Starbucks OKs settlement of overtime suit for $18 million

Starbucks said yesterday it has agreed to pay as much as $18 million to settle claims that thousands of current and former managers and assistant managers in California stores were required to spend long hours performing menial tasks and then weren't paid overtime.

Seattle-based Starbucks is one of hundreds of retailers, restaurants and other businesses to be hit by class-action lawsuits filed under the state's wage-and-hour laws, which require employers to pay time and a half after eight hours of work in a day. This applies even to salaried workers who hold the title of manager or supervisor if they spend at least 50 percent of their time doing tasks unrelated to managing.

Days after the Starbucks suits were filed, a jury in Oakland hit Farmers Insurance Exchange with a $90 million overtime bill on behalf of 2,400 claims adjusters. Several other companies have agreed to settle white-collar overtime suits.

"Employers are losing more and more of the wage-and-hour classification cases," said California Chamber of Commerce Vice President Fred Main. "I would expect that we will see more and more of the cases move more quickly."

Starbucks, the nation's largest specialty-coffee retailer, denied liability in the pair of lawsuits filed in Los Angeles in July and said it agreed to the settlement to resolve the claims without incurring protracted litigation.

"Given the unique aspects of California wage-and-hour laws, which differ significantly from federal and other state laws, we believe this settlement was the best solution for all parties involved," Starbucks Senior Vice President Jennifer O'Connor said.

It was unclear, beyond making payments to an estimated 1,000 current employees and an unspecified number of former employees, if Starbucks would change the way it pays managers and assistant managers in California stores. Of the 5,000 Starbucks worldwide, 821 are in California.