Employees Want $1M PetSmart Class Action Settlement Approved

PetSmart Inc. has reached a proposed $1 million class action settlement with a class of 1,100 former employees who received severance wages in the form a paycard (similar to a prepaid ATM card), according to a motion for preliminary approval filed January 12 in California federal court. The employees argue that, because the cards charge an assortment of fees, the practice constituted wage theft.

Lead plaintiff Cassandra Pace, a former PetSmart groomer, filed the wage and hour class action lawsuit against PetSmart in 2013, alleging violations of California labor laws over PetSmart’s issuance of final pay to separated employees in the form of a paycard without obtaining their written authorization.

The PetSmart class action lawsuit (Pace v. PetSmart) argued that the practice of paying departing employees their final wages with a paycard was a violation of the California Labor Code, specifically the California final paycheck law. Section 212(a) of the code requires that employers pay wages that are “negotiable and payable in cash, on demand, without discount, at some established place of business in the state….”

The PetSmart class action lawsuit alleged that the prepaid payroll cards used by PetSmart were subject to fees and therefore did not meet the requirement that the plaintiff be able to obtain her pay in cash without discount, and that the ATM-like cards required her and other former employees to incur various fees to use, which prevented their final wages from being fully paid.

Additionally, the former groomer argued in the PetSmart class action lawsuit that when an employee had chosen a different method of payment for regular paychecks (direct deposit or paper check), PetSmart’s practice of using the paycards across the board for departing employees violated California Labor Code section 213, which requires an employee’s authorization to use a paycard.

The PetSmart class action settlement proposal calls for the national pet products retailer to pay a gross settlement fund of $1 million, of which approximately $570,000 will be distributed between Class Members on a pro rata bases to recover unpaid wages that were lost to fees incurred from using the ATM-like cards. If no members of the class opt out, each ex-employee can expect to receive $515. The remaining class action settlement money will be used to pay attorney, court and administrative fees and costs.

Class Members of the PetSmart paycard settlement include all former employees who were employed by a California PetSmart store at any time from Feb. 20, 2010 through the date the class action settlement is preliminarily approved by the Court and who, upon their separation of employment, received their terminating wages in the form of a paycard kit.

As part of the PetSmart class action settlement, PetSmart denies any liability or wrongdoing associated with the wage and hour violation claims alleged by the plaintiff and former PetSmart employees. The company maintains that the paycard program was lawful under the Fair Labor Standards Act (FSLA).

A preliminary approval hearing will be held Feb. 9, 2015.

The PetSmart Wage and Hour Violations Lawsuit is Cassandra Pace v. PetSmart Inc., Case No. 8:13-cv-00500, in the U.S. District Court for the Central District of California.

California Labor Law

Employees working for employers that operate their businesses in the State of California are entitled to their rights, especially with regard to matters concerning California labor laws. The Fair Labor Standards Act (FLSA) and several California state laws govern the rights of employees to fair wages and working conditions. Employers who cut corners and disregard these rights can be held legally accountable by employees not to mention the fact that they may face stiff penalties.

California Final Paycheck Law. Under California employment law, departing employees are entitled to receive their final paycheck within certain strict deadlines. California employees who are fired or laid off must be paid all of their wages, including accrued vacation, immediately at the time of termination.

If the employer does not comply with California law, former employees are eligible to compensation in the form of penalties paid by the employer. For every day that final wages are not completely paid, the employer is liable for penalty wages equivalent to the employee’s daily wage, up to a maximum of 30 days.

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