Costco Owes Junior Managers Unpaid Overtime Wages, Class Action Claims

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A proposed class and collective action alleges Costco Wholesale Corporation has unlawfully deprived junior managers of overtime wages by misclassifying them as exempt employees.

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The 21-page lawsuit was filed by three New York residents who worked as junior managers at Costco locations throughout the state and say they regularly worked more than 40 hours a week without overtime wages. Although the federal Fair Labor Standards Act (FLSA) and the New York Labor Law (NYLL) permit managers and other executives to work overtime without extra pay, Costco junior managers do not fit the definition of an “executive” under these laws and are therefore entitled to time-and-a-half wages for every hour worked over 40 per week, the suit claims.  

However, the complaint charges that Costco pays junior managers a fixed weekly salary regardless of how many hours they actually work. 

For example, one plaintiff claims he was routinely scheduled to work at least 45 hours each week. However, a paystub he received from Costco reflecting the two workweeks between December 6 and December 19, 2021 stated that his salary was to pay him for only 80 hours of work at $34.13 an hour, the filing contends.

Costco neglected to report all the time that its junior managers worked in order to “obfuscate [its] unlawful overtime policy,” the suit alleges, claiming that the defendant further violated the NYLL by failing to supply these employees with accurate wage statements each pay period.

According to the case, junior managers are mid-level managers whose responsibilities do not meet the requirements to be exempt from overtime pay under the “executive” exemptions of the FLSA and NYLL because they can neither hire nor fire Costco employees, they are subordinates of their department heads, and they spend a majority of their time on customer service and merchandising tasks.

Although state and federal law says that employees whose primary duty involves “managing the enterprise” are exempt from receiving overtime pay, “[m]anagement-type duties, such as scheduling or writing up employees, make up a small percentage of the Junior Managers’ working time and are done at the discretion of the Senior Managers and other superiors,” the filing relays.

Per the complaint, Costco’s alleged failure to pay junior managers time-and-a-half overtime wages is “widespread, repeated, and consistent.”

The lawsuit looks to represent anyone who worked for Costco in a salaried junior manager position at any time since October 23, 2020.

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