The federal Fair Labor Standards Act (FLSA) guarantees certain rights for all hourly employees working within the United States. The Act does not extend some protections (such as overtime compensation) to higher-level employees who earn a salary, because they generally have more bargaining power than hourly employees. These exempt workers include administrative workers, executives, and those working in a professional occupation.
But the FLSA is very specific about the qualifications employees have to meet in order to be considered exempt from overtime compensation. Administrative workers must perform primarily office work and provide assistance directly to an executive. Executives must spend the majority of their time managing other employees and have significant influence in the hiring, firing, and discipline of those employees. The professional category covers all workers in fields that require a particular set of skills or level of education to perform, including doctors and performers.
Managers are often classified as overtime exempt under the executive category, but they don’t always meet the requirements. A recent wage and hour class action lawsuit against PetSmart alleged the company misclassified its operations managers as exempt from overtime, even though the work they did in overtime was allegedly non-managerial work that did not qualify for the exemption under the FLSA.
Of the 1,100 potential class members, 331 opted to participate in the collective action. The court preliminarily certified the class and the case moved into a second stage of discovery. At this point, PetSmart and the representatives of the class started negotiating a settlement of $3.8 million. The negotiations lasted for two months before they finally came to an agreement. Both parties agree the settlement is fair and reasonable, but they still need the court to approve the settlement before they can move forward with payments to class members and put the matter behind them for good.
The terms of the settlement include paying one-third of the amount to attorneys’ fees and up to $330,000 for expenses. After that, about $6,600 is left for each of the class members. Individual payments will be determined based on the amount of overtime each class member worked without pay.
Although PetSmart agreed to the settlement, it continues to deny that it did anything wrong. It insists that the claims of the wage and hour lawsuit are without merit and that PetSmart acted out of good faith at all times. The official word is that the company agreed to the settlement to avoid the time and expense of a long court battle.
One of the advantages to settling outside of court is that companies can rid themselves of the dispute without accepting blame. They also get to avoid the uncertainty of a court decision, which can either go in their favor or against them, and it can be hard to predict which way it will go.
Despite continuing to protest its innocence and denying all claims of wrongdoing, this is not the first wage and hour lawsuit PetSmart has faced. Just last year, it settled a lawsuit for $10 million that alleged animal groomers were not paid when they performed work other than grooming.The 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, PetSmart, Macy’s, Target, 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, Amazon, Overstock.com and other retail chains and internet sellers 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 Elk Grove Village and Hoffman Estates.