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A national rent-to-own retail chain has agreed to pay $3 million in overtime pay to 500 current and former assistant managers in California to settle a case alleging the company gave them administrative titles to justify not paying for extra hours worked. The employees of Texas-based Rent-a-Center Inc. claimed they were called managers and were denied overtime, even though they didn’t have significant managerial responsibilities. California law states that “executive” employees are exempt from overtime compensation. Executives have discretionary authority over employees; regular supervision of at least two workers; and more than 50 percent of their work time devoted to “managerial duties.” The plaintiffs, represented by Oakland’s Saperstein, Goldstein, Demchak & Baller, were given mostly non-discretionary tasks that occupied more than 50 percent of their time. They said store managers, who are paid on a salary basis and get a share of the branch profits, only occasionally doled out managerial duties to assistants. “It follows a pattern of cases we have seen where employers are misclassifying personnel in exempt positions,” said Saperstein partner David Borgen. He called the cases a common feature of today’s “go-go” economy. “Of course, there would be no case if they didn’t require them to work 50 or 60 hours a week.” Rent-a-Center’s lawyers, however, denied violating state labor law. Latham & Watkins partner Joel Krischer, who represented Rent-a-Center, said wage-and-hour claims are a “cottage industry” in California, because exemptions are based on quantitative rather than qualitative tests. “It reflects California’s particularities in the wage-and-hour law,” Krischer said. As a result, he said there is always a risk to companies that a group of employees will claim they are misclassified. Several months ago the company changed those “assistant” positions from salaried to hourly in response to the class action case, Erica Otero v. Rent-A-Center, Inc., BC17038. Krischer said it made more sense to make the change than to risk future litigation. The settlement was preliminarily approved by a Los Angeles County Superior Court judge last week. Final approval is expected on Aug. 4.

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