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FedEx To Pay $2M To Settle Managers' OT Claims

Law360—Aaron Vehling

A FedEx Corp. unit has agreed to pay $2 million to settle a proposed wage-and-hour class action brought by current and former service managers who accused the company of misclassifying them as exempt from overtime, according to documents filed Tuesday in Connecticut federal court.

The agreement calls for the creation of a fund to settle all class members’ claims, and the plaintiffs’ lawyers request up to a third of the amount for attorneys’ fees, according to the plaintiffs’ settlement request. Named plaintiff William Lawson would receive special compensation of $10,000 for his role in leading the suit.

Eligible settlement class members are line-haul service managers employed by FedEx Ground between Aug. 1, 2010, and March 31, 2013, who opt in to receiving a portion of the settlement, according to the agreement. Payouts will be determined using a formula based on the number of weeks eligible former and current employees worked during the period.

Claims administrator Rust Consulting will earn an $18,000 fee from the settlement, and FedEx Ground will retain any unclaimed settlement funds.

Plaintiff Michael Bozak filed the class action in May 2011, alleging that FedEx Ground Package System Inc. violated the federal Fair Labor Standards Act when it mislabeled him and other line-haul service managers as exempt from overtime and failed to pay them for the time they worked beyond 40 hours a week. He also made individual claims under the Connecticut Minimum Wage Act.

Bozak said he and his counterparts often performed work similar to that of hourly clerks and therefore were not exempt from overtime. But FedEx Ground denied it had violated labor laws and shot back at Bozak’s claims about the nature of service managers’ job duties.

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The parties reached a deal the following month after a full day with a mediator, according to the agreement.

This is not the first wage-and-hour class action FedEx has settled with employees. In June it paid $1 million to drivers who worked for another subsidiary, FedEx Freight Inc. The drivers claimed the company stiffed them on overtime, meal breaks and rest periods.

FedEx Ground has more than 50,000 employees who work in 33 delivery hubs, according to the company.

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The plaintiffs are represented by Justin M. Swartz and Ossai Miazad of Outten & Golden LLP and Richard E. Hayber of The Hayber Law Firm LLC.

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The case is Michael Bozak and William Lawson v. FedEx Ground Package System Inc., case number 3:11-cv-00738, in the U.S. District Court for the District of Connecticut.