Following on the increase in wage class actions, this week brings us a hefty settlement for shoe retailer, Payless Shoesource Inc. Last March, former Payless store managers filed suit in Connecticut federal court, accusing the company of misclassifying them as exempt and failing to pay them overtime. The original case was then combined with a similar action filed in New York in August 2014. Payless has finally resolved the disputes, agreeing to settle with a class of 2,197 employees for $2.9 million, all the while denying any unlawful activity or failure to comply with the law.
The complaint in the initial suit accused Payless of purposefully misclassifying store leaders and managers as exempt, despite requiring them to work overtime without being paid a premium and to perform non-managerial duties such as operating cash registers, cleaning, answering phones and greeting customers.
Payless is simply another example of how employers can fall victim to Fair Labor Standards Act claims by failing to properly classify their employees and pay due overtime wages, even after having ample opportunity to do so. Indeed, this wasn’t the first suit of its kind for Payless. In 2006, managerial employees filed suit in Mississippi alleging the retailer consistently required they work 60 to 90 hour weeks doing non-managerial tasks without overtime. The parties ultimately agreed to a confidential settlement.
Payless isn’t alone – earlier this month grocery chain Publix Super Markets Inc., which operates over 1,000 supermarkets in six states, also agreed to pay a whopping $30 million to settle a 2012 collective action filed in Tennessee federal court, alleging the retailer failed to pay the required amount of overtime to department managers. Publix, too, denied all liability but settled to avoid the “burden, expense, and uncertainty” of continuing litigation.
Employers everywhere would be well-advised to seek legal counsel to ensure their employees are properly classified and properly paid all due overtime – or risk paying much more in litigation and potential settlement costs in the long run.