LOS ANGELES — Wet Seal Inc. agreed to pay $1.28 million to as many as 500 store managers in California who claimed they were denied overtime wages, the junior retailer said last week.

This story first appeared in the January 26, 2004 issue of WWD. Subscribe Today.

The lawsuit, filed in January 2002, alleged Wet Seal wrongly classified certain employees as exempt from overtime pay in violation of California law. This is the second lawsuit Wet Seal settled in the past week.

Last Wednesday, the Foothill Ranch, Calif.-based company said it would pay $90,000 to settle a separate wage lawsuit by four garment workers who claimed they were not paid minimum wages or overtime by a contractor. The company admitted no liability in either suit and will record the settlements as charges in fourth-quarter earnings.

The 621-store chain already expects a wider loss in the fourth quarter as December comp store sales fell 7.3 percent from higher markdowns on slower-moving inventory.

Peter D. Whitford, chief executive officer, could not be reached for comment Friday but said in a statement that clearing up legal disputes would allow the company to move forward and focus on improving business performance.