West Marine Products to Settle California Labor Law Violations

Santa Clara, CAWest Marine Products has likely learned that it doesn’t pay to stiff your employees for overtime pay and meal breaks. After it was hit with to California labor lawsuits, the boating supply products company went after its insurer to cover the lawsuits.

West Marine Wage and Hour Violations

Back in 2014 Karen Taylor and Paulisa Fields, two former employees of West Marine, filed a complaint claiming that West Marine failed to provide its employees with sufficient breaks at work and adequate compensation for off-the-clock tasks, thereby violating California wage and overtime laws. Over a five-year period, the company underpaid employees by a total of $18,828. The settlement amount is $435,000. According to the lawsuit, Fields and Taylor were hourly-paid assistant managers: they closed West Marine facilities in the evening and then traveled more than a mile to the bank to deposit daily receipts. Instead of compensating this off-the-clock work, they were credited with a flat fifteen-minute “timecard correction,” “despite the fact that it took them longer than fifteen minutes to compete their duties”.

Spiff Bonuses and the FLSA

Replicon explains “spiff bonuses” –West Marine’s wage and hour violations. “Spiffs are a form of remuneration used to incentivize sales associates to sell a specific item or group of items. West Marine failed to properly incorporate spiffs into the regular rate of pay, so that employees who were owed spiffs and who also worked overtime hours in the same workweek were underpaid by a few cents for that pay period. Eighty-eight percent of the class action members were underpaid by a mere $50 or less.” Clearly, it pays to become familiar with pay rules, and employers might be wise to employ a dedicated payroll officer and even an experienced wage and hour attorney to avoid miscalculations and costly mistakes.

The Fair Labor Standards Act (FLSA) defines the regular rate of pay as including “all remuneration for employment paid to, or on behalf of, the employee.” Commissions, non-discretionary bonuses, wages (salary, hourly, piece rate), and tips received by eligible tipped employees (individuals who are paid a cash wage lower than the minimum wage in which the employer takes a tip credit) are all variables to be taken into account when calculating the regular rate of pay. Regardless of an employer’s pay period, these calculations are always based on a standard workweek.

Replicon wrote: Miscalculations often appear to be “one off” errors, but typically point to a larger systemic issue, such as an underlying glitch within an employer’s timekeeping or payroll systems. When employers learn about these miscalculations, they should always be asking, “Why did this occur?” There should be a designated resource charged with investigating issues arising from employee compensation. Not addressing the root cause to miscalculations leads for wage and hour violations to permeate for many months – or in West Marine’s case – even years.

The good news for employees is that the FLSA Courts isn’t fond of employers that violate the FLSA, and in recent years workers have been awarded big payouts.

The settlement is KAREN TAYLOR, individually and on behalf of all others similarly situated, and PAULISA FIELDS, Plaintiffs, v. WEST MARINE PRODUCTS, INC., Defendant. No. C 13-04916 WHA United States District Court, N.D. California. May 21, 2015.

Wage and Hour West Marine Lawsuit

The second West Marine wage and hour lawsuit was filed originally in San  Mateo County Superior Court by Adrienne Adams, a  former West Marine  employee. West Marine removed the case to federal court under the Class Action Fairness Act (“CAFA”). Adams claimed the boating company failed to pay overtime and minimum wages, provide meal and rest breaks and provide accurate wage statements. The case is Adams v. West Marine Products, Inc., No. 20-15444 (9th Cir. 2020).

West Marine v. its Insurer

In early 2021 West Marine sued its insurer, National Union Fire Insurance Co. of Pittsburgh PA and Westchester for coverage of the Adams lawsuit. The state court case was removed to federal court the following month, according to court filings.

West Marine also sought coverage for suit Wade v. West Marine Products Inc. Michael Wade in 2020 filed a complaint alleging failure to reimburse necessary business expenses and provide adequate seating.

In November 2021, U.S. District Judge Edward J. Davila granted the insurer's motion to dismiss, finding that West Marine’s actions were not considered employment practices violations that would be covered under its employment practices liability. However, the court noted that Westchester may be required to indemnify West Marine for the claims in the Wade suit. The case is West Marine Products Inc. v. National Union Fire Insurance Co. of Pittsburgh PA et al., case number 5:21-cv-01940, in the U.S. District Court for the Northern District of California.