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Rite Aid Settles Overtime Suit for over $20 Million

Rite Aid has agreed to pay as much as $20.9 million to settle claims that they denied certain store managers their legally stipulated overtime pay. The company is the third largest drug store chain in the U.S. The deal, which is pending court approval, settles claims dating as far back as 2002 and from 15 different collective and class action law suits. It covers over 6000 current and former Rite Aid employees.

According to allegations made in the suit, Rite Aid misclassified salaried assistant and co-store managers in order to avoid paying them overtime for hours worked in excess of legally mandated 40 hour work weeks. The plaintiffs argued that, in doing so, the drug store violated the Fair Labor Standards Act (FLSA) as well as several other state-by-state laws.

According to the FLSA, covered workers are entitled to a minimum wage of $7.25/hour. After a 40-hour work week, those workers are entitled to overtime pay at a rate not less than one and a half times the employees' regular pay rate.

The FLSA also specifies which employees must be covered under its standards. According to information from the Wage and Hour Division of the Department of Labor, employees who work for organizations that meet one of the following two factors are covered by the FLSA. These businesses must have at least two employees and either:

  • Have an annual dollar volume of sales or business totaling at least $500,000; and / or
  • Be a hospital, business providing medical or nursing care for residents, school or preschool and/or a government agency.

Rite Aid has 4700 stores in 31 different states. Its chains generated $26.1 billion in revenue in the most recent fiscal year. As part of the settlement, Rite Aid denies all wrongdoing and maintains its position that previous classifications of assistant and co-managers as exempt from overtime pay were lawful.