Abercrombie Settles Suit
Clothing seller Abercrombie & Fitch Co. has agreed to pay as much as $2 million to settle a lawsuit filed on behalf of more than 250 California store managers who claimed that they were denied overtime pay.
The company admitted no wrongdoing in the settlement, which was approved Thursday by Los Angeles Superior Court Judge Kenneth R. Freeman.
It was the latest in a string of lawsuits that have rippled through the service industry in recent years after California toughened its wage standards beyond what federal rules allow. Employers that apply federal standards to California workers often find themselves in trouble, labor experts say.
Similar settlements in recent years were reached with Foothill Ranch-based Wet Seal Inc., which in January 2004 agreed to pay as much as $1.3 million, and Longs Drug Stores Corp., which paid $11 million to end two suits brought on behalf of about 1,000 managers.
Oakland civil rights attorney Brad Seligman said employers were getting the message. “I think as companies become more rigorous in ensuring compliance with overtime and labor requirements you will see less litigation,” Seligman said.
Joseph Beachboard, an employment attorney with Ogletree Deakins in Los Angeles who represents employers, agreed. But employers may see an increase in other kinds of suits over such issues as meal and rest breaks for workers, he said.
Last month, an Oakland jury awarded $172 million to 116,000 current and former employees of Wal-Mart Stores Inc. for violating a 2001 state law that requires employers to provide 30-minute unpaid lunch breaks to employees who work at least six hours in a shift. “This is sort of becoming the litigation du jour,” Beachboard said.
The overtime lawsuit against Abercrombie was filed in July 2002 by Bryan T. Kimbell, a former manager of the company’s Thousand Oaks store, and was granted class-action status in September 2004, covering managers who worked during the period from July 1998 to April 2004.
The suit alleged that Kimbell and others employed by the retailer regularly were required to work at least nine hours a day -- in some cases more than 60 hours a week -- without overtime pay. It claimed that Abercrombie wrongly classified store managers as salaried employees exempt from overtime pay requirements.
A spokesman for New Albany, Ohio-based Abercrombie declined to comment on the case.
To be considered exempt in California, managers must spend more than 50% of their time performing managerial tasks. In this case, managers spent most of their time unpacking boxes, folding clothes, stocking shelves and waiting on customers, just like hourly workers, said Robert Drexler, an attorney with the Quisenberry Law Firm in Los Angeles, which represented the plaintiffs.
In other states, the question of whether an employee is entitled to overtime pay hinges more on the nature of their responsibilities, not the time spent on particular duties, Beachboard said. The differences in standards creates problems for businesses that make it harder to compete in the state, he said.
Abercrombie has been the target of other employment lawsuits in recent years. In November 2004, the retailer agreed to revamp its hiring and training practices and pay $40 million to thousands of female and minority employees and job applicants to settle lawsuits accusing it of discriminating against women and minorities. Abercrombie denied the charges.
