longer
meal period in which employees are free to use this time for their
own purposes. However, neither breaks nor meal periods are
guaranteed.
Walmart's handbook also promised employees that if their meal
period was interrupted with work, they would be compensated for
their time and then allowed an additional meal period, which did
not occur. It is important for employers to realize that FLSA
requires non-exempt employees to be compensated for all hours
worked. If a non-exempt employee works during his or her lunch
period that employee should be paid. For example, if Jane Doe
decides to eat lunch at her desk and answers the phone and speaks
with a customer, that is considered time worked and should be
paid. To reduce liability employers should discourage
non-exempt employees from eating in their designated work area.
More importantly, to reduce the risks of an employee handbook
being seeing as a contract with employees, employers should ensure
their handbooks have a very clear and precise disclaimer. The
disclaimer should state that the information within the handbook is
not meant to create a contract and the handbook can be changed or
revoked at any time. The handbook should also have an
employee attestation that echoes the same disclaimer.
Employers are encouraged to have their handbooks reviewed by an
attorney and have an annual "check up" with an attorney to ensure
continued legal compliance.
About the authors: Kraig J. Marton is an employment
attorney that heads the employment
law department at the Phoenix law firm of Jaburg Wilk. He assists
employers in compliance with Arizona labor laws. Kraig can
be reached at kjm@jaburgwilk.com or
602.248.1017. Jerrie Martinez-Palombo, M.Ed, SPHR is
the Human Resources Director at Jaburg
Wilk and has over 13 years of HR experience.
This article is not intended to provide legal advice and
only relates to Arizona law. It does not consider the scope of laws
in states other than Arizona. Always consult an attorney for
legal advice for your particular situation. This
policy is written based on Arizona law for Arizona
employers.
3200 North Central Avenue
. Phoenix . Arizona