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California Overtime Pay Plaintiffs Seek Final Approval of $4.25 Million Settlement

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Los Angeles, CAA supplier of services to the retail giant Costco could face a monetary settlement worth $4.25 million if a federal judge in California grants approval of the tentative settlement in the wake of a California overtime pay lawsuit. The class action could benefit some 8,000 individuals who demonstrate products at Costco Warehouses.

Costco Wholesale Corp. (Costco) is not a defendant in the overtime pay laws class action, but rather the entities that supply demonstrators to the chain. The primary plaintiffs in the class action, identified as Selene Prado and Cindy Calahan, allege in their lawsuit that defendants Club Demonstration Services Inc. and Warehouse Demo Services Inc. routinely violated rest periods as required under California labor law. Workers, it was alleged, were also denied overtime pay as required under California overtime law.

Customers to Costco might assume that individuals demonstrating products in store were employed directly by Costco, but that isn’t the case. Those individuals are supplied to Costco and are employed by the defendants (which, it has been reported, have recently merged together under the Club Demonstration Services Inc. banner).

Prado filed her overtime pay laws class action in the spring of 2014. The allegations included the observance of a “patently unlawful” rest period policy that did not allow for a second break when employees worked longer than six hours, but less than 7.5 hours. Prado also claimed in her lawsuit that she and her fellow workers were not paid the proper wages for all overtime hours worked while on the floor, interacting with customers and conducting demonstrations.

At the heart of the unpaid overtime allegations lay various incentives workers received as part of their regular rate of pay. Were such incentives included in calculations for overtime pay, plaintiffs and class members allege they would have received more pay than what was actually distributed in their pay packets.

“Defendants’ policies and practices, as alleged, constitute a willful violation of the [Fair Labor Standards Act],” according to the complaint, which also alleged violations of the California Labor Code.

“In addition to the monetary recovery, as a direct result of this lawsuit, defendants also implemented meaningful non-monetary policy changes,” including revising their payroll practices and rest period policies, the plaintiffs wrote in a motion for final approval.

The tentative settlement was reached in April of this year, and in addition to 57 people who worked in a similar capacity outside the state of California, the class encompasses roughly 8,000 members in total, the vast majority in the state of California.

The case is Selene Prado v. Warehouse Demo Services, Inc. et al, Case No. 2:14-cv-03170, in the US District Court for the Central District of California.


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