Radio Shack Settles Overtime Class Action for $700,000

In a class action alleging that Radio Shack deprived Pennsylvania employees of overtime pay, the company agreed to pay $700K to settle the suit.  According to details reported on Law360 (subscription required), the employees were part of a compensation method that permitted fluctuating hours throughout the workweek.

Lead plaintiff David Verderame was a former store manager and first sued the company in April 2013 in the Philadelphia County Court of Common Pleas.  The suit claimed that salaried workers that were part of the fluctuating workweek method used by the company did not receive overtime in accordance with the state’s Minimum Wage Act; instead, they were paid compensation equal to half the rate that resulted when the employee’s weekly salary was divided by the total hour worked in a week.

In July 2014, Mitchell S. Goldberg of the U.S. District Court for the Eastern District of Pennsylvania rules that, though the fluctuating workweek method may be legal under federal regulations, it violates Pennsylvania state regulations. In November, the parties entered into settlement negotiations and stipulated to a class certification, signed off by Judge Goldberg, for all Pennsylvania workers employed by RadioShack who had overtime pay calculated pursuant to the fluctuating workweek method since April 5, 2010.

The parties reached the $700,000 deal two weeks after an employee brought a proposed class action against RadioShack, alleging the company violated the legal protection of worker retirement plans by continuing to tie worker’s 401(k) plans to the company’s plummeting stock.

If you or someone you know believes that an employer has violated federal or state wage laws, please contact the attorneys in Sommers Schwartz’s Employment Litigation Group today for a free consultation.