The Pennsylvania Superior Court upholds a $187 million judgment in favor of employees who were allegedly forced to work off the clock and skip breaks.

The Pennsylvania Superior Court upheld a jury verdict and award in favor of a class of Wal-Mart employees who were allegedly forced to work through their break periods in violation of the company's policy. Specifically, the class of plaintiffs alleged, inter alia, that the company violated the Pennsylvania Wage Payment and Collection Law because it failed to compensate them for rest breaks and off-the-clock work as mandated in its policies. Specifically, the policies required it to pay "for non-working time on rest breaks" and that "[i]t is against Wal-Mart policy for any Associate to perform work without being paid." Following a 32- day jury trial, the jury found in favor of the class of employees and judgment was entered in their favor. On appeal, the employer argued, among other things, that the "rest periods are not 'wages, wage supplements, or fringe benefits' within the meaning of the Pennsylvania Wage Payment and Collection Law." In upholding the judgment, the court initially noted that it was undisputed that the policies were disseminated to employees and employees received handbooks at orientation which contained the promise of certain benefits, including benefits relating to rest breaks. As a result and based upon the plaintiffs' testimony that they relied on the representations contained in the handbook to continue working, the court noted that the provisions concerning getting paid for rest breaks could constitute a "unilateral contract" that the employees accepted by continuing to work there. In addition, the court noted that to present a wage-payment claim, "the employee must aver a contractual entitlement 'to compensation from wages' and a failure to pay that compensation." As a result, the court held that "monetary payments for rest breaks pursuant to an agreement between an employer and employee are 'fringe benefits,' and thus 'wages'" pursuant to the Wage Payment and Collection Law. In so holding, the court reasoned that "the payment associated with a paid, agreed-upon rest break is both 'guaranteed' and pursuant to an agreement and is, therefore, similar to severance pay." The court further rejected the employer's argument that "the employees were not denied any payment for missed rest breaks because they were paid regardless of whether they took a break or not." In rejecting this argument, the court noted that "[e]ssentially, [the employer] promised to pay a full-time hourly employee[s] for a forty-hour workweek in exchange for thirty-seven-and-a-half hours of labor (including meal periods) and two-and-a-half hours of rest," and because of the unequivocal language of their policies, their failure to provide these paid rest breaks can constitute liability under the Wage Payment and Collection Law. Accordingly, the court upheld the jury verdict in favor of the class of employees who were not compensated for missing their rest breaks or cutting their breaks early. While it is likely that the employer will seek an appeal to the Pennsylvania Supreme Court, the opinion as it stands now creates a need for employers to examine their own policies regarding rest breaks and modify them as necessary. Indeed, in light of the fact that the court determined that the employee handbook could constitute a "unilateral contract" that could subject an employer to liability under the wage laws, it is highly likely that plaintiffs and their attorneys will continue to litigate "missed break" cases and seek compensation when an employee (or a group of employees) miss their paid rest breaks or cut their rest breaks short.

Case Law Alert - 3rd Qtr 2011