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Costco Service Provider, Club Demonstration Services Settles Alleged Unpaid Overtime Class Action

Anyone who has shopped at Costco has seen people spread throughout the store, particularly in the food aisles, giving out samples and demonstrating how appliances work. Although they are a very familiar sight in the giant discount retailer, Costco Wholesale Corp. does not employee these people. Instead, they are supplied by Club Demonstration Services Inc. and Warehouse Demo Services Inc. (the two companies recently merged under the name Club Demonstration Services Inc.).

Selene P. and Cindy C. filed a class action wage and hour lawsuit against their employers for allegedly violating California wage and hour laws.

Like the federal Fair Labor Standards Act (which applies to all employees working in the United States), California labor law requires employers to pay all hourly workers one and one-half times their normal hourly rate of pay for all overtime worked. Both the state and federal laws define overtime as any time spent working after eight hours a day or forty hours a week.

In addition to this mandate, California labor law requires employers to provide all their hourly workers with regular breaks throughout the day. For every four hours of work, an employee is entitled to one paid rest break lasting at least ten minutes. For every five hours worked, an employee is untitled to one unpaid meal break lasting at least half an hour. For every day an employee does not take one of these breaks, for any reason, the employee is entitled to one hour’s worth of pay, in addition to all wages, tips, bonuses, etc. earned that day.

The class action wage and hour lawsuit alleges Club Demonstration Services had a policy of not providing breaks for their employees if they worked a shift longer than six hours and shorter than 7.5 hours, which is in direct violation of California labor law.

There are a number of methods employers can use to pay their workers. There are hourly, salaried, and piecemeal options, and some employees choose to work for a combination of perks and benefits in addition to wages. This may be a more economical compensation method for some employers, but companies who pay their employees this way need to be sure to take into account all means of compensation when calculating things like overtime and bonuses.

According to the class action wage and hour lawsuit, Club Demonstration Services allegedly provided its employees with various incentives in addition to their regular pay. The plaintiffs allege these incentives should have been considered when calculating overtime compensation. If the extra incentives had been considered, the employees allegedly would have received significantly larger paychecks when they worked overtime.

Club Demonstration Services and the class representatives have agreed to settle the lawsuit instead of allowing the matter to drag on in the courts, where it could rack up large legal costs for both sides. The proposed settlement is for $4.25 million and would include policy changes, including revised payroll practices and rest period policies. The settlement has been preliminarily approved by a judge, and now needs only final approval before the more than 8,000 class members can expect to start seeing their checks in the mail.

Our Cicero and Skokie wage and hour attorneys and unpaid overtime lawyers and attorneys are intimately familiar with the issues that arise during wage claim litigation, and we know the laws that govern overtime cases well. Many employers misclassify employees as being exempt from overtime laws and pay workers salaries instead of hourly wages in order to avoid paying them overtime. Some employers mistakenly classify employees as exempt and others intentionally do so in order to circumvent the law. In either case, workers do not receive the wages they should, and a lawsuit may be the only way to recover their earned wages.

Nationwide Consumer Rights is based in Chicago and Oakbrook Terrace. We represent clients throughout the country who have not been paid for the overtime hours that they worked. If you believe that you are owed overtime wages, contact one of our Chicago class action attorneys by phone at (877) 990-4990 or through our online form.