Family Dollar Agreed to Settle Lawsuits for Not Paying Overtime

Family Dollar Stores, Inc. said on Wednesday that it agreed to settle a lawsuit with 1,700 store managers in New York who allege the retailer unlawfully failed to pay them overtime.

The preliminary settlement with New York employees provides for a payment of up to $14 million. Any final settlement needs court approval, and that process hasn’t begun, the discount chain said.

Family Dollar plans to record a one-time charge in the fourth quarter to cover previously unplanned costs and expenses related to the litigation and settlement.

It is bad enough when an employer will not pay his employees overtime for which they are entitled, but when it is the second offense in a short time period, it makes it that much worse.  In 2009, Family Dollar had to pay $33 million to employees, who were classified as “managers” who did not receive overtime pay, following a class-action lawsuit in Alabama.

This is a big company that has been around for a long time. This is no way to treat your employees. Family Dollar was founded in Charlotte, N.C. in 1959 and currently operates more than 7,400 stores in 45 states, employing more than 50,000 people.

A spokeswoman for the company said that in most states, each store has one employee, the store manager, classified as an exempt employee.

The employees in the New York case were classified as “managers,” and are exempt from overtime pay, according to the lawsuit. It is not known why the company assigned these “managers” almost exclusively non-managerial duties, for example, stocking shelves, mopping the bathroom floors, manning the cash registers and unloading the trucks.

The “managers” were scheduled to work more than 60 hours per week, six days per week, as stated in the lawsuit.

A $14 million settlement divided amongst 1,700 employees would amount to just over $8,234 per employee (not including any legal fees taken from the settlement).

Family Dollar Stores, Inc. is litigating 17 lawsuits in seven states over employees being misclassified as “managers” and not receiving overtime pay, according to its most recent quarterly securities filing.

The company is also facing a lawsuit alleging discriminatory pay practices with its female store managers.

Family Dollars’ sales rose to almost $2.4 billion in the third quarter, and their profits increased by 12 percent, to $125 million.  If the company is claiming that managers are exempt from overtime pay, they should make it very clear to these employees that if they work 60 hours per week, they will not be compensated for “overtime” so they know what to expect.  This is not the first time this company has been sued over this matter. You would think they would have job descriptions clearly explaining what “manager” means at Family Dollar, including the pay.

Do you think the employees have the right to expect to be paid overtime?

For more information, contact one of our Gacovino Lake attorneys at 1-800-246-HURT (4878).

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