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Iliadis v. Wal-Mart Stores

August 15, 2006


On appeal from Superior Court of New Jersey, Law Division, Middlesex County, No. MID-L-5498-02.

The opinion of the court was delivered by: Wefing, P.J.A.D.



Argued March 8, 2006

Before Judges Wefing, Wecker and Graves.

Plaintiffs appeal, pursuant to leave granted, from the trial court's order denying their motion for class certification. After reviewing the record in light of the contentions advanced on appeal, we affirm.

Plaintiffs Michelle Iliadis and Angela Nelson-Croxton are both former employees of Wal-Mart Stores, Inc. Plaintiff Iliadis worked as an associate and as a cashier from December 1998 to July 2001 at two locations in New Jersey--Berlin and Turnersville. Plaintiff Nelson-Croxton worked as a cashier from November 1996 to March 1999 at the Berlin store. Defendants Derrick Zimmer and Glen Spencer were the store managers at Berlin and Turnersville, respectively, during the period of plaintiffs' employment.

Plaintiffs have filed an eleven-count complaint asserting claims for breach of contract (express contract, implied-in-fact contract and unilateral contract); breach of the covenant of good faith and fair dealing; violation of New Jersey's State Wage and Hour Law, N.J.S.A. 34:11-56(a)(4); violation of N.J.A.C. 12:56-5.2; restitution; and unjust enrichment. The underlying premise to their complaint, in which they seek relief both for themselves, individually, "and all others similarly situated" is that they were made to work "off-the-clock" and that they did not receive the rest breaks and meal breaks to which they were entitled.

Plaintiffs moved for class certification on all counts of their complaint other than those alleging breach of an express contract. After extensive discovery and comprehensive briefing, the trial court heard oral argument on the motion. Following that argument, the trial court denied the motion, setting forth its reasons in a twenty-five page written memorandum of decision.


Wal-Mart is reputedly the largest private employer in the world. Dukes v. Wal-Mart Stores, Inc., 222 F.R.D. 137, 141 (N.D. Cal. 2004). According to its 2006 Annual Report, it has forty Wal-Mart stores in New Jersey, nine Sam's Club stores and one Wal-Mart Supercenter. Wal-Mart Investors, nual_report.pdf (last visited Aug. 1, 2006).

It is not surprising, given its size, that it has extensive written policies governing the work hours and break times for its employees. Wal-Mart Corporate Policy #PD-07 is applicable to all associates, including salaried, hourly, full-time, peak-time and temporary, as well as some salaried members of management, and governs break periods and meal periods at all Wal-Mart stores. Any associate who works less than three consecutive hours is not entitled to any break period. An associate who works from three hours to six hours is entitled to one uninterrupted paid break of fifteen minutes. An associate who works more than six consecutive hours is entitled to at least two paid uninterrupted fifteen minute breaks.

An associate's immediate supervisor is responsible for scheduling these breaks, and a supervisor who fails to do so is subject to disciplinary action. At the time of plaintiffs' employment with Wal-Mart, employees were required to swipe their time cards when starting and ending their breaks. Wal-Mart changed this procedure in February 2001; thereafter, employees were no longer required to clock out or clock in for their rest break periods. Wal-Mart attributed this change in procedure to the fact that employees are paid for their rest break periods, and thus there is no need for associates to swipe their time cards at the start and the end of their break periods.

This same Corporate Policy contains the rules governing meal breaks. Those associates who work for more than six hours are entitled to a meal break of at least thirty minutes. With the approval of a supervisor, that may be extended to sixty minutes. Associates are not paid for the time they are on meal breaks, as opposed to the time they are on rest breaks. Supervisors are responsible for scheduling meal breaks for the associates under them and are subject to disciplinary action for failure to do so.

Supervisors or management may not ask or direct an associate to perform any work while the individual is on a rest break or a meal break. The Corporate Policy places an affirmative duty on associates to comply with the rules governing rest breaks and meal breaks. Specifically:

Associates are to take full, timely, uninterrupted breaks and meal periods. Associates will be subject to disciplinary action for failing to clock in or out for meal periods, missing meal periods, or taking meal periods that are too long, too short or untimely. Associates will also be subject to disciplinary action for missing breaks or taking breaks that are too long, too short or untimely. Supervisors and salaried members of management will also be subject to disciplinary action for interrupting or failing to provide breaks, meal periods, and/or days of rest in accordance with policy and state laws.

Wal-Mart Corporate Policy #PD-43 deals with the necessity to keep complete and accurate records of time worked. It states "[n]o Wal-Mart Associate should perform work for the Company without compensation." It defines "off the clock" as work that is performed while time is not recorded, not maintained by an automated timing device or not tracked manually. All associates paid on an hourly basis are required to clock in and clock out at the beginning and end of their shifts and their meal periods. An associate or supervisor who violates this policy is subject to discipline, including termination.

In the event that an employee does work off the clock, Wal-Mart has a procedure to see that the employee is compensated for that time. The Time Clock Punch Error Report is a daily report which tracks errors made by associates in clocking in and clocking out. The report lists all associates whose time records are missing an entry; all errors listed on the report must be corrected before the daily or weekly payroll hours can be finalized.

Wal-Mart employs a Time Adjustment Sheet to make written corrections or changes to the Time Clock Punch Error Report. Associates fill out a Time Adjustment Sheet to make any corrections to their time records; that sheet is signed by the associate, his or her supervisor and a member of management. Corrected Time Adjustment Sheets must be attached to the Time Clock Error Reports.

The policies for rest breaks, meal breaks and accurately recording the hours worked are explained to new associates as part of their orientation. All new associates are provided with an Orientation Packet which sets forth the respective policies. In addition, all new associates receive the Associate Handbook, which contains a section explaining these policies and procedures. The Handbook makes clear that each associate is expected to record his/her own time. It states:

[a]lways clock in to begin your workday and at other appropriate times; ask your Supervisor for specific details. If you forget to do this, notify your Supervisor immediately so corrections can be made . . . . Remember that working off the clock is not only against Wal-Mart policy -- it's against the law. Always clock in when you are working -- Always! There are no exceptions.

In this action, plaintiffs allege that the reality of the Wal-Mart work place does not accord with these written policies. They contend that the result of Wal-Mart's emphasis on keeping down labor costs and increasing profits is a disregard of these written policies and the creation of a work atmosphere in which associates work through their rest breaks and meal breaks and work off the clock. They seek relief, both for themselves and for a class which they have ...

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