Petco’s Motion to Dismiss Overtime Pay Claim Denied

Oakland, CAAn overtime pay lawsuit, alleging Petco willfully violated the Fair Labor Standards Act when it came to overtime pay laws will be allowed to continue after a judge denied Petco’s motion to dismiss. The lawsuit alleges Petco does not pay its managers overtime because the managers were improperly classified as exempt from overtime pay, despite performing many non-exempt tasks.

Petco filed the motion to dismiss alleging the lawsuit was filed after the two-year statute of limitations or that the complaint was not sufficiently pled. Under the Fair Labor Standards Act, a two-year statute of limitations applies if the plaintiff cannot show willful violations of the act.

The plaintiffs, however, argued that Petco either knew or recklessly ignored that its assistant store managers were wrongly classed as exempt from overtime pay. Furthermore, the plaintiffs alleged that Petco intentionally underfunded its labor budgets, which resulted in assistant store managers routinely performing non-exempt tasks while not being paid for overtime.

Initially, the courts found partially for Petco, granting part of the company’s motion to dismiss, but also granting leave to the plaintiff to amend the complaint to show that Petco willfully violated the Fair Labor Standards Act.

In denying the latest motion to dismiss, Judge M. James Lorenz agreed that because of the size of Petco’s operations - more than 1,150 stores throughout the country - “it is plausible that Petco knew the underfunded labor budgets would cause assistant store managers to perform non-exempt tasks and result in its FLSA violation,” according to court documents.

Furthermore, the judge noted that according to the allegations, Petco managers witnessed assistant store managers performing non-exempt tasks, which suggests knowledge of the misclassification. Judge Lorenz also noted the “intentionally underfunded labor budgets,” which the judge saw as “sufficient to establish that [plaintiff] has adequately pled willfulness.”

The judge’s refusal to dismiss the lawsuit does not mean that Petco has been found guilty of violating the FLSA. It means that the plaintiffs have made a reasonable case that Petco violations of the Fair Labor Standards Act, if they occurred, were likely willful, allowing plaintiffs to file the case within a three-year statute of limitations, instead of two years.

“In light of the foregoing, the Court finds that Kellgren’s allegations contain sufficient factual matter, accepted as true, to state a claim [of willfulness] that is plausible on its face,” Judge Lorenz wrote.

The lawsuit is Kellgren v. Petco Animal Supplies, Inc., Case No. 13cv644-L, in the US District Court, Southern District of California.