Despite the holiday week, Wal-Mart probably is not feeling much like fireworks. A $6.5 million judgment is nothing to celebrate. Earlier in the week, a class of more than 56,000 Wal-Mart employees was awarded $6.5m in back pay for wage and hour violations. And it gets worse. The penalties phase, scheduled for October, could bring another $2 billion in damages.
The alleged violations included unpaid training time and failure to comply with state law for meal and rest breaks.
Wal-Mart’s own internal audits were used as damning evidence against the retail giant. The company had performed a series of audits that supported the employees’ claim about missing meal and rest breaks.
So is this strong support for never conducting an internal audit? Well no, not really. If your wage and hour practices are not in compliance with the law, that won’t change by whether or not you perform an audit. Nor will an audit change the likelihood that an employee with some knowledge of the wage and hour laws will file a claim with the Department of Labor. Whether you chose to ignore it or chose to address it, a violation is a violation.
Ok, so why did Wal-Mart’s audits end so badly? The audits did not end badly. The unlawful practices did. Audits don’t serve much purpose unless the employer acts to correct any problems that the audit reveals. If you don’t actually act on the information, the audit is nothing more than evidence–against yourself.
Another question, though, that is raised by this case is why the audits came into evidence in the first place. Performing an internal audit must be done with great care to ensure that the information cannot be later used against the company. Some believe that involving legal counsel in an internal audit is the best way to achieve this. If the audits are generated for counsel, attorney-client privilege may attach and serve to protect the results. Undoubtedly, though, how the audit is conducted is just as important as what is done with the results .