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Payless Settles Overtime Class Action

It’s true that, under the federal Fair Labor Standards Act (FLSA), certain employees can legally be exempted from overtime pay. However, it might be more accurate to say that certain job responsibilities are exempt from overtime. In order to qualify for the exemption, an employee needs much more than just a salary and a certain title. The Act requires employees to spend the majority of their time performing specific duties in order to be exempted from overtime compensation.

The FLSA has divided the employees that can be exempt from overtime into three main categories: administrative, executive, and professional. The administrative category consists of employees who perform primarily office work and provide administrative assistance directly to an executive. An executive must spend the majority of her time managing other employees, be able to discipline those employees, and have significant say in the hiring and firing of those employees. The professional category covers all workers whose jobs require a certain level of education or set of skills to complete.

The executive category is often the most misunderstood or, in some cases, deliberately misinterpreted. Employers sometimes classify all employees with the title of manager as exempt from overtime, even if the managers spend the majority of their time at work performing the same tasks as hourly employees. Payless ShoeSource Inc., for example, recently settled a class action wage and hour lawsuit in which its managers allege they were misclassified as overtime exempt.

The class action lawsuit was filed by five named plaintiffs on behalf of all Payless managers who were not paid for the overtime work they performed. According to the lawsuit, managers at Payless allegedly spend the majority of their days at Payless performing “non managerial duties such as operating cash registers, cleaning, greeting customers, and answering phones.” The lawsuit alleges Payless store managers were required to work overtime without pay, much less the proper overtime compensation.

Under the FLSA, any time spent working after eight hours a day or forty hours a week is defined as overtime. All nonexempt employees are entitled to one and one-half times their hourly rate of pay for all overtime worked.

Payless has agreed to settle the class action lawsuit for $2.9 million, but the complaint alleges the shoe company saved much more than that by misclassifying its managers. According to the lawsuit, because the FLSA has a statute of limitations, Payless likely allegedly saved “hundreds of millions of dollars”. This means that, even if Payless had spent years litigating the merits of the wage and hour lawsuit and been unsuccessful, they still would have saved enough money to make a substantial profit, if the allegations are correct.  Payless denied the claims and asserted it had complied with the law.

All the current and former Payless managers who are eligible to participate in the Class will be informed of the settlement and given the right to receive compensation for the unpaid overtime hours they worked. After paying the plaintiffs’ legal costs and plaintiffs’ incentive awards for filing the lawsuit, the rest of the settlement will be paid out to Class members based on their claims.he Chicago overtime lawyers at the Chicago Overtime Law Center are investigating unpaid overtime claims against large retail chains such as Petsmart, Officemax, Staples, Smart & Final, Apple, Walgreen’s, CVS, Urban Outfitters, GAP, Abercrombie & Fitch, Limited, Forever 21, Macy’s, Target, Payless, JC Penney’s, Lowes, Marshalls, Bed Bath & Beyond, TJ Max, Victoria’s Secret, Nieman Marcus, Saks Fifth Avenue, Best Buy, Home Depot, Apple, Best Buy, Sears, K Mart, J.C Penney, Walmart, Costco and other retail chains for misclassifying employees as managers, erasing or altering time sheets or time records, pressuring workers not to report or record overtime, failing to pay for time spent on security checks, and otherwise failing to pay workers for overtime and other wages. If you are the victim this practice call us at (312) 869-4095 or contact us online.  We have offices in Chicago and Oak Brook near Highland Park and Waukegan.