Unpaid Wages Class Action Lawsuit Alleges Costco In-Store Demonstrators Misclassified

An unpaid wages class action lawsuit has been filed against Costco and two other companies involved in managing in-store demonstrators.

Lead plaintiff Leona M. was granted conditional certification of her unpaid wages class action lawsuit filed against Costco Wholesale Corp. stores, CACafe Inc. and Club Demonstration Services. U.S. District Judge Yvonne G. Rogers of a California federal court certified the Class of workers who, within the last three years, were employed as CACafe tea and coffee demonstrators in Costco stores across the U.S.

Costco, CACafe and Club Demonstration Services are accused of violating the federal Fair Labor Standards Act. Additionally, the three companies allegedly violated California state wage laws. The unpaid wages class action lawsuit says the workers were misclassified as independent contractors when they should have been classified as employees.

Because the workers were misclassified as independent contractors, they allegedly missed out on overtime pay, minimum wage compensation, meal periods, rest breaks and business expense reimbursement.

“Marino submits evidence that Costco, acting through CDS and CACafe, retained the right to exert discipline over ISDs to ensure that they did not perform in an ‘un-Costco way,’” Judge Rogers ruled. “Based on the evidence presented by Leona, conditional certification is appropriate since it meets the ‘modest factual showing’ threshold for initial certification under the FLSA and service of a notice of the opportunity to opt in to the action.”

Unpaid Wages Class Action Lawsuit Indicates Misclassification

CACafe allegedly hired more than 100 in-store demonstrators between 2013 and 2016. These workers were to provide samples of CACafe’s coffees and teas to encourage sales of the products at Costco’s stores.

Workers’ pay was determined by the amount of the product sold on the days the workers participated in in-store demonstrations. The unpaid wages class action lawsuit alleges the workers were required to arrive at the Costco store prior to the store’s opening to set up their displays and to stay until after the store’s closing to dismantle their displays and leave.

Leona said she and the other demonstrators had to meet certain requirements during each day they worked. CACafe required the in-store demonstrators to take a photo of their set-up area and send it to CACafe. At any time throughout the day, a Club Demonstration Services manager would stop by to inspect the demonstration area by marking down a checklist of requirements.

“[Leona] submits evidence that the conditions of the in-store demonstrations were dictated by the policies in Costco’s standard operating procedures, which in turn were enforced by CDS and CACafe,” Judge Rogers said.

California’s labor laws indicate that the amount of control an employer has over a worker is part of what determines the difference between being an employee and an independent contractor.

The more control an employer has over an employee’s hours, work wardrobe, actions, behavior and other aspects of the employee’s work life, the more apt the worker is considered an employee and not an independent contractor.

The Unpaid Wages Class Action Lawsuit is Case No. 4:16-cv-06291 in the U.S. District Court for the Northern District of California.

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