RadioShack Sees $5.8 Million in Penna. Overtime Claims

RadioShack Corp. (RSH), the electronics retailer that in February hired its fourth chief executive in three years, said it faces at least $5.8 million in claims for unpaid overtime in a Pennsylvania lawsuit.

David Verderame, an ex-manager, sued the chain last month in state court in Philadelphia on behalf of all Pennsylvania RadioShack workers, accusing the company of failing to pay overtime wages since April 2010. RadioShack had the case moved to U.S. District Court yesterday, saying its possible liability put the proposed class action under federal jurisdiction.

“The district courts shall have original jurisdiction of any civil action in which the matter in controversy exceeds the sum or value of $5,000,000,” Fort Worth, Texas-based RadioShack said in a filing. It calculated that potential overtime “premium damages/costs” total at least $5.8 million in the Pennsylvania case, which “well exceeds” the threshold.

RadioShack runs about 288 stores, kiosks and dealer locations in Pennsylvania. It has used a so-called fluctuating workweek method to calculate overtime pay for more than 100 employees since 2010, Verderame alleged.

Fluctuating Workweek

Verderame, who was a manager at a store in Pennsdale, Pennsylvania, accused the company of paying workers half the overtime rate they’re eligible to receive for time worked more than 40 hours under the fluctuating workweek method.

The company’s method of calculating overtime violated state minimum-wage law, Verderame said in his complaint. He’s seeking to proceed on behalf of all current and former employees who worked at the company’s Pennsylvania stores since April 5, 2010.

RadioShack’s filing broke down the approximate number of overtime hours worked by the proposed class of nonexempt store managers in the state for each of the years in question. The company is facing similar claims by employees in federal courts in New Jersey, New York and California.

The case is Verderame v. RadioShack Corp., 13-02539, U.S. District Court, Eastern District of Pennsylvania (Philadelphia).

To contact the reporter on this story: Sophia Pearson in Philadelphia at spearson3@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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