Retail Giant H&M Agrees to $3.8 Million Settlement

Retail Giant H&M Settles Class-Action Suit for $3.8 Million

Retail giant H&M plans to pay a settlement of $3.8 million to refute allegations that off-the-clock work is not paid for by the company. The amount will be distributed to H&M employees who were allegedly affected by the establishment’s conduct regarding this matter. A portion of the money will also go to California Labor and Workforce Development Agency and toward employment attorneys’ fees. The settlement now awaits preliminary approval from United States District Judge Edward J. Davila.

H&M and the employees involved in the class-action lawsuit agreed to settle the dispute so that the costs and risks of continued litigation could be avoided. Workers involved in the lawsuit stated they believe the compensation offered in the settlement was fair.

Why the Plaintiffs Would Rather Settle Versus Litigate

Employees explained some of the reasoning behind their willingness to make the motion requesting approval of the settlement rather than continuing to litigate. For most workers involved in the suit, their hesitancy to continue litigating stemmed from concerns about the ultimate cost of trying the case, as well as the possibility, however slight, that they might lose.

For example, one of the complaints they feared might fail in court was their issue with the company’s policy requiring them to complete a security check when their shifts commenced. With regard to wage and hour violations, compensation for the security check could go either way during a trial. If this were the case, it would likely be due to the “de minimis rule” of the Fair Labor Standards Act, which prohibits employees from suing over minuscule amounts of unpaid time that are so short that it is viewed as unreasonable to expect compensation. California law, however, is generally more liberal than the Fair Labor Standards Act, finding such time to be compensable in most instances.

How Settlement Funds Are Distributed

According to employment attorneys in Orange County, the terms of the H&M wage settlement state that the California Labor and Workforce Development Agency will be paid $75,000 of the $3.8 million, and $41,750 will go to administrative funds. Attorneys’ fees will be approximately $1.27 million, $250,000 is earmarked for legal costs, and workers will receive $15,000 each.

Class Certification Awarded Despite H&M’s Attempt to Prevent It

The class-action lawsuit brought forth by the retailer’s employees survived the company’s attempt to stop workers from gaining class certification. This failed for some claims, but the plaintiffs were ultimately granted class certification. Employees asked Judge Davila for certification of a group of H&M workers who have worked for the retailer since the fall of 2019 and are not exempt from overtime.

The Gray Area of Before-and-After Duties

Employees who perform shift work may encounter tasks before and after their designated start and end time, and some companies may attempt to circumvent payment for such duties. These include those listed in the class-action suit against H&M. Other examples include the time it takes for a person to change into a uniform. If it is essential to the principal activities of their employment, workers must be compensated for the time it takes to don the uniform, according to the Society for Human Resource Management (“SHRM”).

Not all jobs require one to perform duties prior to the start and following the end of a shift; however, federal law requires employees to be paid for many tasks that are outside their typical shift or duties, but nonetheless mandatory. For example, in certain industries, workers may have to attend meetings or participate in trainings. The Fair Labor Standards Act requires employers to pay workers for lectures and training as well as additional activities, provided they are job-related and mandatory. California employees may be able to receive compensation for such pre and post shift tasks even if the time is “de minimus” as California law follows a different standard than the federal Fair Labor Standards Act. An employment attorney is the best person to speak to if a worker has questions about wage and hour violations or other work-related issues.