Wal-Mart said the department's review of its overtime calculations also found it had overpaid about 215,000 hourly workers during the same five-year period. The company said it will not seek to recover any overpayments, which were at least $20 per worker.
Steven Mandel, associate solicitor in the Labor Department's Fair Labor Standards Division, said the case — involving nearly 87,000 employees — resulted from Wal-Mart coming to the department in early 2005 and asking for a review of its overtime calculations.
"They had some concern that some of the practices were not in compliance" with federal wage laws, he told a conference call for reporters
"It's not particularly unusual for an employer to come to us and talk to us about potential payroll violations," Mandel said.
But Mandel said the overtime settlement was one of the largest ever reached by the department's wage and hour division.
Wal-Mart said the settlement includes no fines or penalties and that it has adopted measures to prevent the errors from occurring again.
"The fact of the matter is we discovered this matter, we reported it to the Department of Labor and we resolved the issue," Wal-Mart spokesman John Simley said.
"We are committed to our associates (employees) and we've apologized to them for this error," Simley said.
Simley said Wal-Mart discovered possible mistakes in its formulas for overtime during a regular internal review. He said there was no connection between the company reporting itself to the Labor Department and multiple lawsuits against the retailer in recent years by employees alleging payroll violations.
Last October, Wal-Mart workers in Pennsylvania won a $78.5 million judgment for working off the clock and through rest breaks. Wal-Mart denied wrongdoing and is appealing the jury award.
One of Wal-Mart's most vociferous critics, union-backed WakeUpWalMart.com, said the overtime settlement was a sweetheart deal that favored the retailer rather than its workers.
WakeUpWalMart.com spokesman Chris Kofinis said workers were not represented in the settlement talks and added that the idea that Wal-Mart "would negotiate in the best interests of its workers is ludicrous on its face."
Critics had previously denounced a separate Labor Department settlement with Wal-Mart over child labor violations, which was made public last February.
That $135,540 settlement was later found by the Labor Department's inspector general to contain significant concessions for the retailer. The inspector general's report said the settlement was "significantly different" from other such agreements and included far-reaching restrictions on the government's ability to assess monetary penalties.
Regarding the overtime issue, Mandel said the department carried out a national review of all Wal-Mart stores over a two-year period from February 2005 to this year.
The settlement was approved Thursday by a federal judge in the U.S. District Court for western Arkansas, Mandel said.
The highest award to an individual employee was about $39,000, he said.