Dive Brief:
- Covelli Enterprises, which operates 300 Panera Bread locations, will pay $4.6 million to settle a class action case involving overtime pay, Restaurant Business reports. The agreement, originally reached in 2019, received final judicial approval last week.
- The suit was filed in January 2018 when a group of assistant managers in Ohio claimed they were forced to work without overtime pay. They also claimed to be wrongly classified as exempt from overtime protections.
- More than 900 assistant managers joined the class action suit. Panera did not respond to HR Dive sister publication Restaurant Dive's request for comment.
Dive Insight:
Panera settled another class action suit last year in a Washington, D.C. court for nearly $2 million. In that case, the plaintiffs also argued that the chain wrongly classified assistant managers as exempt from overtime requirements. These issues likely stem from the company's reclassification of assistant managers in 2016.
According to Bloomberg Law, those changes were made ahead of anticipated revisions of President Obama's Fair Labor Standard Act's "white collar" exemptions. Under the Fair Labor Standards Act, only certain classes of employees may be designated as overtime exempt and are expected to perform specific duties to warrant such a classification. However, although these Panera employees were classified as overtime exempt, they performed many of the same duties as hourly associates who qualified for overtime, according to the D.C. lawsuit.
The most recent suit alleged that Panera had a pattern of violating the FLSA by failing to record all of the time its employees worked, and intentionally misclassified employees as exempt. According to one law firm, courts look at job duties performed to determine classification. The plaintiffs claimed they performed non-managerial tasks like cashier and food prep, for example.
In a fast-paced restaurant setting, employees are often tasked with wearing many hats and fulfilling a variety of duties, which could create additional challenges to an already complex environment. Panera certainly isn't the only restaurant chain to grapple with this issue. Nearly 10,000 Chipotle employees brought forth a similar suit against their parent company in 2016, while Jimmy John's and franchisees faced an overtime lawsuit in 2018.
Wage lawsuits are among the most common in the restaurant industry, but franchisees are now solely on the hook if they're found liable for such violations. In December, the National Labor Relations Board absolved McDonald's as a joint employer from responsibility for labor violations brought forward in 2012 by Fight for $15 and other labor groups. On the heels of that ruling, in January, the Labor Department announced further protections for parent companies if a franchisee violates wage or overtime laws.
