Wal-Mart must pay $200m to workers denied lunch breaks

Wal-Mart, the world's largest retail company, has suffered a potentially ominous legal setback, with a California jury awarding more than $200m (£115m) to thousands of employees who alleged they were illegally and systematically denied lunch-breaks.

The company has been fighting allegations for years, in and out of court, that it cuts corners to keep labour costs low. Yesterday's jury verdict in Oakland, near San Francisco, marked the first time that the company had been forced to go to trial and lost.

The suit was one of about 40 in the works nationwide alleging that the Arkansas-based retailer, which boasts a chain of mostly suburban superstores across the United States and beyond, routinely violates US labour laws - keeping workers off the clock so they are not credited for overtime, denying them lunch-breaks and other rests, and so on.

Wal-Mart is at the centre of a growing dispute over the economic desirability of the sort of superstore it has pioneered. While the chain, and others like it, provides affordable consumer goods and plentiful employment, especially in impoverished areas of the country that are badly in need of both, its critics complain that it earns its profits at the expense of both the communities where it takes up occupancy and its own underpaid employees.

While the surviving members of the founding Walton family are all multi-billionaires, almost half the children of company employees either have no health insurance or else rely on government-sponsored subsistence programmes to gain access to basic medical care, according to the company's own figures. An unknown number of employees relies on government food stamps to keep body and soul together month to month.

Labour unions have been complaining about Wal-Mart for years, and in the past few months have focused their organising efforts around a new documentary entitled Wal-Mart: The High Cost of Low Price, produced and directed by the prominent Hollywood liberal activist Robert Greenwald.

The film has been a considerable PR blow to the company, which has fought back via conservative think-tanks and its own media information machine to try to pour cold water on the film's most incendiary attacks and discredit the film-makers. A pro-Wal-Mart documentary has also made the rounds, albeit far less prominently.

In the wake of the California ruling, it now appears that the company's labour practices may prove to be its Achilles heel. It has already settled one class-action lawsuit in Colorado for $50m - a case that bears many similarities to the California one.

A judge in Missouri, meanwhile, has just granted class-action status to another suit originally filed in 2001. Although that case is still some distance away from trial, the judge's ruling accepted the plaintiffs' contention that whatever was going on was the result of a systematic policy dictated by Wal-Mart headquarters in Bentonville, Arkansas.

In other parts of the country, Wal-Mart has fared better. Courts in Florida, Ohio, Texas, Louisiana and North Carolina have either refused to grant class-action status to plaintiffs in Wal-Mart cases or otherwise thrown the suits out.