Court Rules Hershey RSRs Entitled to Overtime at 1.5x Pay Rate if Found Misclassified

On February 20, 2013, the Honorable Kandis A. Westmore, United States Magistrate Judge for the Northern District of California, issued an order providing that the approximately 150 Hershey Retail Sales Representatives (“RSRs”) who were seeking overtime pay would be compensated at an hourly rate of 1.5 (time-and-a-half) and not at the .5 rate (half-time) that Hershey sought, in the pending case of Zulewski, et al. v. The Hershey Company, Case No. 4:11-cv-05117-KAW, if the RSRs are found to be misclassified in that case.

On October 19, 2011, Hershey RSRs filed this second suit seeking overtime pay for violating overtime rights of its national sales force after Hershey failed to change its policy following the first suit.  Previously, on February 23, 2011, the Honorable Magistrate Judge Bernard Zimmerman issued an order holding that the 120 Hershey RSR plaintiffs and those RSRs who have joined the case of Campanelli, et al. v. The Hershey Company, Case No. 3:08-cv-01862-BZ, were entitled to overtime compensation. The Court held that the RSRs are not exempt under the “outside sales” or “administrative exemptions” as a matter of law.

In January 2012, Hershey finally agreed to start paying some overtime going forward but refused to retroactively pay any overtime for improperly classified RSRs before that date.

Under its new overtime policy, Hershey was paying 1.5 times the hourly rate for overtime worked but in court insisted it was only legally obligated to pay its workers at a .5 hourly rate for past overtime due.  Hershey claimed that paying the claimants at a 1.5 rate amounted to a “windfall” to the RSRs.

Rejecting Hershey’s arguments Judge Westmore noted that “Congress enacted the Federal Fair Labor Standards Act (FLSA) in 1938 to eliminate ‘labor conditions detrimental to the maintenance of the minimum standard of living necessary for health, efficiency, and general well being.’”  The case is set for trial October 7, 2013 in Oakland, California.

Click here for Judge Westmore’s Order Regarding the Proper Calculation of Damages Under the Fair Labor Standards Act.  If you would like more information on any of the Hershey litigation, please contact our office at 800-481-1615 or bjm@brandilaw.com