RadioShack to Settle Managers’ Overtime Lawsuit
RadioShack Corp. said Tuesday that it would pay $29.9 million to settle the unpaid overtime claims of 1,300 managers in California in one of the largest such agreements in the short history of the state’s white-collar wage litigation wave.
The managers filed a class-action overtime lawsuit more than two years ago, contending that the Fort Worth-based company had improperly exempted them from overtime eligibility. RadioShack made no admission of wrongdoing in agreeing to the settlement but is working on a plan for court approval to change the way it pays managers.
Under California’s unique wage law, workers classified as managers are eligible for overtime pay at time and a half if they spend more than 50% of their time on nonsupervisory tasks such as running a cash register, flipping burgers or unloading merchandise.
Hundreds of firms have paid out hundreds of millions of dollars in settlements in such cases filed over the last five years. RadioShack’s deal appears to be the second-largest, behind a SBC Pacific Bell settlement in December to pay 1,500 engineers $35 million. In April, Starbucks Corp. agreed to pay $18 million to settle overtime claims by 1,000 managers and assistants.
Employment lawyers said they believe that the litigation may have peaked because most of the large national firms with potential vulnerability have been sued.
“It may be these suits are on a downhill slope in terms of numbers and size,” said Frank Cronin, an Irvine-based employment lawyer who has defended management in a handful of such suits. “There’s a lot of medium and small companies that might become targets of the plaintiffs’ bar, but they have pretty much focused on the big, name-brand companies with deep pockets.”
But Steve Zieff, a San Francisco lawyer who won a $90-million verdict on behalf of 2,400 Farmers Insurance claims adjusters in an overtime case, said he believes there are plenty of companies that are failing to pay overtime that they owe to supervisory workers. “The litigation and the publicity that’s attended it has probably put a lot of employers on notice, so they are hopefully cleaning up their act,” he said. “But I’m sure the practice still exists and will continue.”
Employers are encouraged by a recent appellate decision in a case involving Sav-on drugstores. The court ruled that store managers did not qualify as a class. From store to store, the court held, managers spent their time in such different ways that there was not enough similarity to treat them all the same in a mass trial or settlement.
Labor lawyers said the ruling has limited applicability to other cases and believe it has a good chance of being overturned. But, if it stands, the decision will “have a chilling effect on this kind of litigation,” said Robert Thompson, a Tustin lawyer who has represented workers in several overtime suits, including RadioShack.
After the Sav-on ruling, RadioShack asked the Orange County judge overseeing its case to disband the class of managers. The judge declined, and RadioShack settled the case while its appeal was pending.
The class includes current and former managers at 550 large-volume stores in California, Thompson said. Payments depend on how many weeks claimants worked as managers in those stores since 1996.
RadioShack general counsel Mark Hill said the company was encouraged by the Sav-on decision, but he said RadioShack wanted to put the dispute behind it, and the settlement of a separate, unrelated lawsuit in its favor freed up $27.7 million in cash.
