A Florida federal judge has once again rejected a proposed settlement between Lowe’s Home Centers Inc. and a class of human resources (HR) managers who accused the chain of misclassifying them as exempt from overtime pay requirements. This time U.S. District Judge Virginia M. Hernandez Covington said the terms of a $3.4 million deal are unfair. Judge Covington denied without prejudice the parties’ second joint motion for approval of a collective action settlement in the ongoing Fair Labor Standards Act (FLSA) suit. The parties were given “one final opportunity” to file a new motion for the court’s approval. Judge Covington had just two weeks prior rejected a proposed $9.5 million settlement in the case because it included a provision to reopen the class notice period.
The parties have filed an amended settlement motion to account only for the 891 class members who timely opted in. The 2,834 additional class members who could have joined under the terms of the previous deal, but didn’t, were excluded. The latest agreement, which would have awarded less than $2 million to the opt-in Plaintiffs, was still found to be insufficient. Judge Covington wrote in her order:
Upon review of the parties’ proposed settlement agreement, the court finds that the terms are not fair and reasonable. Instead, when the net distribution is divided amongst the 891 opt-in plaintiffs, the amount each opt-in plaintiff is to receive will only compensate them for roughly 20 percent of their alleged damages; roughly $2,150.00 per person. The court finds this amount of recovery to be inadequate.
Lowe’s and the HR managers first sought Judge Covington’s approval of the settlement in August with an agreement that would have allowed for another round of class notice. The original notice period ended in May and the parties never asked the court to extend the deadline. On Aug. 26, the judge gave the parties time to confer and redraft the proposed agreement to account for only the class members who had already opted in. She also ordered the HR managers and the home-improvement chain to include in the settlement agreement a detailed itemization demonstrating the compensation each class member will receive individually from the common fund, which she said they failed to provide in their initial approval motion.
The suit was initially filed in August 2012 by lead Plaintiff Lizeth Lytle. She asserted that the company classified its human resources managers as exempt from the FLSA’s overtime requirements, but that their duties were not as “sophisticated as their title suggested,” and they should not be classified as exempt. Although given the title of manager, Lowe’s human resources managers lack discretion to make meaningful decisions and do not supervise employees. The managers maintained that the employees’ duties actually include menial tasks such as operating cash registers, cleaning bathrooms, greeting customers and sweeping floors.
In January, Judge Covington conditionally certified the suit as a collective action for the purposes of the FLSA claims. In April, she reduced the scope of the suit, ruling the Plaintiffs did not and could not bring Employee Retirement Income Security Act (ERISA) claims. The settlement rejected last month would have reimbursed class counsel’s litigation costs up to $68,000 and provided incentive payments of $4,000. Judge Covington had given the parties one last chance, until Sept. 19, to file new motions for approval of a settlement that falls in line with her instructions. The case is in the U.S. District Court for the Middle District of Florida, Tampa Division.
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