$3.8M Settlement Reached in Kmart Overtime Pay Class Action Lawsuits

Two overtime pay lawsuits against Kmart may be over following upcoming court approval of a proposed $3.8 million settlement.

Plaintiffs in both actions allege the retail chain denied unpaid wages to its assistant managers by failing to pay them overtime pay.

They alleged that Kmart had misclassified the assistant managers as being exempt from certain legal protections under state and federal law.

Named plaintiff Amy Fischer started her unpaid overtime class action lawsuit in July 2013, objecting to Kmart’s practice of not paying assistant store managers overtime pay.

Unlike other store employees who were eligible for breaks and overtime pay, assistant managers were treated more like supervisors, who are exempt from certain protections under the Fair Labor Standards Act, she alleged.

Fischer also argued the same practice violated state laws in Maryland, New Jersey, New York and Ohio.

Overtime Pay Under the FLSA

For certain types of employees, the FLSA requires employers to pay a higher wage for time spent at work in excess of 40 hours in a work week. Some types of employees are exempt from this protection, however.

The exemption generally applies to certain types of employees that are presumed to be less vulnerable to abusive employment practices.

Certain executive, professional and highly skilled employees may be considered exempt, and employers may expect these employees to work overtime without being paid a higher wage.

Management employees, like Kmart’s assistant managers, may or may not qualify as non-exempt, depending on the details of their employment terms. Whether an employer has properly classified a particular group of employees as exempt or nonexempt is often a major issue in litigation over unpaid wages.

As proposed, the settlement would require Kmart to pay over $3.8 million to cover allegedly unpaid overtime for a class of 422 employees.

Class members are assistant store managers who worked at least one work week at Kmart during a period of several years that varies according to which state they were from.

New York employees enjoy the longest period of applicability, running from March 27, 2009, through the date of settlement. Employees in New Jersey are only eligible if they worked after July 3, 2013.

Although Kmart has agreed to the settlement, it does not require the company to admit any of the plaintiffs’ allegations.

The settlement also covers another unpaid overtime class action lawsuit filed in New York in 2015. In that case, plaintiff Gina Hautur led a class of employees who had missed a deadline to join Fischer’s claim in New Jersey.

Fischer and Hautur’s claims are not the only overtime pay lawsuits Kmart has faced lately. Last December, the chain settled a claim brought by a Florida employee who claimed the company compensated its assistant managers as if they had more power than they actually did.

The terms of that settlement were not made public.

Also last year, two former Kmart employees secured a $500,000 settlement after raising allegations that the company withheld both overtime pay and regular pay from managers who worked more than 40 hours in a given workweek.

The Kmart Overtime Pay Class Action Lawsuits are Amy Fischer et al. v. Kmart Corp. et al., Case No. 3:13-cv-04116, in the U.S. District Court for the District of New Jersey, and Gina Hautur et al. v. Kmart Corp. et al., Case No.  1:15-cv-00267, in the Western District of New York.

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