Nationwide retailer Lowe's struck a $9.5 million deal on Aug. 22 to end a two-year class action lawsuit alleging the company "misclassified" up to 1,750 of its human resource managers in violation of the Fair Labor Standards Act (FLSA).
After much back-and-forth litigation, the big-box retailer agreed to pay $9.5 million into a common fund settlement, part of which will go to Lowe's employees who come forward as having worked under the title of HR Manager between January 2011 and the time that the order on the motion is filed. The settlement total is based on per-person cost of approximately $3,166.
The original complaint—filed by former employee and plaintiff Lizeth Lytle on Aug. 15, 2012—claimed that Lowe's violated FLSA overtime wage provisions by hiring employees as "human resources managers" but giving them the clerical duties of "low-level" human resources workers without the eligibility for overtime pay. Though her job title was that of a manager, Lytle says she lacked the authority to fire or hire, promote, discipline, or give raises to workers. Additionally, Lytle says that she and other similarly-titled employees were required to work 55 hours of work per week, but received no overtime compensation as a result.
Lytle also alleged Lowe's failed to track the hours of most, if not all of the company's human resource managers, and that the act of paying those employees on a salary basis did not meet the requirements of an FLSA-exempt status.
The case was treated as a class action suit in January of this year, and by May, roughly 880 former HR managers joined the case. In the settlement agreement, Lowe's acknowledged the fact that further litigation would be "protracted, distracting, and expensive," and that the "cost, uncertainty, and risks" of any further proceedings make the settlement a fair trade.
This isn't the first time in recent history the company has settled for a big sum. In May of this year, the retailer agreed to pay $6.5 million to settle a case alleging the company treated independent contractors like company employees without giving them any of the benefits.