Lowe’s Illegally Excluded Bonuses, Volunteer Time from Overtime Calculations, Lawsuit Claims

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Lowe’s Home Centers, LLC faces a proposed collective and class action lawsuit that claims the home improvement chain illegally excluded nondiscretionary bonuses and “volunteer” time when calculating overtime pay.

In January 2018, Lowe’s allegedly promised a one-time bonus, based on the amount of time spent working for the company, to all 260,000 hourly employees and paid out the bonuses the following month. The lawsuit contends, however, that Lowe’s improperly classified these bonuses as discretionary and illegally excluded the payments when calculating employees’ overtime pay.

According to the complaint, the bonuses paid by Lowe’s should have been classified as nondiscretionary because they were specifically promised to employees and functioned like a retention or “longevity” bonus designed to encourage workers to continue their employment. The suit argues that such bonuses should be considered nondiscretionary and are required by the Fair Labor Standards Act to be included as part of an employee’s regular rate of pay for the purpose of calculating overtime, the suit explains. From the complaint, citing the Code of Federal Regulations:

“Bonuses which are announced to employees to induce them to work more steadily or more rapidly or more efficiently or to remain with the firm are regarded as part of the regular rate of pay. Attendance bonuses, individual or group production bonuses, bonuses for quality and accuracy of work, bonuses contingent upon the employee’s continuing in employment until the time the payment is to be made … must be included in the regular rate of pay.”

Because Lowe’s did not factor in nondiscretionary bonuses as part of workers’ regular rates of pay, the defendant’s overtime calculations were flawed and resulted in employees being paid less than they were owed, according to the complaint.

In addition, the complaint claims Lowe’s did not factor in “give back time” – that is, hours where the defendant paid employees to “volunteer” for local charities – when calculating hours worked and overtime compensation. According to the case, an individual cannot qualify as a volunteer under the FLSA “unless they offer their services ‘freely and without pressure or coercion, direct or implied, from an employer.’” The complaint argues that the defendant’s employees did not meet this definition because the workers were under the company’s control and were in fact compensated during “give back time.” Thus, the case claims, Lowe’s employees were entitled to employee protections under the FLSA, including overtime pay for hours worked over 40 per week.

The complaint contends that Lowe’s conduct as laid out above violated the wage laws of New York, Oregon, Pennsylvania and Massachusetts, in addition to the FLSA.