Pacific Sunwear of California Inc. has reached an agreement to settle all claims related to two lawsuits concerning overtime pay.
The suits are Auden v. Pacific Sunwear of California Inc. filed on Sept. 17, 2001 and Adams v. Pacific Sunwear Inc. of California filed May 3, 2002. The settlement is subject to court approval. As previously disclosed, the purported class actions allege that the company improperly classified certain California-based employees as “exempt” from overtime pay.
The company indicated that it will pay approximately $4 million. Of this amount, the company had accrued $3.9 million at Feb. 1, 2003, the end of the prior fiscal year. The settlement will not have any material impact on results for the first quarter which ends May 3, 2003. The court is expected to review the settlement within the next 60 days.
While the company denies the allegations underlying the suit, it has agreed to the settlement to avoid the cost, distraction and uncertainty associated with protracted litigation during the important summer and back-to-school selling seasons. The suit is one of many similar suits filed against retailers with operations in California.
