Abercrombie & Fitch Co. is about to end a years-long worker class-action lawsuit for $25 million.
The youth-centric retailer on Friday reached an agreement with just under 260,000 current and former Abercrombie and Hollister employees mainly in California, New York, Florida and Massachusetts that first alleged in 2013 they were forced to purchase branded apparel to wear while at work, and the company refused to reimburse them. While the case was filed and mostly litigated in California, it was recently transferred to Abercrombie’s home state of Ohio.
Under the laws of the four states involved in the suit, employers are required to reimburse any employee that is required to purchase a work uniform as a condition of employment or business-related expenses.
The workers also mostly earned minimum wage and claimed that in being forced to purchase apparel on their own dime, even with an employee discount, their wages dropped below the minimum wage threshold of their respective states, at least during periods that they needed to make purchases.
In order to end the litigation before it heads to trial, Abercrombie has agreed to settle the claims with a payment of $25 million into a class settlement fund, which will distribute reimbursements to workers that were denied payment for required workwear.
A company spokeswoman said, “Abercrombie strongly contests the allegations, however, it believes it is in the best interest of the company and all its stakeholders, including its employees, to settle this matter.”
She also noted that the employe purchases at issue go back to 2009, adding: “At that time Abercrombie had, and continues to have, clear written policies and associate handbooks in place that stated its employees were not required to purchase or to wear company merchandise, nor were they obligated to make use of their employee discounts.”
Abercrombie and representative plaintiffs for the suits agreed in a joint filing that the settlement is “fair, reasonable and adequate,” despite the retailer maintaining throughout the litigation that the employee claims lack “merit” and are too varied to be settled through a class action.
During the case, Abercrombie pointed out that it’s stores had posters in employee areas saying purchases were not mandatory and that workers signed a statement after each purchase saying it was “voluntary,” according to court records. It’s these arguments, as well as Abercrombie’s claim that the reason why each individual worker’s purchased the items they did would need to be identified before full class certification, that led plaintiffs to agree to a settlement deal instead of a judgment by trial.
Plaintiffs said Abercrombie’s positions “would require years of additional litigation” and thereby “significant” additional costs, even though they have support for their claim of an “unwritten national policy” requiring workers to buy and wear company apparel.
While the settlement agreement will put $25 million into a worker payment fund, only $16.68 million will remain available for disbursements. $7.5 million will go to plaintiffs’ attorney fees and nearly another $1 million will go to administrative costs and other legal costs.
A representative of Abercrombie and counsel for plaintiffs could not be reached for comment.
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