Kraft Foods has settled claims that it failed to properly calculate overtime brought by people who stock grocery store shelves for $1.75 million.
The agreement followed allegations filed in federal court that Kraft had violated the Pennsylvania Minimum Wage Act when it calculated workers' overtime using the "federal fluctuating work week method," according to court papers.
U.S. District Judge Cathy Bissoon of the Western District of Pennsylvania gave final approval of the settlement last week, including $583,333 in attorney fees.
The settlement concludes two class-action cases, both in front of Judge Bissoon, and extinguishes a third suit that was being handled by a different judge. The cases that settled are captioned Foster v. Kraft and Dziadyk v. Kraft. The case in which the plaintiffs agreed to dismiss their suit was captioned Buza v. Kraft, according to the settlement.
Normally, if a worker gets a weekly salary of $400, under Pennsylvania law that means the wage is $10 an hour for a 40-hour week. So the worker who earns $400 a week and works 10 hours of overtime should be paid an extra $150 (or time-and-a-half) for the extra 10 hours, for a total of $550 that week.
But under a "fluctuating" work week, that base salary would be tabulated at $8 an hour -- $400, divided by 50 hours worked. Overtime would then be calculated at a time-and-a-half rate, or 150 percent of the $8 hourly rate, meaning overtime wages are $12 an hour, not $15.
The result is that an employee on a "fluctuating work week" would be paid $440 total -- $320 in "regular" wages, and $120 in overtime, but just $40 "extra" that week.
That type of overtime calculation is not permitted in Pennsylvania.
"The court has reviewed the monetary recovery that is being granted as part of the settlement and recognizes the significant value to the settlement class," Judge Bissoon said in her order granting approval. "The court finds that the class is properly certified as a class for settlement purposes only."
Included in that class are any employees who worked for Kraft as a "wall-to-wall sales representative," in Pennsylvania from July 1, 2007, to March 31, 2012. John Linkosky, who represented the plaintiffs, described the job done by the plaintiffs as stocking grocery store shelves.
"The gist of the claims is that Kraft allegedly failed to properly calculate overtime," according to the settlement.
Judge Bissoon stressed in her order that the settlement does not validate the claims.
"The stipulation and settlement are not an admission by Kraft or any of the other released parties, nor is this judgment a finding, of the validity of any claims in the action or of any wrongdoing by Kraft or any of the other released parties," Judge Bissoon said.
Rather, litigating the matter would be long and costly, as explained in the settlement.
Members of the class can collect by submitting claims and the payout fund will be "divided by the total number of weeks of employment during the class period for all plaintiffs to arrive at a dollar value per week worked," according to the settlement.
The named plaintiffs will each be awarded $15,000, Judge Bissoon said in her order. She also approved $6,500 for administrative expenses.
Any money not claimed from the settlement amount remains the property of Kraft, according to the settlement.
"The court finds that the stipulation is in good faith and constitutes a fair, reasonable and adequate compromise of the released claims and released federal claims against Kraft," Judge Bissoon said.
Mr. Linkosky, who represented the plaintiffs, declined to comment on the case beyond noting that the parties recognized the benefit of settling.