Rite Aid To Settle Allegations Of Unpaid Overtime For $20.9 Million

Pharmacy Settles Allegations It Misclassified Managers

Oddly enough, employees from one of the nation’s largest pharmacies could soon be celebrating the fact that they won't be classified as management.

Rite Aid has ageed to pay $20.9 million to settle allegations that it did not pay employees for unpaid overtime, The Wall Street Journal reports. A total of more than 6,000 current and former associates had sued the retail giant, alleging they had been incorrectly classified as assistant managers and co-managers and hence unfairly denied overtime pay.

Under the Fair Labor Standards Act, certain salaried managerial employees in "executive, administrative or professional" roles may be exempt from overtime, but-lower level employees are entitled to increased compensation for more than 40 hours worked per week.

The lead plaintiffs' counsel, Seth Lesser, called the settlement “an excellent result” in a statement, CBS News reports. Rite Aid continues to deny any wrongdoing.

There have been a rash of recent lawsuits concerning overtime and unpaid wages, a trend some argue results from employers expecting more out of their employees in order to remain profitable and avoid adding extra jobs. Over the last 11 years, class-action lawsuits alleging wage and hour violations have risen 400 percent, CNNMoney reports.

As in Rite Aid’s case, the lawsuits often come down to classification of employees, a problem with which the pharmaceutical industry is familiar. Walmart recently agreed to $4.8 million in back pay because it had previously exempted its vision center employees from overtime.

However, the Supreme Court ruled this week that drug sales representatives are not entitled to overtime after employees sued drugmaker GlaxoSmithKline, alleging that they shouldn't be exempt like most "salesmen" since they only promoted their company’s drugs to physicians, instead of selling them directly to customers.

The ruling comes just weeks after a $99 million settlement over the same issue was approved by a federal judge in favor of Novartis sales representatives, Bloomberg BNA reports. According to the approval, the Supreme Court’s negative ruling means Novartis employees will “not be able to recover any overtime pay, notwithstanding the Second Circuit's favorable ruling.”

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