Family Dollar has agreed to settle a lawsuit with 1,700 store managers in New York. The managers alleged that the retailer unlawfully failed to pay them overtime. The settlement, which has not been finalized, could cost Family Dollar up to $14 million. The settlement must be approved by the court. Family Dollar plans to record a one-time charge in the fourth quarter to account for the settlement.

This isn’t the first time the company has been punished for a similar offense. In 2009, Family Dollar had to pay $33 million to employees classified as managers who, improperly, did not receive overtime pay, following a class-action lawsuit in Alabama. At the time, Family Dollar CEO Howard Levine said he thought the judgment was a “raw deal” for the company. Family Dollar, founded in Charlotte in 1959, currently operates more than 7,400 stores in 45 states, with more than 50,000 employees.

The employees in the New York case were classified by Dollar General as “managers” and exempt from overtime pay. But the company assigned them almost exclusively non-managerial duties, such as stocking shelves, mopping the bathrooms, running cash registers and unloading trucks. They were scheduled to work more than 60 hours a week, six days a week.

Family Dollar is currently defending 17 lawsuits in seven states over employees being misclassified as managers and not receiving overtime pay, according to its most recent quarterly securities filing. The company also is facing a lawsuit alleging discriminatory pay practices against its female store managers. Other retailers have faced similar complaints from employees classified as exempt from overtime, including Wal-Mart, Publix, and Rite Aid. Family Dollar’s sales rose to nearly $2.4 billion in the third quarter, and profits were up 12 percent, to $125 million. If you need more information on this litigation, contact Larry Golston, who handles employment litigation for our firm, at 800-898-2034 or by email at


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