SAN FRANCISCO — In a closely watched labor law case, the California Supreme Court cleared the way Thursday for a class-action lawsuit brought by Sav-on Drug Stores workers who say they were misclassified as managers and improperly denied overtime.
The unanimous ruling overturned a lower-court decision that would have discouraged such suits.
Plaintiffs' attorneys maintain that many workers -- despite being given titles such as "store manager" or "team leader" -- spend most of their day on non-managerial tasks such as stocking shelves or tending a cash register, rather than overseeing any aspect of the business.
Companies had hoped that the lower court's position would slow a wave of overtime litigation that has swept the state in recent years, costing firms hundreds of millions of dollars in judgments and settlements. A broad swath of corporate California has been hit, including Farmers Insurance Group, Bank of America Corp., RadioShack Corp., Rite Aid Corp., Starbucks Corp., Taco Bell Corp. and United Parcel Service Inc.
As a result of the high-court ruling, experts said, California businesses can expect a renewed surge of class-action litigation seeking overtime pay.
"There are probably a fair number of these lawsuits waiting in the wings for the court to clarify what the standards are," said Steven Katz, a Los Angeles lawyer who wrote a friend-of-the-court brief for other businesses in the Sav-on case. "Now that that has happened, I think we're going to see those suits being filed."
A spokeswoman for Sav-on, which has about 300 stores in California, declined to comment on the ruling. Rex S. Heinke, a Los Angeles attorney who represented the drugstore chain, said he couldn't comment because the litigation was ongoing.
The California Supreme Court ruling came the same week that new federal overtime regulations took effect. Those rules, which are expected to reduce the amount of overtime paid to workers and reduce litigation, were opposed by organized labor and embraced by the business community.
The federal regulations, however, are expected to have little effect in California, which has its own labor laws.
Under the state statutes, workers who spend more than 50% of their time performing the duties of hourly workers, even if they're called managers, are eligible for overtime pay. Eligible workers who put in more than eight hours a day on the job are supposed to be paid for the overtime at time-and-a-half -- 1.5 times their usual hourly rate.
