Drugstore chain Duane Reade Inc. has agreed to fork over $3.5 million to settle a pair of class actions that accused it of failing to pay overtime wages to its assistant store managers.
The settlement, which still requires approval from the U.S. District Court for the Southern District of New York, was announced Tuesday. As a result of the settlement, Duane Reade will record a $3.5 million one-time, pre-tax charge for the fourth quarter of 2008, according to the company.
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The cases date back to 2004, when an overnight assistant manager filed a proposed class action on behalf of all nighttime workers against Duane Reade, the largest drugstore chain in the metropolitan New York area. That suit alleged that the company illegally misbranded the employees as exempt from the overtime pay requirements under state labor law and the federal Fair Labor Standards Act.
A daytime assistant manager later lodged another proposed class action by day and evening employees, making similar accusations.
In May 2005, the judge overseeing the litigation denied Duane Reade’s motion to dismiss. Then, in May, the plaintiffs won their bid for class certification.
Among other things, the plaintiffs argued that Duane Reade’s business model dictated uniformity of size, staffing and other operational policies across the company’s 251 stores and roughly 6,500 retail employees.
The company’s corporate headquarters made most hiring decisions, and store managers had little room to set policies on issues such as the number of workers to hire, how much they should earn in wages and whether they were eligible for overtime pay, the plaintiffs said.
Duane Reade countered by pointing out that some plaintiffs were in charge of the store when store managers were absent, that they had responsibilities to train and supervise other store employees, that they made recommendations on hiring and firing of employees, and that they attended management meetings.
The judge was unconvinced, however, saying the evidence didn’t establish significant differences in the responsibilities exercised by different assistant managers.
“Apparent inconsistencies in the record are the result of overly aggressive lawyering rather than credible testimony of assistant managers or anyone else,” the judge said. “The weight of evidence supports the position that the job responsibilities for assistant managers are largely and materially consistent.”
The plaintiffs are represented in the matter by Outten & Golden LLP
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The cases are Kelvin Damassia et al. v. Duane Reade Inc., case number 04-cv-08819, and Enamul Chowdhury et al. v. Duane Reade Inc., case number 06-cv-02295, in the U.S. District Court for the Southern District of New York.