Dive Brief:

• Target is facing a lawsuit in Northern District of New York federal court that alleges the retailer failed to compensate some workers for overtime work in its warehouses. The suit's legal team is looking to certify it as a class action, according to a release by law firms Outten & Golden LLP and Louis Ginsberg Law Offices, P.C.

• Target’s warehouse jobs in general are among the highest paid in retail, according to Glassdoor, and the company has added workers in the past year due to its greater focus on e-commerce and omnichannel sales. The retailer saw its e-commerce sales rise 34% in Q4 last year.

• Target spokesperson Molly Snyder told Retail Dive that the company disputes the allegations in the suit and said, "At Target, our distribution center group leaders are properly classified as exempt, salaried team members. These department leaders hire, manage, and lead teams of up to 50 people. We value their leadership and contributions, and they are competitively compensated and rewarded for their performance." 

Dive Insight:

Target has been ramping up its e-commerce operations of late and has broadened its fulfillment logistics from warehouses as well as stores. The company hardly has the vast network of fulfillment and distribution centers that (mostly) pure-play retailer Amazon runs, and so far hasn’t garnered the kind of criticism about warehouse working conditions that Amazon has. 

This suit appears centered on how Target categorizes its group leaders, which in turn determines whether or not they’re eligible for overtime pay.

An employer who requires or permits an employee to work overtime is generally required to pay the employee premium pay for such work, according to the U.S. Department of Labor website. Employees covered by the Fair Labor Standards Act (FLSA) must receive overtime pay for working over 40 hours in a workweek, of at least one and one-half times their regular rates of pay.

Managers who earn a minimum amount on a salaried basis and who perform certain oversight duties like hiring workers, determining their compensation, and controlling certain aspects of the business are exempt from overtime rules, according to the Labor Department. 

This dispute resembles the increasing number of skirmishes between workers, government labor agencies, and businesses over whether paid workers can be classified as contractors instead of employees. This distinction determines whether they’re eligible for expense reimbursements and benefits, including both company and government benefits.