Aldi, Inc. Settles California Overtime Lawsuit

Los Angeles, CAJeree Gant filed a class action lawsuit against Aldi, Inc., claiming that the grocery chain failed to pay her for all the hours she worked between October 2017 and May 2018. The other allegations under the California labor code concerning meal breaks, rest breaks and wage statements follow from that central claim. Aldi has now offered to settle the claims of what might ultimately have been thousands of California plaintiffs for $2 million.

The relatively simplicity of the allegations and the speed of the resolution may, in fact, obscure a complicated tale of worker abuse that appears to be widespread. It involves a form of misclassification that involves treating hourly non-exempt workers as managerial employees to avoid the legal obligation to pay overtime.

Brutal management of labor costs

Among grocery retailers, Aldi has a reputation as a “brutally efficient” competitor. Shoppers like the prices, and the inconvenience of the 25 cent deposit to rent a grocery cart seems small.

The ugly truth, though, is that much of the discount may come from management of labor costs – management that is beyond tight. This is apparently management that breaks the law at the expense of hourly workers, who can least afford to bear the burden.

Working for free

The tipoff in the Complaint are claims that Aldi failed to pay workers for time spent performing job duties before and after their scheduled shifts such as opening or closing the store, receiving and responding to business-related calls and correspondences, cleaning and maintaining the premises and providing customer service to customers.

Handling business calls and correspondence? Jeree Gant worked as a Store Associate at $13 an hour. These are the kinds of tasks ordinarily handled by salaried higher-ups, whose salary must, under the provisions of California labor law, be more than minimum wage. Actually, to the extent she performed these tasks before clocking in or after clocking out, she was working for free.

The difference between hourly workers and salaried management in California

Perhaps the most important of many differences is that hourly workers (referred to as “nonexempt”) are entitled to overtime for hours worked over 12 per day or 40 per workweek. Salaried management workers (“exempt workers”) are not, presumably because their larger salaries more than make up the difference. There are a host of other differences, as well though, including entitlement to rest and meal breaks. The bottom line is that exempt workers are far less protected by California law than their nonexempt colleagues.

In order to be considered an exempt employee, workers must meet certain requirements. It is not a matter of title, alone. In California, the employee must meet the following tests in order to fall outside of the purview of legal protections:

• Be primarily engaged in executive, administrative or professional duties (generally, this requires the employee dedicate about half of his or her work time to these duties);
• Regularly and customarily exercise discretion and independent judgment on the job; and
• Earn a salary equivalent to at least twice the state minimum wage for full-time work (based on a 40-hour workweek).

Promoting the grocery worker who has been racking up the overtime hours stocking shelves to “management” without significantly changing her wage or her duties, might save the employer money; it may be flattering to the “eager beaver” who has been working hard to please the boss. But it costs her money and may ultimately make her work days harder and more exhausting.

Is this a pattern with Aldi, Inc.?

Recent lawsuits suggest that it may be. In Hunt v. Aldi, Inc., an overtime lawsuit under the federal Fair Labor Standards Act, for example, plaintiff grocery workers claimed that:

“contrary to the Aldi job description for "Store Managers," none of them perform true managerial tasks. Rather, Plaintiffs contend that all Store Managers almost exclusively perform "core tasks" of "manual labor" to include unloading trucks, stocking inventory, working the cash register, sweeping and mopping floors and setting up store displays. Plaintiffs further allege that they retained no discretionary authority and took all direction from Aldi's District Manager.”

The Maryland federal court in which the case was heard, it should be noted, denied class action status.

Plaintiffs in McNelley v. Aldi, Inc., an Ohio FLSA lawsuit, similarly claimed that despite being hired as store managers their primary duties included stocking shelves, operating the cash register, cleaning the store and performing customer service duties. McNelley alleged that he did not oversee two or more employees, engage in management duties or have the power to hire, fire or promote other workers. Because his duties were virtually indistinguishable from the assistant managers, cashiers and other hourly employees, he and others similarly situated should have been paid as hourly workers entitled to overtime.

It is unlikely that this form of misclassification is limited to Aldi, Inc. or the grocery industry, in general. The Aldi complaints, however, provided a vivid example, perhaps a template, of a practice to which workers should be alert.