Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: WEDNESDAY, August 4, 1993 TAG: 9308040121
SECTION: BUSINESS PAGE: B-6 EDITION: METRO
SOURCE: Associated Press
DATELINE: WASHINGTON LENGTH: Medium
The settlement, which ended more than eight months of negotiations with the Labor Department, is the largest ever reached by the federal government in a wage-and-hour case involving a private employer.
Labor Secretary Robert Reich said he hoped it "sends a clear signal" that the Clinton administration "will not tolerate companies that seek to gain competitive advantage through undermining the nation's fair-labor standards."
Salisbury, N.C.-based Food Lion, which has more than 1,000 stores in 14 states, did not admit to any violations.
"We feel very strongly that we have not violated the law, but we settled in order to demonstrate that the long-running disagreement with the Labor Department is behind us," said George Salem, an attorney for Food Lion.
But the Labor Department said its investigation, which included on-site inspections of 85 stores and reports from 150 others, revealed "widespread and extensive" violations of child-labor and overtime rules.
$13.2 million in back pay to current and former workers who had not received proper overtime pay, some dating back to 1989. The company also agreed to pay $3 million in civil penalties for child-labor and wage-and-hour law abuses.
Most of the nearly 1,400 child-labor violations stemmed from teenagers working on food-baling machines and meat slicers contrary to federal safety requirements. A small number concerned minors who worked excessive hours or late-night hours.
The agreement with Food Lion, which reported earnings during the last quarter of $30.7 million, came only a week after the Labor Department fined another supermarket chain, New Jersey-based A&P, nearly $490,000, also for child-labor violations involving minors working with dangerous equipment.
Tom Smith, president of Food Lion, said it agreed to resolve the dispute "rather than spend considerable resources and years in litigation."
Thomas P. Williamson, a department solicitor, said 30,000 to 40,000 current and past employees will be eligible to receive back pay. Officials said they could not say how much money each worker would get. The chain has about 66,000 employees, including about 800 in the Roanoke area.
The chain still faces a separate lawsuit by nearly 900 workers on the overtime issue. The Labor Department agreement does not affect that suit, officials said.
The overtime payments stem from a complaint filed in 1992 by the United Food and Commercial Workers Union that Food Lion scheduling practices was forcing workers to work extra hours without pay, or "off the clock."
Nicholas Clark, assistant general counsel for the union, said while the settlement may be "an historic amount, it's not enough" and likely will mean only about $350 for each worker involved. The union claims Food Lion saved as much as $65 million a year by not paying required overtime.
The Labor Department said Tuesday that the overtime violations stemmed from the way Food Lion had implemented its "effective scheduling" system, which requires workers to complete specific tasks within a certain time period.
"Often this system did not allow adequate time for the completion of the assigned work and, as a result, the company often failed to pay employees for unrecorded hours," said the department.
Food Lion settled another case with the Labor Department in 1989 involving overtime complaints, and in that case paid $300,000 while promising not to repeat the infractions.
by CNB