Back Pay for Misclassified Workers Costs Grocers Lots of Green

Misclassified Workers Cost Grocers Lots of Green

Posted on 07-Feb-08 by The Timekeeper

In an interesting coincidence, two stories of grocery-related companies, misclassified workers and big back overtime awards came across my desk this week. If you’re in the grocery or food-distribution business, you might want to pay special attention to these.

First, from Colorado…

As reported by the Daily Camera, seventy-eight workers at Sunflower Farmers Market are due $125,310 in overtime, according to the US DOL Wage and Hour Division. The DOL found the company had been “misapplying the executive and administrative exemptions under the Fair Labor Standards Act.” In other words, they’d classified people as exempt from overtime regulations, when their jobs didn’t qualify them for exemption.

Reportedly, the company will also pay an additional $10,000 for violating child labor regulations by allowing six minors to work past 9:00pm during summer months.

Sunflower Farmers Market is a discount “natural grocer” based in Boulder, Colorado, with thirteen stores in Denver, Las Vegas, Albuquerque, Phoenix and Tempe, Arizona. It was co-founded by Mike Gilliland, who was also a co-founder of Wild Oats Markets, which was recently purchased by Whole Foods.

And further developments from Texas…

In another story, The Temple Daily Telegram reports McLane Co. Inc., headquartered in Temple, will pay $1,559,316 in back overtime wages to 570 current and former retail merchandising specialists nationwide.

McLane, a wholesale distributor of food and grocery products, classified its retail merchandising specialists as outside sales employees exempt from overtime. Further, the company allegedly didn’t keep records of hours worked by these employees (probably because they weren’t planning to pay them overtime anyway). DOL investigators disagreed with that classification, and “to avoid the expense and distraction of further litigation,” the company will pay the back wages, but without admitting any wrong-doing.

“McLane believed, and still believes, that we classified the retail merchandiser positions properly… We believe we have compensated, and continue to compensate, all of our teammates fully and fairly, and in accordance with the law,” said Len Mewhinney, general counsel for the McLane Co. Inc.

Now, just how expensive and distracting would additional litigation have been, to make it a better idea to just pay out $1.5 million — especially if you really believed you hadn’t done anything wrong? Wow.

Food for thought.

Filed under: Wage and hour lawsuits