Workers in Wage-Theft Lawsuit Obtain $21 Million Settlement from Walmart Service Contractor

Modern_warehouse_with_pallet_rack_storage_system.jpgA group of workers in several warehouses owned by Walmart recently settled a lawsuit against the company that operates the warehouses under a contract with the retailer. The settlement includes $21 million in back pay, interest, and penalties, and that amount will reportedly be the sole responsibility of the contractor. The plaintiffs initially sued the contractor and several affiliated companies for alleged violations of the Fair Labor Standards Act (FLSA), 29 U.S.C. § 201 et seq., and California labor statutes. The court granted their motion to amend their complaint to include Walmart itself under the theory that the contractors and it were joint employers of the plaintiffs. Carrillo, et al v. Schneider Logistics, Inc., et al, No. 2:11-cv-08557, third am. complaint (C.D. Cal., Jan. 11, 2013).

The plaintiffs worked in warehouses owned by Walmart in Eastvale, California at various times between approximately January 2003 and February 2012, according to their most recent complaint. Schneider Logistics, Inc. and several other businesses had contracts with Walmart to provide warehousing, trucking, and other services at the warehouses. The plaintiffs were employees of one or more of the contractors, in the sense that they received paychecks and other features of employment from one or more of those companies.

The allegations against the defendants included dangerous working conditions, minimum wage violations, and failure to pay overtime. The plaintiffs further alleged that the defendants failed to keep accurate payroll records, and even falsified records, in an effort to conceal wage violations and unlawfully withhold earnings from workers. In October 2011, the initial group of plaintiffs filed the lawsuit on behalf of themselves and more than 200 other workers who consented to suit under the FLSA. 29 U.S.C. § 216(b).

The court granted the plaintiffs leave to amend their complaint to include Walmart as a defendant, on the grounds that it is a joint employer with the other defendants, and therefore is jointly liable for the wage violations. The plaintiffs cited numerous examples of control exerted by Walmart over the other defendants’ employment decisions, such as “guidelines, requirements, and training…about how to perform their duties, including but not limited to instructions on how to lift boxes without injury and other safety training…” Carrillo, third am. complaint at 38.

The plaintiffs’ most recent complaint asserted 17 causes of action, including FLSA violations, multiple California labor statute violations, common-law claims for fraudulent misrepresentation and negligence, and a claim under the Declaratory Judgment Act, 28 U.S.C. §§ 2201-02, seeking a declaration “that defendants have committed the violations set forth above.” Id. at 95.

In January 2014, the court denied motions for partial summary judgment brought by Walmart and another defendant, Schneider Logistics Transloading and Distribution, Inc., (SLDT) on the question of joint liability. Both companies argued that they were not liable because they were not the plaintiffs’ direct employers. The plaintiffs reached a settlement agreement with Schneider Logistics, a different entity than SLDT, in May 2014, which included damages of $21 million to be paid solely by Schneider. The settlement is still awaiting the court’s approval.

If you need to speak to an employment attorney regarding a wage claim or another employment law matter in New Jersey or New York, please contact the Resnick Law Group today online, at 973-781-1204, or at 646-867-7997.

More Blog Posts:

Lawsuit Alleges Employer Failed to Provide Adequate Restroom Breaks, The New Jersey Employment Law Firm Blog, May 13, 2014
McDonald’s Faces Multiple Lawsuits in New York for Alleged Wage Violations, The New Jersey Employment Law Firm Blog, April 18, 2014
Liquidated Damages Award in FLSA Case Reminds Employers in New Jersey and Across the U.S. to Comply With Wage Laws, The New Jersey Employment Law Firm Blog, January 10, 2014
Photo credit: By Axisadman (Own work) [CC-BY-SA-3.0 or GFDL], via Wikimedia Commons.

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